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“It means your only connection to your customer is very tenuous, which is why everybody is trying to build relationships with their customers.”

Undercutting may be a useful short-term strategy to get your “foot in the door”, but one with severe limitations.

“You will find great difficulty moving from a price proposition into one where you have a deeper hook into your customer,” he said. “If you go that route in order to get the business, you have to be clear how you are going to get out of that corner down the line.”

People don’t buy on price, he says. “If that were the case, we would all drive the cheapest model of the cheapest car around, and clearly we don’t.”

Sean Murphy, the director of policy at Chambers Ireland, says the aim should be to be a “price-maker not a price-taker”. “Doing this comes down to whether or not your product or service is innovative enough to add value to your client,” he said.

“Unfortunately, too many small firms are price-takers. A company or person will pay more for something they think is of benefit to them, but you’ve got to be able to answer the ‘what’s in it for me?’ question.”

Competing on price is “a race to the bottom”, he adds.

Getting a good price for your goods or service has much to do with confidence. “You need to be able to walk tall in the marketplace, to be confident about what you are providing,” said Murphy. “Unfortunately, we have a real problem in this country with sales skills.”

These are not to be confused with the Irish “gift of the gab”, which will only get you so far, he says.

“Good sales skills training is what makes the difference between a price-maker and a price-taker,” he added. “The fact is, if you don’t know how to make a sale, how can you have a chance of getting the right price?” Martin Horan, a training and development consultant, sees the issue from two sides, both as a trainer and as a person running his own business.

For service providers such as himself, he believes any attempt to raise prices should be done only after face-to-face discussion, never by e-mail or by simply invoicing the higher price. It is also valuable to ask the client for their opinion of your charges.

“Such conversations can elicit important information, such as the fact your client was approached by a competitor offering to charge half your price,” said Horan.

“You might then discover there is something you are doing that your client isn’t happy with, or doesn’t value, or there are things you are doing the client isn’t even aware of.”

Here too, confidence is a prerequisite and any conversation regarding prices should be initiated only when you have a strong sense of your own “unique selling proposition”, he said. “You have to be ready to fully justify your current prices, let alone any price rise.”

When negotiating, never attribute your price rise to general “rising costs”, says Trainor. “Mention of them just annoys people because we all have them and the attitude is, live with it.”

Think long-term too, advises Horan. “A good relationship with a client is a marathon, not a sprint. Small firms want to be working with their clients in five years’ time, not just screwing them for every penny they can today,” he said.

It is okay to vary rates too, depending on how much you want a job.

“In my case, if I have a client for whom I do 10 days’ training a year, I have to consider whether it is better for me to ask for a 10% increase, or for two days’ extra training each year.”

Trainor agrees with Mackey that the issue is never what it costs you to do the job.

By way of example, he cites an incident in the early 1900s where an electrical engineer was hired by General Electric to identify a problem with some of its equipment.

The man walked on site, circled a machine for two minutes and marked the errant part with a line of chalk.

He then sent them an invoice for $10,000.

“Shocked, the company asked for a breakdown of costs,” said Horan. “It read: ‘Marking machine with chalk line — $1. Knowing where to mark machine — $9,999.’”