A Lesson In Pricing Your Product (And Your Worth)

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A Lesson In Pricing Your Product (And Your Worth)

This blog post revisits an article I wrote on Substack back in September 2023. A little over two years ago but still relevant today, and a lesson I will never forget.

Today, we help clients make the mistakes that we made. Does that mean they will never make mistakes? Of course not, but if we can help them make fewer mistakes, or maybe minimise the impact of mistake made, then it’s a successful outcome, as far as I’m concerned.

And, of course, making a mistake isn’t always a bad thing.

John Kavanagh, the MMA coach best known for training Conor McGregor and founding Straight Blast Gym in Dublin, helped popularise the phrase “win or learn”. The philosophy rejects the idea of a traditional “loss”. As long as a fighter learns from a defeat, then it’s not a loss.

The same philosophy can be applied to business.

Anyway, here is the original post:

Photo of the team at Transmit Startups

Looks like we just priced ourselves out of the market...

Are you comfortable that your pricing strategy is aligned with your goals and your values?

Smarta co-founder Richard Myers shares some uncomfortable truths about where his business journey has taken an unexpected turn, how he’s handled it personally, and how the company has adapted to change.

For ten years, Transmit Startups delivered the Start Up Loan scheme.

We provided more than £175 million in funding for over 15,000 UK entrepreneurs who may have been refused by traditional lenders. We started in 2013 as the smallest provider and grew to be the largest within 5 years. How?

  • We delivered a better customer experience than our competitors

  • We relentlessly improved our processes to maintain profitability, spending years optimising our delivery of the scheme to achieve consistently high conversation rates at high volume

  • We built a great team that genuinely cared about our customers.

By 2018, we had around 30% market share, generating 2,000 loan applications per month, disbursing considerably more loans than all of our competitors, and maintaining a 96% customer feedback score for the last 5 years.

COVID created an unexpected increase in demand, so we expanded our team to deliver more loans than ever before. But in 2022, things got tougher.

The post-pandemic economic climate, combined with the cost of living crisis, began to make lending through the scheme more challenging and placed additional pressures on business advisors to get as many loans approved as possible.

As a Delivery Partner (DP) of the scheme, we faced increasing pressure to operate at lower margins. Demand for Start Up Loans remained strong post-pandemic (2022 onwards) but it was certainly less than in 2020/21 and we still had the same cost base. Something had to change.

Standing our ground

Each year, we submitted our bid to continue delivering the Start Up Loans scheme, feeling confident our contract would be renewed.

We’ve always prioritised the quality of our customer service because we genuinely give a sh*t about people - inside and outside our company. So the price we put in was the price we felt able to deliver at.

We're a commercial organisation and just breaking even wasn’t acceptable, especially if the quality of the customer’s experience, or our staff’s enjoyment of their work, would be compromised. 

Our 11th year of delivering Start Up Loans became our last. I’ll never forget the day I found out we hadn’t been awarded a new contract, and that the DPs who had been successful had put in a much lower price.

It’s a hard lesson when you lose a contract you’ve come to rely on as the “bread and butter” of your business. 

Despite the huge sadness we felt at having to drastically scale down our workforce, I’m proud that we made the decision to stand our ground on price. It shows what we believe our people are worth.

There’s no right or wrong way to price your service

We made the call that we’d rather deliver at our price or not do it at all, because we wanted to maintain our excellent quality and keep some flexibility. We could have easily said we’d deliver Start Up Loans for 20% less and potentially have won the contract. But we're not prepared to compromise our values.

We don’t regret pricing ourselves out of that contract. If we’d dropped our price any lower, we would have resented the fact that our team would have been busting their balls, and we’d only just be breaking even. 

As my co-founder Ian Straker said:

“We have always prioritised customer experience alongside efficient processes and systems. Making a profit is what enables us to create a positive experience for everyone.”

A big part of what worked well at Transmit for the past decade was the culture: everybody felt their work was valued.

Piling more pressure onto our delivery team, for less financial reward, could have had negative consequences for individuals psychologically and impacted the culture of the whole organisation. That’s not OK. 

The psychological effects of being undervalued cascade up and down a company. If you know you’re delivering the same great service but you're getting paid less, it demoralises everybody.

Want to discuss your pricing strategy?

We're happy to have a no-strings, no-fee chat for 30 minutes to see if we can help you out the right pricing policies in place.

BOOK A CALL

Profit isn’t everything, but when you generate profit, you can explore and reinvest in other things.

Our investment in Smarta and Generic AI came largely from our cash flow. If your business is just breaking even, and you don’t have cash reserves, you can't reinvest in growth and it’s extremely difficult to diversify your products and services. 

