Value-based pricing has become something of a holy grail in the world of service businesses. The theory is seductive: Instead of charging by the hour or offering rigid packages, you price your services based on the value they deliver to the client. If your support helps someone generate $100k in revenue, why shouldn't you charge $10k instead of $2k?

This approach can lead to higher margins and more premium clients, but it comes with downsides. When it doesn't work, it can quietly eat away at your profitability, create client resentment and hold up your growth.

Related: The Price Is Right: How to Price Your Product for Long-Term Success

Value-based pricing has gotten a lot of attention in the last few years. In short, value-based pricing is the idea that you can charge for your services based on the value it adds to the business purchasing them, rather than based on the cost of delivery for you as the service provider.

There are real reasons why this makes sense. Research shows that higher prices can increase the perceived value of your services. By undercutting your price, you may actually be devaluing your services — so there is good reason to keep your prices above rock bottom. Lower prices can attract clients looking for the cheapest option on the market, which are often the most difficult to service.

There is also compelling evidence that women tend to underprice their services in........

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