How to price your services: The story of a freelancer

Recently, I posted a story about Swatch in our ongoing look at pricing products and services. In this blog, I want to talk about pricing services and use the example of a freelancer I know who recently went through this exercise.

Pricing services can be hard. The pricing metric (Daily? Hourly? Project-based?) is influenced by factors like what is actually delivered and how long it takes and what is acceptable in the industry.

One freelancer was trying to figure out how much to charge and this is what he did: He determined how much he wanted to earn in a year and then worked backwards to figure out how many days each week he wanted to work and then that gave him how much he needed to earn each day. Then he divided it further to determine how much he wanted to earn each hour.

Thus, he had an hourly, daily, weekly, monthly, and annual income goal.

However, most of his clients paid by the project – an accepted standard in his industry. So before he did this exercise, his rate was based on the arbitrary number of how much he thought the project should cost. (Yeah, that’s wide open!). But today, he has a goal and knows when to turn projects down because they don’t pay enough and when to take on a project because it is within his target.

Just recently, he told me some additional revelations and ideas:

• This model helped him to see one client as perennially under-paying for the service they were receiving. He explored the idea of readjusting their rate but decided to end the ongoing agreement.
• This model also helped him to identify an opportunity to grow revenue: as he takes on new projects, he strives to drive his price upwards. That wasn’t something he could do before.

This pricing method is not rocket science and there are other factors, too. For example, many freelancers will need to think about how much time they want to set aside each week to market their services.

Well, we’ve just touched on 3 aspects of pricing in recent blogs. Next month we’ll look at some more pricing considerations.

Jessica Routier, IAC-EZ

Jessica Routier

Jessica wants to talk to you! She is who coordinates the contests, travels to all the conferences, and interfaces on a fun level with customers on a daily basis in order to bring our users together as a community.

Jessica has a B.Admin and an MBA. Her background in business, along with a diverse skill-set (including a diploma in Medical Transportation, retail experience, and experience as a paralegal) make her a valued, highly flexible team member.

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