It might feel risky to price your services higher than your competitors. You could potentially lose a major contract, just like we did. But it’s equally risky to just sit at breakeven point.

Don’t get stuck at a price where you’re making little or no profit - you need room to keep exploring.

If your business is only just covering its costs, you're likely to miss opportunities to go in new directions. You need enough profit to give you room to explore other avenues and the headspace to look at how to spread that profit across a few income streams.

Pricing is paramount

If you're manufacturing physical products, you know what it costs to produce a specific quantity and what you’d need to charge to cover your production costs + overheads.

But it's quite difficult to get pricing right in the service industry because you’re selling your time, knowledge and expertise - the value of which is subjective, depending on who's buying it.

A lot of businesses get caught in a cycle of constantly cutting prices just to win work.

I saw it all the time when I was running a web development company down Silicon Alley, and I’ve seen it many times with business owners I’ve mentored over the years.

When businesses were really hungry for work, they’d put in a price and the client would come back saying, “it’s too expensive”.

So they’d slash their prices, sometimes by as much as half, and there'd be no profit. When you’re stuck in that cycle, there’s no chance of ever growing or expanding your business. 

Even if you're a very early founder, don’t be tempted to undervalue your work.

Don’t get squeezed 

Your business exists to solve a problem for your customer, and you’ll achieve this faster if you’re making a profit.

If your client doesn’t value what you do, or can’t understand why you're charging what you charge, it's the wrong client for you.

It can be tempting to say; “OK, I really want to work with you so I’m going to give you a discount on this piece of work”. 

But when it comes to the next piece of work, the expectation is that you'll continue to deliver at the discounted price.

I believe companies have to work out what their price is, and then stick to it. 

Sometimes, you discount a bit if you’re building a longer-term relationship or buying in higher volume. But don’t forget that your customer is paying for years of experience, your unique skill set and relevant knowledge, and your diligent approach to work.

If you’re dealing with a customer who wants the cheapest price possible, and is pressuring you to discount your rates, there's no long-term value in that relationship. Even if they're a big brand. They will always be shopping around for the next cheapest price. It ends up being a race to the bottom.

REMEMBER: ‘value for money’ does not equal ‘cheap’!

Value for money means many different things. It is not the same as price. You could be paying top dollar for someone or something, but if you feel like you're getting excellent service then you're still getting great value for money.

It takes a lot of confidence to turn work down, or bid for work at a higher price than your competitors. But both parties need to feel like they're either valued or getting value from the relationship.  

Conclusion: Know Your Worth and Stand Your Ground

Losing our core contract after a decade of hard work was a bitter pill to swallow, but I have no regrets about refusing to join the race to the bottom.

Slashing our margins to match cheaper competitors might have kept the contract, but it would have cost us our culture, overworked our team, and eroded the quality our customers rely on. Operating at mere break-even is not sustainable—it strips away the financial buffer and creative headspace you need to innovate, diversify, and invest in your future.

Pricing your services isn’t just a numbers game; it is an active reflection of your values and what you believe your people are worth. Remember that “value for money” does not mean “cheap.” Have the confidence to determine what your expertise and diligent service are genuinely worth, stick to your price, and be willing to walk away from deals that force you to compromise.

It takes courage to stand your ground, but sustainable profit and self-respect will always beat an unsustainable race to zero.

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Contract

We will use and process your personal data where it is necessary for a contract we have with you, or because you have asked us to take specific steps before entering into a contract.

How is your personal information used?

Below we have set out the reasons we use your personal data and the lawful basis for each use.

How we use your personal information

Lawful Basis

To effectively communicate with you

Legitimate interest

To respond to your enquiries

Legitimate interest

To enable us to manage service interactions with you

Legitimate interest / Contract

To ensure compliance with our contractual obligations, including auditing and reporting, we have in providing our service to you

Legitimate interest / Contract

To make our website and other social media content available to you

Legitimate interest

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Legitimate interest

To contact you (with your agreement) electronically about promotional offers and services which may interest you

Consent

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Legitimate interest

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Legal obligation

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Where we have a legal right or duty to use or disclose your information (for example in relation to an investigation by a public authority or in a legal dispute)

Legal obligation

To test new systems and check upgrades to existing systems to improve our service delivery

Legitimate interest

To help improve our products and services, for quality control, security, internal record keeping and other business needs

Legitimate interest

To effectively manage our business and our relationships with you, partners and consultants

Legitimate interest

Certain types of personal information, such as gender and ethnicity, are used only by aggregating the information for reporting requirements, and for the purposes of monitoring and promoting equal opportunities.

