by Dawn Mentzer – Solopreneur and Marketing & PR Freelance Writer, Editor, Proofreader
“Will they think it’s too much?”
“Am I charging enough?”
Finding balance between the opposite ends of the spectrum isn’t easy – and it’s something that requires thought, research and usually a degree from the “school of hard knocks” via pricing mistakes that you make along the way.
To price your freelance services effectively, there are several things to consider:
- How much time will you spend on non-billable work? A good bit of your time will be spent doing business-related tasks that you won’t be invoicing a client for. Your time on your business Facebook Page, tweeting, prospecting on LinkedIn, writing proposals, preparing invoices…all are necessary for building and managing your business. And all of them take away from the amount of time you have to spend on billable projects.
- How many billable client hours do you expect to invoice? When you start out as a solopreneur, it’s not likely that all your available hours will be filled with client projects. Before you set your prices, realistically estimate how many billable hours you’ll be invoicing.
- What are your business expenses? Even solopreneurs offering professional services are faced with direct costs for starting and running their businesses. Software, office supplies, fuel, the coffee tab from a client meeting, taxes…your pricing needs to take those expenses and more into account.
- How much income do I need to make? In your specific situation, how much net income will you need to make each week, month and annually? Your pricing needs to allow you to generate enough revenue to support your professional and personal living needs.
- What’s acceptable for your industry and geographic location? If you live in Schoeneck, PA, your local clients won’t have the same rate tolerance as those in New York City. Likewise, if you’re providing a commodity service vs. one that’s specialized, you won’t be at liberty to charge a premium. And of course, you’ll need to take a look at what your competition is charging for very similar services. In a nutshell, you’ll need to consider the price points that your market will bear.
There are also resources out there that provide tools and templates online – and offline – that can help you with pricing your services. Here are few:
Freelance Service Rate Calculator – Although this was developed with writers in mind, it works just as well for other types of freelance professionals. It’s a nice tool for determining your billable rate per hour based on the revenue you’d like to make. It also factors in the amount of billable hours you expect to work and the vacation time you intend to take. Even if you quote by project vs. hourly rate (as “The Wealthy Freelancer” advises), the rate per hour that the tool computes can be used to calculate what you should be charging per project to meet your income goals.
SCORE – The non-profit organization maintains a library of business financial templates that can help you figure out how to price your services. Plus, SCORE chapters nationally provide free face-to-face and online mentoring, so you can run your numbers past a trusted and experienced advisor.
Accountants and Business Consultants can provide you with templates to do Break Even Analyses and other forecasting exercises that can help guide you to the right price points for your services.
Your local library might also have some business resources available to help entrepreneurs with setting prices. The local library near me, the Duke Street Business Center in Lancaster, PA, gives entrepreneurs free access to special business intelligence databases that contain valuable information about competitors as well as industry pricing and practices. If you’re fortunate to have a library that offers services specific to businesses, schedule an appointment with the business reference librarian there to really dig into the available data.
Pricing freelance services can be especially challenging for solopreneurs who have always worked in an environment with a steady paycheck. It’s tempting to base your billing rate on the hourly rate you were paid by your employer because you think it will sound more reasonable to clients. Remember, it’s not “apples to apples”. As a freelancer, you’re running a business – one with costs in non-billable time and operating expenses that you’ll need to factor into the equation.
More Relevant Reading:
Consider joining the Dialing 8 Project! A forum for learning, sharing & making the most out of your social media efforts for your small business.
Image: jscreationzs / FreeDigitalPhotos.net
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