It’s time to start pricing for your worth.
Let’s give your business what she deserves, shall we?
“How many hours is that going to take you?”
They said, as they twiddled their fingers, drank their lukewarm coffee and waited on a response that’s altogether not quick enough for their taste.
Hey, creative.
How are you?
We’ve talked a bit in the past about setting boundaries with clients, but we didn’t talk about the big, fat whopper: setting our rates.
Pricing and boundaries go hand in hand, really. The initial pricing portion of the relationship can easily dictate who you work with, and how they respect you and your professionalism.
When you price your work, you’re being given the opportunity to ideate your value. You’re putting your proposal on the table, and allowing the client to either take it, or pass it up.
Now, that’s a beautiful thing to say, but when we practice it, it can be terrifying. I’m not sure about you, but I’ve proposed to clients plenty of times (without a ring, sadly), and just so happened to have a rate in mind, then found myself feeling guilty (why?) and decreasing the rate, then decreasing it some more.
Then, guess what? The client took it (excuse me while I slap my forehead), and I ended up
regretting every single minute of it.
And let’s be real, those clients? They’re the ones that tend to stick.
SO, let’s talk about pricing. Because if we can be better about setting our rates, we can decrease the amount of times we need to send break up emails. (If you missed that blog, click here).
Stop pricing by hour.
STOP.
PRICING.
BY.
HOUR.
Stop it right now, please.
I can’t even tell you how much I loathe the hourly pricing model, when used in the wrong place and time.
The hourly pricing I’m talking about is the kind where we grab a random rate from the air, and decide, “ah yes, THIS will be an accurate depiction of the blood, sweat and tears involved in creating the thing or delivering on the promise I made to the client,” and then we propose it.
The issue with hourly pricing models, ESPECIALLY for retainer-based clients, is that it permanently monetizes and places a number, or KPI (key performance indicator), on your work.
Meaning - your client then learns, “Ah, Kirsten can do this in 4 hours! She did it in 4 hours last time. I’m going to tell Kirsten I need it in 3-4 hours, because my budget can’t allow anything more.”
Then, they walk into the conversation with their guard up, and the mentality that they own your rates, not the other way around.
So you then experience the not-so-fun conversation of, “well… I guess I can do it in x amount of time…” and you feel pigeon-holed into keeping the same hourly rates for the rest of eternity.
Does that sound familiar?
There’s nothing wrong with pricing per hour, when that model and formula is used appropriately. However, I fell into the deep, deep hole of pricing by hour initially, and realized that I was climbing out of it, client by client, until the bitter end.
So, if hourly rates aren’t the way to go, let’s talk about a different pricing formula.
Put together a pricing formula.
When I waltzed into the freelancing world, I shoveled through the hourly muck, until I found it. THE pricing model. The one that made my heart soar, and my wings flap.
I have no other name for this non-hourly pricing model, so let’s call it the Value-Based Pricing Model. Meaning, you’re charging for your value, and not just your time.
When determining a rate for your work, I recommend you break things down into a review of:
The monetary value it’ll bring your customer
The amount of hours it’ll take you to work on it (again, keep this to yourself)
The cost of the resources utilized to create or deliver on the scope of work (rented or owned equipment, prior education and certifications)
How much you need to take home, after taxes, in order to pay your bills.
So, let’s say you’re pricing your client for product photos, shall we?
If we take a look at the context, they’re an up and coming product shop with horrific (and I mean horrific) pictures. It’s obvious that the photos are what they need to branch off into that next step of their business, while boosting sales.
You know better than I how much value those photos will bring to their brand when it comes to monetary gain. If you can, try to calculate a general number in your mind of how much money in recurring sales these photos could bring in for your client (or for other examples, how much time it’ll save them).
For the sake of the exercise, let’s say that your client can easily experience a boost of at least $10,000 in sales juuuust because of your photos.
Then, break it down into:
Monetary value +
Hours it’ll take you to complete +
Cost of resources utilized +
Your personal needs and take-home rate in order to pay the bills =
the magic number.
As an example, that could look something like:
$10,000 (monetary value) + 20 hours (time spent) + $1,000 in resources (previously and currently purchased) + $2,000 (personal pay, post-tax) = ?
Looking at that, you might be scratching your head. The goal from the “equation” above isn’t to just churn out an automatic number. I actually wanted to just help you mentally break down and visualize what should be involved when you do consider the rates you’d like to propose.
