Pricing has always been a fundamental part of our jobs as freelancers. We are, ultimately, providing a service of our expertise, for money. An artist paints art and we create designs or create websites, and just as the artist is rewarded for good work, so are we. The problem arises in how to market your skills at the right price. In this article, I aim to shed some light on pricing, especially now that we are in the recession.
Pricing: A summary
Before we make amends to our pricing policy, we need to remember our pricing policy. Do you remember your basics? Well, let me fill you in.
This is where you make your own decision. Nobody can say “Charge this!”, rather you need to decide yourself. In the world of freelancing are your services more described as ‘Harrods’ or ‘Primark’? Get number crunching and first figure out what you need, and what sort of profit margin you are aiming for.
When working this out take some things into consideration. Remember to consider:
- The Stock Market
This may seem outrageous, but if we are in a bear market in the stock market, I would say go to the lower end of you calculations for profit. I think even a monkey can figure out what to do in a bull market.
- Your competition
Research your own market. There are hundreds of factors you may not even realise exist which could push your price up or down. Number of freelancers in the market, recession, people with your expertise etc
- Your expertise
Including your experience, skills and niche. What is so special about you that makes you different from others, and don’t say that you are lucky enough to have a girlfriend (because I know you don’t).
- The client
If, for arguments sake, you are a coder and are amazing at making e-commerce websites due to your experience and skills, then do not charge the prices a 12 year old charges! Similarly if you are just starting off, don’t charge what I charge, cause I can, you cant :p
You will come across different nerds giving you different formulas to work out how much you should charge per project. Here’s something you ought to know – it doesn’t matter. All you need is common sense, and being able to read the article so far shows you must have some sense.
Working out Pricing
Judge the project. Ask two questions:
1. How much would I be comfortable making on this project with regard to profit?
2. What do others charge?
If 1 is far greater than 2, you need to reconsider the project. If 2 is far greater than 1, you may need to consider raising your prices.
Once you have gotten so far, ask yourself; how many hours you will spend on this project?
Then do the math and align it with a good hourly rate.
If you want a standard hourly rate then you need to work out how much you want to make (at a profit) annually or monthly and divide that by the number of hours you will be working in that period of time. Your calculations will need to take into consideration costs, as you are dealing with profit. Always round off your hourly rate to a good figure (always round up) to allow yourself some breathing space.
Here we go in a full circle and come back to the fact that common sense plays a role here. If you do not get any clients, lower your price. Similarly, too many clients all of a sudden, guess what Sherlock? Yes, put your price up.
Now personally I would go to ‘Harrods’ rather than ‘Primark’, but I am not an idiot and know when I see a good deal. Remember the reason why your clients exist. Why did this person approaching you rather than going to a professional company? It’s probably because the company would have cost and arm, leg and a testicle for something the freelancer would probably do better and a lot cheaper.
Let me simplify. The recession guarantees one thing and that is that prices come down, I think we all agree here. But how much?
This is precisely the reason I summarised basic pricing principles above. That is exactly the same method you use even now. The problem comes in when many of us have become accustomed to charging certain prices, so when we need to come back, we are unsure and sceptical. Just go back to the drawing board, and do the above steps.
There is one thing I wish to share with you. In the recession, Warren Buffet lost millions, Bill Gates lost millions, and the top ten richest people in the world saw their money reduced massively. However, ‘Zara’ (clothing retailer) saw profits in the recession, making around £100million when the rest of the clothing retailers lost billions. What is the reason?
It is because quality will never lose value. If you are good, and do what you can do brilliantly, recognize that and implement it into your marketing techniques – this brings me swiftly onto my final point.
Believe in yourself. You are what you want to be. If you dream something, it is achievable. Achieve to the best of your ability. Don’t become a sell out. Believe in your work and give your work sincere effort. If you do, you won’t need to worry about what you charge, as your clients will see the value in your work themselves.
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