 

Where your personal information is stored and who we share it with

Your data may be shared with some of our service providers, which allow us to carry out our services, or with other third parties as outlined in this section. This Privacy Notice does not cover the processing of your data by these third parties. For information on how a third party processes your personal data, please refer to their privacy notices.

Your information is stored on dedicated hardware used by Smarta and all data is held and backed up within the UK or EU, is covered by comparable data protection standards (Adequacy) or is covered by the EU SCCs + UK Addendum.

To deliver a full range of services to you, it may on occasion be necessary for us to share your data outside of the European Economic Area. This will typically occur when service providers are located outside the EEA or if you are based outside the EEA. These transfers are subject to special rules under GDPR and UK GDPR.

If this happens, we will ensure that the transfer will be compliant with data protection law and all personal data will be secure. Our standard practice will be to use the EU SCCs + UK Addendum which has been approved by the European Commission and UK Information Commissioner’s Office for such transfers. Those clauses can be accessed on the European Commission website and the UK Information Commissioner’s website.

IT service providers

In order to make certain services available to you, we will share your personal data with our IT service providers. We use IT services providers for activities such as email communication, calendar invites, file storage, customer relationship management, email marketing, customer journey management, and task processing.

Website data is stored within a MariaDB database in a secure hosting environment. The only way to access the database is via a server console or via SSH. Images and assets are securely hosted on a service called S3 - which is an Amazon Web Service (AWS) service. Only authenticated users within the site have access to push files to this location.

We only allow our service providers to handle your personal data when we have confirmed that they apply appropriate data protection and security controls. We also impose contractual obligations on service providers relating to data protection and security, which mean they can only use your data to provide services to us and to you, and for no other purposes.

Partners and suppliers

Where relevant for the delivery of services we will also share your personal data to organisations who contract us to deliver services, and to our network of consultants, coaches and mentors if you are working with one. We will only share your contact details with such partners for the purposes of delivering services to you or to fulfil contractual obligations such as reporting. 

We only allow our partners and suppliers to handle your personal data when we have confirmed that they apply appropriate data protection and security controls. We also impose contractual obligations on partners and suppliers relating to data protection and security, which mean they can only use your data to provide services to us and to you, and for no other purposes.

Other third parties

Aside from our service providers and partners, we will not disclose your personal information to any third party unless we are legally obliged to do so, or you provide your consent for us to do so. We will never sell or rent our customer data to other organisations for marketing purposes.

Examples of where we may be legally obliged to share your personal information include:

  • Governmental bodies, regulators, law enforcement agencies, courts/tribunals and insurers where we are required to do so;

  • To comply with our legal obligations;

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  • For the protection of our employees and customers.

 

How we keep your personal information secure

We are committed to keeping your personal data safe and secure.

Our security measures include:

  • Encryption of data

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  • Internal policies setting out our data security approach and training for staff.

Only authorised and trained personnel can access your personal information if required to do so as part of their legitimate job role.

Website security and backups

Our website has HTTPS encryption via a Let’s Encrypt SSL certificate to ensure any data passed between your browser and the web server (where this website is hosted) is encrypted. When you are on a secure page, a lock icon will appear on the bottom of web browsers such as Microsoft Edge, Google Chrome and Apple Safari.

This website and its database are automatically backed up every day via our hosting provider AWS (Amazon Web Services). Backups are stored for 90 days in the EU Region.

 

How long we keep your personal information

We will not retain your data for longer than necessary for the purposes set out in this notice.

We are required by law to keep some information for a minimum period e.g. financial information for tax purposes.

Different retention periods apply for different types of data, however the longest we will normally hold any personal data is six years after we have fulfilled the service to you. Where there is no legal requirement, or a business reasons such as the fulfilment and management of a contractual agreement, we will retain personal information for only as long as necessary to deliver our services and respond to any subsequent communications.

As long as you wish to have a membership on the Smarta platform, we will retain your data for that purpose.

You can update, amend or request deletion of your personal information at any time (see below).

 

Automated decision making, including profiling

We do not use automated decision making or engage in profiling activity.

When do we collect your information?

Website forms

Our website has forms built-in to allow you to interact with the site via the submission of data. When you use our forms, the information submitted is securely stored in the website’s database. Your personal data stored in the website’s database will be automatically deleted from here after five years. Your personal data is encrypted by the website.

The website is built using a framework called Laravel (it is an open-source PHP MVC framework for bespoke platform development). 

