How to charge what you are worth
Are you self-employed — A freelancer or someone trying to get paid for their skill level?
How do you charge what you are worth?
You may have ten years of learning value that has to be added to your hourly rate. And you are competing for this work with someone who has far less to offer, and your price cannot be the same!
Remember: It is not about the $$$$$$$ it is about the value you deliver.
Find a pricing structure that works.
Working out your prices can be very difficult if you are in a business that provides a service.
It is somewhat more straightforward when you are selling a product, but you still need to have a markup that covers your costs and makes you a profit.
How do you know if you are too high or too low or meeting your market or going to get any business at the price you want to charge?
Value offered
There will always be people who do not want to pay your going rate, and you need to remember that this is fine, and these are not the people you want to waste your valuable time talking to.
You have to discover who your ideal clients are and what they will pay for your business. This will take time, and it will evolve too.
Have a solid system
You must have a pricing system to be consistent in your offer to both new and existing clients.
However, you do not want this system to be a simple hourly rate. Ideally, you want to charge on a per-project or per-service basis.
- What services do you provide?
- How can they be bundled and priced?
- If you are selling a product, what is your markup, 100% or 120%, to cover some additional costs?
Project pricing
Only you know how long a project or service should take, and sometimes providing a quote is just an educated guess. This educated guess sometimes means you win, and sometimes you lose, but you should be consistently winning over time.
What does your project look like:
- Scope of work
- Materials if required
- Is there to be ongoing work after the project
- Does the client have a budget you need to stick to
Price
(Estimate of hours) x (your preferred hourly rate) = Base Rate
(Materials) x (percentage for sourcing) = Materials Cost
Unforeseen % = 20% or more additional to cover
Project Quote = Base rate + Materials + Unforeseen
Regardless of the price you quote, you must be happy to do the work for that price if you get the job. You don’t want to get work and then complain that you quoted too cheaply to do it.
Submitting your price
The perceived value must exceed the actual cost of the project.
Communicate your price while managing your clients’ expectations and selling the value of your offer. Be precise in what is included and excluded from your fee, so nothing is left to chance.
If the client goes ahead, you must track your project and ensure that your pricing structure works. By following your projects closely, you can see if you consistently overestimate or underestimate and then you can adjust accordingly.
Finally, be confident of your price, don’t second-guess yourself, and always work on delivering more perceived value than the actual cost.
Never discount to get a client, or you will be discounting for your business's life, which may ultimately cost you your business.
How do you currently work out your prices? Can you improve your pricing structure and make more money?
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Thanks, Kelly
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