By: Alek Sabin
Working as a freelancer or running your own business brings a large assortment of trials and tribulations that one must overcome every day. One of the most important factors of this lifestyle is being able to maintain a steady revenue so that you can support yourself and your family. This fact must be reflected in your prices, which is why it is sad that so many freelancers tend to struggle with setting the price for their work. There is so much fear surrounding the topic, as prices that are too high will mean no work, while prices that are too low will mean overwork for poor wages. This is a process, however, that doesn’t need to be so complex. Here are some tips for how to stick to your prices…
Know the market
In order to have confidence in your prices, you need to know that they are built on a solid bedrock of education about the industry you are in. This is why it is so important to read into what other individuals and firms are charging for your services. In order to stay competitive, you need to be able to place yourself amongst your contemporaries and find where you belong in your industry. If you are offering only high-end services for affluent clients and successful businesses, then your work and prices need to be able to reflect that.
Don’t undervalue yourself
Once you know the market, you have to know your own process exceptionally well. The biggest mistake that people make as freelancers is undervaluing the work that they provide. Not only does this cause immediate problems for yourself, but it also artificially deflates prices across your industry, and your peers will hate you for it. Instead, look at the amount of time and resources that get spent on a job, and set an industry-educated price that reflects your time and experience. This process will change heavily, depending on your industry. One industry specific example of things to calculate in your price is detailed in this informative article about how property managers set rental prices.
Be specific about what your client is getting
As we’ve stated several times, the key to sticking to your prices is being confident in what they are. Another way to help with this is to be incredibly specific about what your pricing entails. It is generally a good business practice to line itemize everything in an invoice, so that your client can see how their dollars are being utilized. Include the price for your time and any materials that may be necessary, as well as other labor that may need to be brought in to finish a project. This often puts the client at ease about pricing as well, and also helps you be confident in what you are offering. Despite being specific, though, make sure to specify that unforeseen circumstances can change the price.
Don’t anchor early
When you are in negotiations for price, an anchor occurs when each party drops a specific price. While this eventually needs to happen, anchoring too early is a bad idea in most industries. There are different factors that make each job a little unique, and thus could have an effect on the final price. Before discussing a bottom line, actually talk with your client about what they are needing to be done. Make sure to get specifics about the job. Once you have thoroughly examined what needs to be done, you can give a much more educated price estimate on what it would take to complete it.
Use ranges of price
When you are selling your service as a product, you know that it can be hard to estimate a price, since the amount of time it takes you could vary, due to circumstances beyond your control. For this reason, it’s always a good idea to estimate a general price, but to give them a range that it will likely land in. Always put your estimate on the lower side of this scale. For example, if you think that a job will cost $2300, then give them a range of $2000 to $3000. That way, any factors that drive up the cost won’t be out of left field. Also, if everything goes according to plan, then the client will feel they got a better deal.