As I’m sure you’ve already discovered by now, being a freelancer isn’t always the greatest thing. That revelation is probably not related to the core of your business, which is your product or service.
No, instead it has to do with the business of your freelance work—the bureaucracy, the legalities, and of course, your business pricing structure.
Although many freelancers may believe that ‘business structure’ is too formal of a term for freelance work, in fact it isn’t. Anyone with a business (which is simply any activity that brings in revenues) will need to have some structure.
Establishing a pricing structure is also crucial for winning over your clients, meaning it is both a financial and promotional consideration.
But what is the best way to price your freelancing services? Today we’ll look at the 5 best you should consider.
The first and most common thing that many freelancers do is to simply guesstimate. Guesstimation is normally based on a combination of actual numbers (research) and guesswork.
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For example, you can check your local job listings (which are more accurate than national or regional numbers) for average salaries in your field.
You’d have to find something pretty close to what you’re offering, or combine different skills to come up with an average value.
Beyond that, you’ll also need to include the other important factors that freelancers aren’t privy to. Mainly, we’re talking about retirement, healthcare, etc.
These will help cover you by ensuring you’re getting a fair market price for your services.
#2 Cover your costs
Many businesses use this method, especially those that sell products. By setting your prices based on your costs, you can be sure to at least cover yourself.
Optimally, you’ll be adding a markup to make sure that you are making a comfortable profit. For example, if your products cost you $10 to produce (including overheads), then you could go for a 25-50% markup to get your final price.
This is a bit more complicated to calculate for services, but it’s still possible.
For example, if you are a freelance photographer, you’ll need to factor in your own hourly rate as a minimum. Then add in your overhead and you’ll get to your basic costs. Then, you should add on a markup that you’re comfortable with.
Just remember not to go too crazy with this and add huge markups that will price you out of the market. You still need to remain competitive.
#3 Test it out
In my freelance work, there is a lot of guesstimation and just basic trial and error. There are many ways to discover if your prices are too low or too high.
For example, if you’re not getting anyone to bite on your offer, it could be that your services or offerings at the moment don’t fit with your price. It could be because of the fact that you’re brand new, or that you’re just pricing your services too high.
Alternatively, you should also adjust your prices if they’re too low.
For me, one important test is the speed at which someone agrees to my prices. If they say yes without even taking a minute to consider it, I know that my prices are too low.
I need hesitation or negotiation. That way I know I’m closer to their ceiling. With this method, I ended up charging much more than I thought my clients would initially pay.
But this only came about through trial and error.
#4 Make a package
Another way to price your products and increase your sales at the same time is to bundle complementary products.
This is often used by companies to sell products, such as video game systems bundled with the most popular video games.
When you create these bundles, you’ll have to think logically of what offers will go together. The composite should be desirable, but they should be irresistible when packaged together.
For example, if you’re a wedding photographer, you can combine the wedding pictures, a deluxe photo album and a large print for your customers to hang up.
Individually, your clients may be lukewarm to these, but if you combine them (with a small discount), then you are guaranteed to sell more.
#5 Rely on your colleagues
One of the best pricing strategies you can do for your freelance services is to just ask around. Not just any old lady on the street.
Here you’ll need someone in the same industry (and hopefully location) who has more experience than you.
This way, that person will have gone through his or her trial and error period and adjusted their prices accordingly. They will have the perspective needed not only based on what they’re doing, but also seeing your skills, location, and offerings.
You should work with your peers (even your “competitors”) as they can give you great advice, not only concerning your pricing, but also your business and career development.
With these 5 pricing methods for your freelance services, you’ll see the value and importance of appropriate prices. You’ll also see that finding the right pricing method will lead to great revenues and fantastic sales.
Good luck! Let me know which method you use in the comments.
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