Starting a business, or working for one can be very exciting. There are so many things to do and learn. At the same time, there’s a lot of pressure to figure out how you’re going to get clients and customers in the door without spending money on advertising that may not work anyway. We think it helps if you sit down and have some conversations with yourself first about your pricing strategy before confirming the “final” numbers with your team or putting them on your website.
Pricing Your Services as a Freelancer
Pricing your services is one of the most difficult things for a freelancer to do. If you are starting out, it can be very difficult even to figure out what other people charge. These are some ideas about how to go about pricing your freelance business and why that doesn’t mean just adding up all of the hours you put in each week and then charging that amount per hour.
1. Is your service a commodity?
2. How much experience do you have in this field?
3. What are the current industry rates for your services?
4. What is the value of your service to the customer?
5. Do you want to charge hourly or by project?
Pricing your services can be a tricky thing. You want to charge enough that you’re making what you feel is “fair market value,” but not so much that no one will hire you. In some cases, an hourly rate makes the most sense because of fluctuating costs or a high-volume business with low margins and expenses (like photography). But in other cases, it just doesn’t make sense—in which case it’s best to come up with a flat fee for the job at hand.
Making the decision
Professionals who provide services to clients tend to have a difficult time with pricing. We set our rates based on what we think the market will bear, or even how much we want to make. However, when you go this route, it can lead to your business failing because no one takes you seriously and they feel like they are getting overcharged for something that is not important enough for them to pay more than $25-50 an hour. Here are five things to help you start thinking about what you want to charge.
1. What is the value of your time?
2. How much do you want to make?
3. What are your business goals for this year?
4. What services are you providing and what is their value in relation to one another?
5. Who is your target audience and what price points will they be comfortable with paying?
The only bottom line that matters is your bottom line. Choosing the right price point won’t be at the end or beginning of your business. It’s a milestone along a journey that will make you feel like you are charging too much, charging too little, or charging just right. Sometimes these happen all at the same time.
Here are a few closing thoughts based on my experience of pricing my services for over 10 years…
- Pricing based on what you think someone else can pay isn’t sustainable and won’t help you scale or grow.
- Deciding what to price can be a highly emotional decision, don’t let the emotions of others influence your choices.
- Pick price points that don’t leave you feeling resentful.
- Remember you can always change your mind and do something different.
- If you are overbooked and have a waitlist, it might be time to raise your prices.