On a recent networking call with a business investment strategist, I got hit by lightning and I’m amazed it didn’t happen sooner.

If you’re like me, you’ve heard and possibly said this one or two or a thousand times before:

"One of the benefits of being a small business is that your low overhead enables you to be much more competitively priced."

That's because you just don’t have to cover as many ongoing expenses as your larger competitors so more of the purchase price goes toward your profits even when you’re charging less.

But when my networking buddy articulates some version of this small business bible chestnut, it’s like someone’s put my brain in the microwave.

I'm dazed and confused and get off the call as quickly as possible.

Is it true that small businesses incur lower overall costs than larger businesses? Sure.

But the idea that lower costs should translate into lower prices is anything but true, and I really can't believe I'm just realizing this NOW!

Here’s why that math is no longer mathing for me:

• So many of our costs are invisible, meaning they don’t show up on our bank and credit card statements or our financial reports.
• You have to charge for the infrastructure you need, not the one you have, otherwise you’ll never be able to afford to develop and grow.
• Value isn’t about what it costs you or me, it’s about what it’s worth to our customers and our prices need to reflect that.

I’m ashamed it's taken me this long to realize the overhead argument is just another false narrative that keeps small businesses from charging their value and baking real profitability into their pricing.

Do us both a favor and don’t fall for it!

Rather than making the size-price argument, compete on other more valuable differentiators like level of customer care and experience, innovation and expertise, flexibility, and so on.

While size can and certainly does matter in many ways, it really shouldn't matter when it comes to determining pricing—at least where overhead is concerned.

Have questions or concerns about keeping your offers and proposals competitive? Let's talk it through.

Until next time,

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PS – In case you missed it, last time I told Two Truths and a Lie about Black Friday.

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