How To Price Your Services As A Freelancer
Pricing your work can be a difficult task if you are a new freelancer, even if you are running a small agency that provides some kind of service.
You could be running a design consulting practice, a marketing practice, or even you could be a website designer.
Pricing your services can be equally difficult in all different niches and especially difficult for you if you are just starting out and you are not aware about how to value yourself in the marketplace.
Value based pricing is the best case scenario as opposed to an hourly pricing that is kind of the industry norm.
With hourly pricing the incentive is not to be efficient and complete the work in as less amount of time as possible rather you are incentivised to slow down the work and take more time which is neither good for the piece of art that you are making nor for the client and not for the world in which that piece of work is going to live.
So there are mainly two ways to simply price your services.
Hourly Rate X Hours
With this pricing strategy you are asking for the price of the whole project at the same time even though the above formula helps you come up with a number that is good for that project, you must ask the client for the payment of the whole project and not for the number of hours that you're going to work upon it.
As an example, if you want to charge $100 for one hour and the project is approximately going to take you 10 hours the total comes out to be $1000 for the project.
So you must tell the client that you are going to charge $1000 for the project. They do not need to know that you calculated 10 hours of work for hundred dollars an hour.
Price Your Services According To The Client Size
They tell the same price to all the clients irrespective of the size of the business of the client and this is a big mistake.
For businesses which are comparatively smaller in size, a low price is a good thing and they might be able to get you to do creative work at a low price. They are used to low prices because they are a small company and they are used to getting good value out of the low prices.
But if it comes down to a bigger company, they are used to paying high prices. Most of the time in these companies the common notion that is believed is, higher the price higher the value. So if you quote a low price to a bigger company they are going to think that your work is not good enough. For example, for a company’s last website if they paid $10,000 and you come in and you quote them $5000 for a better website, even though your cost is very low and you have a high profit margin they're going to think something is wrong with you because you're not charging as much as the previous guy had charged them for a seemingly inferior product to the one you’re telling them you can give.
Value Based Pricing
Now, value based pricing means that you are charging the client according to the value you bring to their business. Value can be calculated in the number of customers or it can be calculated based on the revenue that you are going to generate for them.
It is normal for consultants and other people to charge 10 to 20% of the additional revenue that they are going to generate for them within the first year of engagement.
Discount Your Services?
The only thing I can tell you about this is do not discount your services. If they need somebody at a lower price point it is better to give them a referral of someone cheaper than lowering your price.
If you give them a discount the next time when they have the budget they're going to go to the person who had said no to giving them a discount.
Chase Jarvis, a renowned photographer gave this example.
If you normally charge $3000 for social media and the client has a budget of only $1000, instead of doing it for $1000 it is better to give them a contact of someone who is going to do it in their budget.
The next time when they have a budget of $3000, they’re going to come to you and tell you that now they have the budget to work with you.
If you would have taken that $1000 earlier you would have become a $1000 freelancer and had not remained a $3000 freelancer.
And of course there is a lot of communication involved when talking about getting people to agree to your prices as a freelancer so you must train yourself in the art of better communication as well apart from knowing your work’s value.