No matter what industry you are in, pricing for services can be pretty difficult. Unlike retail, where there is a set price of goods and a generally accepted markup for products, the biggest cost involved in most service-oriented jobs is based on your time and talents rather than a more tangible product. As a service-based small business, I struggled for a long time with how to price in a way that worked for both my clients and myself. There are plenty of online calculators for determining how much you need to charge hourly, but I haven’t always found them to be the most helpful.
So, how do you charge in a way that is fair to both you and your customers? This guide is a brief introduction on one way to frame your services and prices regardless of whether you charge by the hour or by the project.
The Scope of the Project
This one is the most obvious, but it’s important and can make flat-rate work a challenge. A more in-depth, complicated, or time-consuming project is going to be priced differently than a basic one. If a project is more complicated than your standard scope and pricing allow, it may be best to share what’s involved with your client so that they have a better comfort level and understanding of the project.
What Value Are You Adding?
A big part of determining a fair price for your services is to calculate the value that you’re adding. Considering how the completed project benefits its stakeholders is one way to look at this, but also be sure to consider your experience, specialized knowledge, and skills. Not everyone is an expert in or possesses the skills of your trade- that’s ok because that’s what you bring to the table! Your past time, off-the-clock hours, effort, and experience are all important factors to consider.
Providing a Great Service
I think it’s fair to say that regardless of the industry you’re in, there will always be someone who will do it cheaper. At least a few times a year, I stumble across an article written by creative professionals describing their industry as dead or dying due to the “race to the bottom” mentality driven by inexpensive online marketplaces. Not every customer or client wants the cheapest possible work- some do, some expect top-tier quality at a premium, and others want a balance.
Trying to compete with the lowest possible prices can be a disservice to both you and your client- as taking on too many underpriced jobs to make ends meet can impact your time and overall quality of work. When pricing your services, it’s crucial to factor in the time and effort to make your service one that fits or exceeds their expectations. Providing a high-quality service that supports your client and values your time is key in fair pricing.
Not Sure Where to Start?
If you’re really unsure of where to start for pricing, I highly recommend looking up industry averages. For example, if you’re in the creative service industry, the freelance rates tool from Bonsai is an excellent source for average rate data based on your experience, service, and location. Finding your industry average is a great baseline to be sure you are on the right track!