There are a lot of calculations and tools for pricing products, but pricing services can be much more complicated.
A while ago, I had a conversation with someone about pricing. They said, if your income goal is this, why not just triple your pricing? What’s better – 10 clients at $10 each or 1 client at $100?
Nice plan. Who wouldn’t want to triple their price just for fun?
Sounds great…but to me, it didn’t feel right.
I was at the beginning stages of my business. I knew I didn’t deliver quite the finesse and quality of service that I wanted to give my clients. I was just fresh in business! How can I sell something that’s not the quality it should be? There’s no problem. There’s no judging. I’m just learning.
Think of it like a product. A notepad with only 50 pages is going to be cheaper than a notepad with 150 pages.
Tripling my prices just because did not fit my personality at all, so I didn’t do it.
I often have the conversation about pricing your services. In web design, you can buy a website for $50 or $50,000. It all comes down to the market rate, your knowledge, and your years in business.
Let’s go deeper into that.
- Market Rate
I do recommend paying some attention to what the going rate is for your service. Say you’re a web designer, the market rate is $50-$125/hr. You want to try to be in the range of the market rate to be competitive, but the exact numbers are just a guideline. The market rate is simply an idea not a requirement.
If you’re business is doing really well and you’re booked out and busy, you can raise your price above the market rate for that service. When everyone wants to work with you and you’re booked, you can charge more. If there’s demand, you can raise the price. If there’s no demand, you have to lower it. That’s how the economy works.
- Your Life
You are the product you’re pricing. You need to make as much as you need to pay your bills! If you can’t pay your bills you won’t be able to work with clients at all. You have to pay rent, utilities, food, and advertising among other things. Just like you had to budget when you were employed, you need to do the same in your business.
Your cost of living needs to go into your pricing. This is like the production costs that goes into a product’s pricing.
People don’t think about their own need for money when they plan out their pricing! When the month comes to an end and you didn’t have as many clients as you needed, believe me, you will take a client at half price just to make your next car payment. It will happen and it’s OK. We have all at some point sold ourselves for less than market value. It’s because we are just getting out there.
When you’re working on exposure, it’s a good idea not to get wrapped up in the number you put on your services. Discounting our price is a way of saving money and making what you need to make at the end of the day.
How do you price yourself? Comment below and let me know.