The forms are built within this stack using VueJS, form data is submitted via Axios (AJAX HTTP requests) to a controller that parsers the data and stores in within a data store. Some forms are also built in the HubSpot platform.

Sensitive data and passwords are encrypted using OpenSSL and the AES-256-CBC cipher.

 

Mailing list

When you subscribe to our newsletter, we collect your email address and name so that we can correspond with you. Your personal data will be shared with the service provider that facilitates our sending of our newsletters. You can request to be removed from our mailing list at any time by clicking ‘unsubscribe’ in any newsletter/mailout or by contacting us.

 

Ongoing communication

We will also collect additional information from you as we communicate with you in order to deliver our services. For example, we will (where relevant) collect documentation from you via email.

Cookies

Like most websites the Smarta website uses cookies to collect information. Cookies are small data files which store information on your browser, your computer, or other connected devices (such as smart phones or tablets).

How do I manage cookies?

When you visit our website only strictly necessary cookies are applied. You can then manage which additional cookies are applied using the pop-up window. After cookie settings are applied your preferences can still be changed by clicking the black circle icon in the bottom left of your browser window.

Alternatively, you can set your browser to block cookies. Please check your browser for instructions on how to do this.

Use of cookies

The main purposes for which cookies are used are:

  • For technical purposes essential to effective operation of our websites, particularly in relation to site navigation.

  • To improve your experience on our website.

  • To enable us to collect information about your browsing patterns, including to monitor the success of conveying our information to you.

Our website does not store any information that would, on its own, allow us to identify individual users without their permission. Any cookies on this website are used either solely on a per session basis or to maintain user preferences. Cookies are not shared with any third parties.

Online data management (analytics and security)

If you accept non-essential marketing cookies when using our website, we use a third-party service, Google Analytics, to collect standard internet log information and details of visitor behaviour patterns.

We collect information about your computer and about your visits to and use of this website (including your IP address, geographical location, browser type, referral source, length of visit, entry and exit points and the number of page views).

We do this to find out things such as the number of visitors to the various parts of the site.

This information is only processed in a way which does not identify anyone.

We do not make and do not permit Google to make, any attempt to find out the identities of those visiting our website.

If we do ever want to collect personally identifiable information through our website, we will be upfront about this. We will make it clear when we collect personal information and will explain what we intend to do with it.

 

Your rights in respect of the personal information we hold

We fully support and facilitate the ability of people to exercise their rights.

If you wish to correct, complain, object, or otherwise control the data we hold please contact us and we will respond accordingly.

Please contact us if you have any questions about how your personal information is being used or if you are unhappy about our service or anything we do. We will do our best to resolve the issue.

 

An overview of your different rights

You have the right to request:

  • Access to the personal information we hold about you, free of charge.

  • Corrections to your personal information when it is inaccurate, out of date or incomplete.

  • Erasure of your personal information, for example, when you withdraw consent, or object and we have no legitimate overriding interest, or once the purpose for which we hold the personal information has come to an end.

  • Obtain and reuse your personal data for your own purposes across different services (known as data portability).

  • That we stop using your personal information for direct marketing (either through specific channels, or all channels).

  • That we stop any consent-based processing of your personal information after you withdraw that consent.

Whenever you have given us your consent to use your personal information, you have the right to change your mind at any time and withdraw that consent.

 

Where we rely on our legitimate interest

In cases where we are processing your personal information on the basis of our legitimate interest, you can ask us to stop for reasons connected to your individual situation. We must then do so unless we believe we have a legitimate overriding reason to continue processing your personal information.

 

Direct marketing

You have the right to stop the use of your personal information for direct marketing activity through all channels, or selected channels. We must always comply with your request.

 

How you can make a request about your data subject rights

You can make a request related to any of the rights listed above by contacting us using the details below.

We will respond to you as soon as possible, and always within one month of receipt of the request.

To protect the confidentiality of your personal information, we will ask you to verify your identity before proceeding with any request you make under this Privacy Notice. If you have authorised a third party to submit a request on your behalf, we will ask them to prove they have your permission to act.

 

Getting in touch with Smarta

We can be contacted at:

Smarta / Transmit Start-Ups Ltd

Northern Design Centre

Baltic Business Quarter

Abbott's Hill

Gateshead

NE8 3DF

 

Email: hello@gosmarta.com

 

The Supervisory Authority in the UK is the Information Commissioners Office (ICO).

 

Smarta / Transmit Start-Ups Ltd can be found on the Data Protection Register. The registration number is ZA047144.

 

Complaints

If you would like to make a complaint about the way your personal data has been handled, you can contact us using the details given above.

Alternatively, you can refer your complaint to the ICO