However, I’m willing to bet that a few of you have, in the past, placed an arbitrary hourly number on the work, and moved on. Don’t worry, I’m also speaking to myself here.
But if we really take a look, that’s $1,000 in resources that you spent your hard-earned time and money on, either in the past, or currently, in order to show up and show up well for that client. You have to at least make that number back, and then profit some more.
Meaning, if the client is likely going to see an increase in at least $10k in sales, and you’ll be spending at least 20 hours on the work, PLUS you’ve invested over $1,000 in resources and you need $2,000 in take-home pay, you HAVE to be charging at least $3,000-$4,000.
And I mean at least.
Does that sound high to you? Let me remind you that your client will experience upwards of $10,000 in sales, just because of your photos. $3,000 for $10,000? (If we want to be nerdy, that’s $7,000 net) Sign me up for that money tree.
Again, I’m not sitting down with you personally to review your project or offering, but the goal is for you to have the different pricing factors ingrained in your being, so you never again fall into the hourly pricing model trap.
Once you have that proposal number in your mind (let’s say it’s $4,000, for the sake of the exercise), do not tell the client anything we just talked about.
Please imagine that I just said that to you with the exact level of intensity that John Locke had about the hatch in Lost. I’m watching a lot of Lost right now. It’s making me really intense.
...instead, propose the price, and share what you’ll be delivering on for that rate.
# of photos
Due date for the project
Any extenuating resources, products, or add-ins (example: share that the price will include the studio space, set up, editing, whatever it is that it actually includes)
(AKA, only give deliverables in your quote. No hours, please!)
Then, deliver the proposal in the form of a flat rate, for $4,000. When and if they ask how long the project actually takes you, just share that you don’t price based on an hourly rate, and this is a project fee.
Not only will this allow the flexibility to continue to price them up, and change rates around each time they come back for another project - it keeps you from being cheapened by their view of you as an hourly resource.
If you’re pricing for retainers, everything I said above still rings true. Picture this: you’re three months into your retainer, and your client says, “Hey, I actually need to add on ___. Can you tell me what that would cost?”
*Insert opportunity to rework your retainer, and silently raise your rates here*
Rather than, “Hey, I need you to add ____ to your hours. Please tell me how many hours that will take you.”
*Insert sad creative, who feels too awkward to tell the client they’re raising their hourly rates, so they continue to charge the same $40 an hour until they lie in a ditch and cry*
Your clients do not need to know how much you’re charging them per hour, because your worth doesn’t lie in hours worked. You are valuable, helpful, educated, creative and insightful. You have a product (your brain) that they desperately need.
That kind of offering is expensive, and business is business.
Include an hourly add-on rate.
Now, once you figure out your flat-rate pricing model, I recommend offering additional hourly support for your client.
My best practice? I offer a flat rate to my clients, and clearly define the deliverables involved. Then, I inform them, “for additional work outside of the scope proposed, I am happy to offer my one-time hourly rate of $$$.” I even tell them what ISN’T included in those additional hours, in case that alternate line of work is more challenging.
Meaning, “if you need me to go over and beyond everything we already agreed upon, here’s my (fairly) high hourly rate.”
For example, you could quote a flat rate and share that, “for additional edits outside of the scope of work proposed, my fee is $$$ an hour.” Heck, you could even throw in the fact that any additional calls will be charged an hourly fee, too.
Now, do me a favor - before you quote that hourly rate, take whatever number you have in your mind, and triple it.
Yes, triple it.
THAT is the rate you need to propose. I kid you not, I used to scoff (do people still say that?) when fellow creatives told me the same thing… until I tried it.
When you price high, you create value-based demand and a higher-level offering. When you price low, you cheapen your skills, products, and work.
So, price high.
But always remember - flat rate, value-based pricing FIRST. Then additional, overtime hours later.
You can thank me (with your cash money, babay) later.
About the writer
I’m Kirsten, and I’m notorious for my love of writing long-winded, passionate and helpful articles for freelancers and creative entrepreneurs.
I’m a dog mom, wife and the owner of Alway Services, where I provide business relief to creative entrepreneurs, in the form of long-term and project-based copywriting, community building, sales and marketing strategy, as well as 1:1 strategy sessions.
If you’d like to learn my proven community-building and Instagram engagement strategy, download my guide at alwayservices.com/products. To book a strategy call with me, click here.
Thanks for reading!