As I prepared to revamp my services page to better showcase the types of work I do (and the prices I charge), I was interested in exploring a variety of pricing methods to find the one(s) that work best for me.
Granted, I’ve written several times about freelance pricing over the years, including:
Also, my friend (and client) Scott Paley has a great piece on his Abstract Edge agency blog about a hybrid pricing model that’s worth a read. (NOTE: He’s my client, but he’s not paying me to mention that post; I just think he has a really smart idea.)
So, to make sure I’m not overlooking a pricing possibility, I started asking around to see how everyone else prices their services. Here’s what they said.
Freelance Pricing Method #1: Flat Hourly Rate
expenses + desired annual salary / number of hours per month I want to work
That seems simple, right?
It also seems ideal for a fixed price approach, which makes everything from pitching to accounting easier for everyone involved. Hourly rate x hours worked = fee. Problem solved. (Usually.)
For most freelancers, a no-haggle model would make life easy for everyone. Instead of having to scale your pricing to match the needs (and the budgets) of your prospects, you offer your services at a standard rate. And since not all freelancers love the business side of business, having standard prices saves you from haggling yourself into a loss.
Freelance Pricing Method #2: “It Depends”
Race cars don’t come equipped with spacious backseats, state of the art stereo systems and extra cupholders. They’re built from the bare basics: only what they need to win, and nothing else that might get in the way. All dead weight is removed.
You don’t think your sticker price includes dead weight, but that’s because you’ve constructed it around the concept of one-size-fits-all. And as long as one size actually does fit most of your potential clients, that’s a wise strategy.
But sometimes a client doesn’t need everything that’s included in the sticker price.
Maybe they can’t afford your total price tag.
Maybe they need something slightly different than what you’ve listed.
Maybe they don’t know what they need, and they’re afraid to ask.
And they may walk away.
Now, it’s possible you might not miss this extra work. But for most of us, we have more leads than we have conversions. We have more possible clients than we have actual clients. And, therefore, we have a reason to consider scaled pricing.
But what do you base that scale on? From here, I see three possibilities:
A. Live and die by your hourly rate. If your hourly rate is X dollars and you project a flat rate of Y hours for a standard project, you know what a package or project should cost. If a client can’t pay you XY (your ideal total), and you don’t want to budge from X (because you’d feel like you were devaluing your services), then ask yourself: what could you get done for them in less time?
If you could still provide even halfway useful results in half the time, or — if speed is not a factor — in twice the time (thereby allowing you to stretch the project out and focus the remainder of your time on flat rate work), you may want to consider portioned pricing against your hourly rate.
B. Ask your client to articulate their needs first. Granted, they may not really know what they want, or what’s actually possible. But if your potential client can outline their goals to the extent that you can rephrase them within the framework of a custom package that meets their needs, you can also charge a custom price for that solution.
BONUS: You may discover that this “one-time” custom solution actually works even better than your standard approach, and you may adopt this one-off as your new standard. It never hurts to experiment.
C. Copy the Groupon approach. If a potential client isn’t sure that you’re the right choice, why not let them take you for a test drive? For a price, of course.
If your services are retainer-based, offering a first month discount or other kinds of “sample pricing” are a great way to potentially profit from clients who might overlook you otherwise. The downside, obviously, is that you’re getting paid less than normal while conceivably working twice as hard (to not only land the business but then retain it), so this solution doesn’t make sense in every case. But if your offerings are easily templated, and your new client acquisition costs are relatively low, earning a little off a lot of customers — some of whom stick around for the long term — isn’t a bad alternative.
So… what do you think? Is there a pricing approach I’ve overlooked?
A Final Note: How to Announce Your Rates with a Straight Face
When freelance coder and multimedia jack-of-all-trades Josh Sager was asked a question about pricing by one of his students, his response (which he emailed to me) included the following:
At this point [after you've determined your rate], take a deep breath and don’t freak out because “that’s a lot of money.” I’ve too many times take 20 – 30% off what my initial quote was going to be just because I was afraid I would “lose” the job due to my estimate.
But this project will be taking me away from everything else I do, so what is that worth to me to sacrifice those other things?
For me, skimming the quote just to “get the job” has NEVER worked out as a good plan. Those clients have continued to undervalue what I do throughout the entire process, take advantage of my “hometown discount,” and have unrealistic expectations.
Josh is right: if you’re inclined to bid low just so you can get work, you’ll lose money and sanity in the end.
Whatever your pricing process is, make sure your numbers add up to a win.
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