It’s been almost 10 months since I’ve dropped out of school to work for myself full-time. I really still can’t believe how much I’ve grown and learned since then! Everyday I’m finding new ways to better my personal brand and myself as a career woman.
When I first began designing for pay at 18, it was a fun and new experience. I was still living with my parents and I didn’t have any bills. Designing for $50 here and there was great. Fast-forward 6 years (time flies!), and I have rent, a gym membership, (my daddy still pays my phone bill :] ), car insurance and NOW a car note.
I’m very fortunate that I’m able to work for myself and be able to afford to go out and put a down payment on a newer, reliable car based on my income.
There’s no way I would’ve been able to do that plus afford any of my bills if I was still pricing my services like I was 6 years ago. I’ve changed my pricing about 5 times (on average 1x a year). Why? Every year I have more responsibilities (including business expenses), plus the value of my services has increased.
Properly pricing products is key for small-business owners, but coming up with the right pricing structure can be tricky. Charging too much can turn customers away, while pricing too low can create a demand that your business can’t possibly meet.
I increased my pricing when I found that the money was already spent before the work was even complete. For example, about 3-4 years ago I charged $400 for a website that took me nearly a MONTH to complete. Girl, what?! A month’s worth of work for $400? Yeah, no.
So, how do I price my services? I use an hourly and value based method. View my income report here.
Here are two examples of pricing.
Hourly.
Ask yourself how much money you wanted to make. Let’s say you want to earn $4,000/month. That’s about $40k a year after taxes. If you have been at a career job for 5 years, I think that’s well over a fair compensation. There’s no reason you shouldn’t be making that money for yourself! Okay, $4,000/month. That’s about $1,000/week, $200/day, $25/hour for an 8-hour workday. Charge clients AT LEAST $25/hour.
Value based.
Because I’m a WAY better designer than I used to be, I work quicker and more efficiently. So while I could put together a website in about 48 hours (which is approximately two weeks since I like to sleep, eat and drink margaritas on the weekends), it doesn’t mean it will come out to be $1200 (assuming I charge the hourly rate from our previous example). For example, if I develop an e-commerce site that will bring in a potential client a minimum of $300/month, I am delivering a monetary value of $3,600 annually. At that point I could charge them more than $1,800 rather than $1200 (48 hours x $25/hour rate) for their website.
The way I’m able to make this work is by working with clients who value what I offer. This means they are willing to pay what I charge. I do this by narrowing down my target audience. I don’t go after EVERYONE to visit my website, follow my twitter or like my Facebook page. I seek out people who are passionate business owners who are backed by funding. I weed out the people who aren’t meant for me and my brand.
For each client, I have a structured process. We talk through their needs, see if their idea is within the right budget and then schedule out their project. Here’s an example of a basic proposal for a recent client.
Once we agree on the proposal and sign contracts, I know when I’m getting paid. So let’s say I get a client like this 3x a month (sometimes easier said then done) – I am reaching my goal AND I know when to expect money to come in. See my updated pricing and proposal process here.
Applying this thought process contributed to me making the biggest purchase of my life (so far).
Previous to that my biggest purchase was my iMac (which I’m still technically debating which purchase was bigger because the iMac cost me more money than the down payment to my car)! Lol.
Let’s chat! What’s your monetary goal? Are you struggling to come up with pricing? I’d love to hear from you!
Interested in a coaching call with me to help you get clear on your niche as a service provider?
I think this is an awsome way of looking out for the betterment of your business. I believe that so often and too often small business owners sell themselves short (I previously did hair). I’m currently working full time but these are great tips if I ever reconsidered. Thank you for sharing this!
Thanks for your comment, Arielle! I hope my posts help you along the way should you reconsider! I think you should. 🙂
I really appreciate you posting this! Working full-time and trying to build freelance Graphic Designing business myself, I find it hard to price my services…I feel that i am selling myself short but i also have noticed that I do need find my target market. But i do love this post! Thank you!
Thanks for your comment Sharissa! I’m so glad this helped! 🙂
Yes! Pricing is hard and since people hire me based on word of mouth (e.g. I don’t have a company), they are also coming to me with a previous pricing in mind so I’ve been sticking to a range of $20 to $40 depending on the project. If it’s a project that I have to maintain for a longer period of time (i.e. developing a social media campaign and keeping it up) I have to change the pricing from setup & implementation to continuation phases. It’s hard to know what to charge so when I give a rate, I’m basing it on how hard I *know* I will be working on the project and gladly also use some of the steps you mentioned, like paying attention to what my annual and basic costs of living would be. But when a client doesn’t like my requested pricing and the project gets cancelled I’m SO bummed. Probably because I’m not working right now -_-! Do you think in those cases it’s just better to let the client go because they wouldn’t have valued my time anyway?
Narsha –
This is such a common dilemma as a growing creative and a really good question. It’s really a bummer when you have to turn down a client, but it’s absolutely necessary for growth. If you get into the habit of doing new projects for old prices, you’ll never grow. BUT this doesn’t mean that you shouldn’t be open to negotiation. You could add in something extra without lowering your price, or offer something a little less (ex. no complimentary business card with the logo design) for the price they’re asking for. Does this make sense? That way you both find a balance where both parties are happy that time or money wasn’t wasted. I would suggest building your portfolio into a PDF if you don’t have a website. This will show clients your value and growth so they don’t seem so shocked and appalled when you let them know that your prices have increased since the last they’ve hired you.
Thank you for this post! My sister Jenifer Daniels referred me to your blog and let me just say you are a life saver! I’m a social entrepreneur that recently started the G Marie Project, LLC, an arts and entertainment consulting agency. My mission is to act as a vessel and resource for businesses and inner city youth in the Southeast MI area, either aspiring to or are in the arts and entertainment field. I also offer private lessons starting at $30 for an hour and a half (not including what it cost to rent the space out for an hour).I have some dedicated clients and then I have those group of people that are always looking for the free ball!!! It’s the most frustrating thing when you’re clearly qualified in the field you specialize in. Can you offer some guidance on the subject matter? Thank you in advance.
I feel stuck right now with my pricing. I’m a web and graphic designer who raised my prices about 7 months ago and now I’ve had like hardly any client inquiries. I’m wondering if I’m stuck in the middle…too high for people on the low end budget yet not high enough for those who are willing to pay more. Does that even make sense???
I feel stuck right now with my pricing. I’m a web and graphic designer who raised my prices about 7 months ago and now I’ve had like hardly any client inquiries. I’m wondering if I’m stuck in the middle…too high for people on the low end budget yet not high enough for those who are willing to pay more. Does that even make sense???