Pricing is time and time again one of the most difficult things to nail down as a business owner. You price too low and you aren’t able to make ends meet, but you price too high and you run the risk of scaring potential clients away. You’re faced with other tough questions as well, like will you charge per hour or per project? Will you require a down payment? Will you offer payment plans? Will you post your prices on your website or will you require visitors to inquire in order to receive a pricing guide?
Unlike many of my posts, this article isn’t a how-to; each business is different and should approach pricing carefully based on its goals, experience and clientele. Instead, I’m sharing my simple, straight-forward approach to pricing that’s allowed me to increase my prices, attract my ideal clients, and feel confident and content with what I’m charging. Although we might differ on a couple things, I hope these insights will help you be a little less intimidated by pricing your services.
How I Set My Prices
Question 1: What am I offering?
I currently offer one design package, so nailing down my prices isn’t as complex for me as it is for other designers who offer multiple packages, a range of design services, and/or a la carte items. Within my design package, I work with one client a time in a 2-week time frame to provide them with a streamlined brand, website, and 4 collateral items.
Question 2: Will I charge per hour or per project?
Both. I started my pricing calculations by generously estimating how many hours my design package would take me from start to finish (I say “generously” because the perfectionist in me has a tendency to underestimate how many hours a project will require, and I used to end up making less than minimum wage on my projects as a result). I write out each step, from the initial client consultation to the file preparation on the last day, and estimate how many hours each step will require. Then I multiply the total number of hours by what I want to be paid per hour.
This method has several benefits. First, it gives my client an expectation right from the start instead of leaving the final amount open-ended. This fosters trust with my clients and helps them know what to plan for. Second, it puts less pressure on me than it would if I were billing my clients per hour. If each step of the project takes a little longer than I anticipated, it’s on me. If I get each step of the project done on time, great. And if I get each step done ahead of schedule, even better!
So when I first priced my 2-week brand design package last fall, I estimated that the entire project would take me 30 hours (3 hours a day x 5 days a week x 2 weeks). I multiplied that by my hourly rate of $50 and listed the package at $1,500.
How did I arrive at my hourly rate? This is one of those hard questions that is going to look a little bit different for everyone. I factored in the demand for my services, my education, and my experience, but I also knew what I needed to be making per hour in order to work from home and help support our family.
One of the greatest things I’ve learned in this whole pricing experience is that you can’t sacrifice for your clients to the detriment of your business. There were too many times where I wanted to play the nice guy and offered a steal of a deal on my services for my clients. While I thought that I had my clients’ best interest in mind, it took away time that I could’ve been making money or spending time with friends and family, all because I didn’t want to say no or offend someone with my prices. Not only is this a bad business practice - especially if you continue to make it a habit - but it devalues your work. In order for other people to take you, your work, and your business seriously, you have to take yourself seriously. While it’s good to consider your clients in pricing, especially when you’re pricing yourself to attract a certain type of client, it’s even more important to consider what you need to charge in order to keep your business running and receive an income. It’s a business - it’s okay to make money!
How I Raised My Prices
If there was one thing I took away from my economics classes at Tech, it was the direct relationship between cost and demand. In order to raise prices for my design services, I knew that I needed to focus on increasing the demand for them. And in order to increase demand, I needed a loyal, engaged audience.
The best way I found to do that? This blog. By sharing posts that benefited my ideal clients and kept them returning, my audience quickly grew. And as my audience grew, so did my number of design inquiries. And that’s where my (surprisingly beneficial) issue with supply came in. Because I only had a select number of 2-week time slots for 2015, my supply was limited. An increase in demand and limited supply allowed me to raise my prices significantly not once but twice in January alone. I went from charging $1,500 per project at the beginning of the month to charging $3,500 at the end of the month, and while inquiries have slowed some, I’m almost booked through November at this price point.
I’ve talked to several people who are afraid to raise their prices for fear that no one will book their services. But if you consider clever ways to increase demand for your services, raising your prices will be an easy transition. I’ve also learned the hard way that when you price yourself too low, you run the risk of people not taking you seriously. Like I said before, in order for potential clients to take you seriously, you have to take yourself seriously. And often times that starts with pricing.
Why I Post My Prices
The issue of whether or not to post my prices on the Elle & Company website is one that I went back and forth on for a long time. But once more inquiries started coming my way, I made the decision to post my prices and I haven’t looked back!
Posting my prices on my website has solved many issues in my business. First, it cut down on the amount of time I was spending responding to inquiries that never panned out. When my prices weren’t posted on my site, I received several inquiries a week from people looking for something below my price point. It not only took me a lot of my time to respond to those inquiries, but it wasted the time of the people who inquired, too. Second, I now know that everyone who inquires about my services is serious about working with me. They not only know about my design process, package, and availability (all of which is available on my branding page), but they know how much the project will cost them. If they still inquire, they’re probably on board with all of the above. It saves me time, it saves them time, and it usually results in a booking.
The pricing game is involved and looks a little different for each business, but I hope this post was helpful for you in some way, especially if you’re first starting out. Do you have any other questions about pricing that I may not have covered in this post? Feel free to ask them in the comments below - it’s always helpful to get feedback from others, and I love brainstorming with other creative entrepreneurs about these things (Jake does too).
How do you price your services? What are your biggest pricing fears and dilemmas?