How to get your pricing right
You could make $10,000 per month. But having your pricing right is the difference between that $10,000 taking 20 hours per week or 60 hours per week to make. Getting your pricing right will generate you as much money for as little time spent working as possible. This free time acts as a great base to gain more clients and further your income.
Most freelancers start out with an hourly rate, say $30 or so an hour. You’ll track the time it takes you to complete the project and then be paid for the culmination of $30s’, plus any over-time. The pay-per-hour model is a good starting point, but it’s limiting. You will not benefit from the maximization of your quality of work.
Quite simply put, clients will honorable budgets don’t care if it takes you 30 minutes or 30 hours. All they’re looking for is the job to be completedwithin the time frame, budget, and desired quality.
If a client with a well laid out plan for what they want comes to you, you could get what they need to be done in merely 3-5 hours. You’ve just created this amazing work that you’re proud of, that you know is worth at least thousands of dollars. But your client is only going to pay you for 3-5 hours’ worth of work, roughly $90-$170 dollars for your great job.
Clients also tend to shy away from pay-per-hour. They tend to have worries that concern “what if the freelancer lies about how many hours they’ve done just so they can get more money out of me?”
Having your fee be project-based is a much more scalable alternative and one that I personally recommend. When a client comes to you, putting the focus on the quality of the end result, rather than the quantity of the hours will do a couple of things.
The client only cares for the end product, they do not care about the hours taken. Putting emphasis on how great the outcome is going to be for them is a lot more exciting to the client, not how many sets of $30 they’re going to have to pay.
You can charge a lot more. If you think you can provide them a website or piece of content worth thousands of dollars, you can charge thousands of dollars – even if you only do it in 5 hours.
How much should you charge?
A mistake you might make once you’ve moved to project-based fees is simply estimating how long the project will take and then multiply that by your hourly rate. If you do this you’re wasting your time, you may as well stay on an hourly-based rate.
Another mistake you could make is charging the same or lower than your competitors, but this won’t help you grow. All you’re doing is showing clients that you are only worth the same as others, all the while you are keeping yourself from expanding your income.
Instead, you should create your valuation for your service based on these criteria:
Do you like the client?
This may sound superficial, especially when the end-goal of freelancing is monetary gain. But asking yourself if you like the client goes a long way. You are, after all, letting them into your life for a period of time.
Are they annoying, pedantic, irritating? You may want to avoid these people. But asking yourself if you like the client also means:
- I like this corporate client because they have a large budget, but there’s not much creative freedom.
- Or, I like this artistic client because they give me creative freedom, but not a large budget.
Knowing whether you’ll be compatible with them will help your longevity as a freelancer.
How much do you think they’re willing to pay?
Charging clients in-line with their budget expectations is the best thing you can do as a freelancer. If two clients come to you asking for similar tasks done, but one has a $1,000 budget and the other has a $3,000 budget. The best thing you can do is accept both.
Avoid saying to the client with $3,000 that “you can do it for $1,000″. This sends a signal to your client that you’re not good enough.
Instead, charge them both based on their budgets, they are already expecting to pay that amount. This also maximizes your earning potential without overstepping any boundaries.
How much value are you giving your client?
This is in response to the aforementioned “AGHHHH DONT DO HOURLY BASED PRICING AGHHHH!”. When you do your project-based pricing, what you are really undertaking is value-based pricing. Looking at the project you are tasked with and seeing how much value you are providing to your client.
During the negotiation process, you can emphasize the value that you are bringing to the table, and use this to help buff up your price-point. Doing this will naturally grow your income over time.
Although there is no set-in-stone method to fully achieve anything above, these tips will help you charge the right amount, and make sure you are paid for the value you bring.
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