How to Price Your Services
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One of the greatest challenges of starting a business is figuring out how to price your services or products. Here's my advice after doing this for 7 years.. including through a pandemic!
A brief disclaimer...
It’s fine to give a discount (or better, throw in a freebie) to your BFF or someone you’ve known since you were 2.
This post doesn't apply if you are new to your field and in the process of getting clients for the first time, and developing a portfolio and resume. I highly encourage you to do internships, to work for free, do personal projects; hell, do anything to get yourself some real work experience.
Research the Market
Do your research before deciding on your prices. I have read various methods for figuring out what your hourly rate should be—usually based on your cost of living. I hate that concept because my goal is never to be making just enough to cover my cost of living. I’m trying to build an empire over here!
Here’s how I price my services. A few times I year I check up on my competitors and figure out what they are charging. Some designers list their pricing right on their website. Sometimes you have to dig a little deeper and send them an email. Don't be afraid to ask people questions! You will never get an answer if you don't ask. Don't just look in your geographic area. I check out designers in the UK, Australia, and all over the US. I look for designers with a similar aesthetic to mine, with similar offerings, servings the same types of clients. People in other regions will probably be more inclined to share their pricing information with you because you aren't competing in the same geographic market, so they won't see you as direct competition.
Once I have a general idea of what my competition is charging, I set my prices to the high end of average. Two reasons:
1. I consider myself to be an expert at what I do because of my decade of experience and high end client list, and
2. I live in New York City.. so it costs me a LOT more to run my business than someone who lives in the fucking Arkansas, assuming we both work from home.
Added bonus, when I was checking out designers in other areas I got a ton of ideas and inspiration from looking at their portfolios. Tip for creatives: I actually prefer following creative people in other locations because there is a greater circulation of fresh ideas.
Stick to your guns
After you have done your research and you are confident that your prices are fair and competitive, STICK TO THEM. In my experience freelancing, people will ask if they can pay you less than your listed rate. I consider myself to be well established and people still ask me if I will do a logo for a hundred bucks. Be respectful, but explain that your prices are firm and based on the value of what you provide them. It helps to use the word “investment,” rather than “cost.”
Keep in mind, there will always be someone who can’t afford you no matter how low your prices are. Please don’t feel guilty for this. I’m sure there are things you want that you can’t afford. That doesn’t mean that you can walk into any store and leave with what you want for a fraction of the price, does it? I assume if you are reading this post, you are serious about being a freelancer or a business owner. Why should your business be treated any different?
The problems with settling for less
When you work for less than you are worth, it’s problematic for a few reasons.
It messes up the market for everyone. When freelancers or small businesses try to out-bid each other and win clients by offering the lowest price, the perceived value of the service or product goes down. The prospective client then believes the true value of the item being offered is whatever the lowest price is. I've had people tell me $2500 is a ridiculously high price for a brand identity. Any savvy business person could tell you that a strong brand identity is one of the most important investments in your business, therefore I highly disagree! I also personally know someone who spent $30,000 on just a logo, so let's try to keep some perspective.
You will start to resent the client. Resentment is never good. But it's hard to avoid if you are doing work for one client at $120/ hour, and another client at $20/hour. Every email they send you starts to annoy you. You start wondering why you ever accepted the work at such a low rate in the first place. And don't even get me started on how you will feel when a potential new client wants to hire you to do some work at your standard rate, but your schedule for the next week is full of the $42/hour projects. Grrrr!!!
Other people will want the discounted rate. Despite the internet, good old-fashioned word of mouth is still one way that I get new business. If your client goes around telling everyone they know that you will work for $20, chances are the next person who contacts you will think $20 is your rate. It can be uncomfortable explaining that isn't the case.
The 3 big exceptions
If you are CERTAIN that a project will be SO fun to do, it won't even feel like work... DO IT.
If the client is SO impressive (and maybe even out of your league) that you can name drop them for the rest of your life... DO IT. They might even refer you other clients of the same caliber. (And make sure you put their logo on your website so people know how amazing you are for having worked with them!)
If the project will be one of the most amazing pieces in your portfolio, DO IT.
Because every clever business owner knows that when the above 3 factors come into play, the number on the paycheck is only part of the equation.
x, gretchen
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