But what if we had available AND accessible resources on how to price your rates? This is exactly what Mariel Bitanga of Simply Finance inspired me to do when I interviewed her for a three-part miniseries about tackling touchy topics. After all, getting past the so-called shame of discussing finances would open doors for people to make more informed decisions.
Whether you want to pursue a new career, move to a new place, switch jobs, or set up your rate card, this guide will help you make decisions based on real information instead of simply hoping for the best.
What Makes Figuring Out Your Rate So Difficult?
Calculating your rate is an overwhelming, intimidating, and confusing process. But it's also equally rewarding, eye-opening, and worthwhile. The only way you can figure out your rate perfectly is to fully understand your target clients, the value you give to them, and the competitive market.
One thing Mariel said really stuck with me:
"When you price your services too cheap or too low, you're going to attract troublesome clients. The clients who are willing to pay more are the least troublesome ones."
Perhaps this is because clients who pay your services at a premium are certain that you will perform at a level that aligns with your price.
Setting your rate isn't a challenge that is faced solely by freelancers and service providers. In fact, I urge even employees to regularly reevaluate their rates to ensure they are not leaving money on the table.
Allow me to remind you this: you have the flexibility and freedom to decide your rate.
Enjoy this process! The first rate you write down isn't set in stone, so stop overthinking it.
Pricing Your Rate 101
Do you want to charge hourly or follow fixed-based pricing?
This is pretty self-explanatory. When you charge an hourly rate, you come up with an amount and simply multiply it by the number of hours you spent on a certain project. Meanwhile, project-based or fixed pricing is when you determine your rate solely based on the result you deliver.
Understand why your clients need your services
What is the value you bring to your clients? Definitely not your face and brand. If you are a service provider, it's your skills, experience, and ability to get the job done that makes you invaluable to any business.
Consider your expenses
Taxes, your internet connection, transportation to go to a meeting, your website domain, ads for your services - these things cost money. If you're not charging enough to pay for these expenses, then you won't be able to sustain yourself.
As a rule, expect around 30% of your income to go to business-related expenses. While the amount may be less than that in reality, it's still better to overestimate.
Research similar packages
See what the current market price standard is for your industry. To do this, check out associations and organizations in your niche. You may even start joining Facebook groups and try to see if there are helpful posts related to charging your services.
After a bit of digging, ask yourself: "How will my services be different? How will I bring MORE VALUE to my clients?"
For example, if the market rate for a graphic designer for a logo design is Php20,000, but you offer up to 10 revisions, and turnaround time is guaranteed within 24 hours, then you are in a good position to raise your price.
Do a trial
After doing your research, do a trial with a client. This could be a friend, a colleague, a family member, or even a business you found online.
The minute you do your first "real" project, you need to ask yourself a few questions:
- How did the project go?
- Did I fulfill my promises?
- Did I meet the deadline?
- Was the client satisfied?
- This is the most surefire way to evaluate your pricing.
Go with your gut
We can give you 1,000 tips on how to price your services, but in the end, it all comes down to this: follow your heart. Trust yourself and your gut feeling about each project you take.
Prepare for pushbacks
The reality is, there will be clients who will give you an extremely lowball offer, or refuse to pay your rate altogether.
Be prepared to show why your rate is worth your time, and most importantly, be ready to walk away. If a client refuses to pay you the compensation you deserve, then they don't need to have you do the project. Your time is valuable. Don't let people take advantage of that.