So, I wanna talk to you today about pricing. There are a lot of questions that I get as a Freelance coach, but pricing is probably one of the biggest questions that I get. People don’t know what to charge, and there’s a lot of insecurity when it comes to pricing because we’re putting a price tag on, on ourselves. We’re we’re, we’re putting a value onto ourselves.
And so, you know, that can be scary and you just don’t know where to start. If you’re a young freelancer and you’re just getting started, then that can be intimidating. Or, you know, maybe you’ve been, you’ve been playing around and you’ve tried some and you haven’t one that works, or you’re afraid that maybe haven’t got the right strategy.
I get it. As a young freelancer, I remember, you know, pricing my services and I’m gonna tell you some real practical advice. It’s gonna come from my experience, but also from some things that I’ve picked up along the way from other people that have really helped me understand what pricing is all about and how we can get comfortable with our pricing and earn a good living. I think at the end of the day, we’re all interested in being successful. I know that I would not be freelancing right now if I was not able to provide for my family if we were not able to have things like insurance and be able to take vacations. You know, when I left my corporate nine to five, you know, I had the security of a paycheck, I had the security of benefits, and going into Freelance, not quite so much. And that’s some things that we all have to figure out, and it took me a while to get where I’m at today, and I’m a him here to offer you some advice to maybe help shorten that rotor a little bit for you.
Okay? So what I’m gonna do today is I’m gonna share with you three things that I think are key to knowing how to not only know the perfect price for your services, but actually know how and when to increase your prices. I, I think it’s also important for us to talk a little bit about what is really what we’re selling and what are people really paying for when they hire us.
What, let’s dive into this. So what I wanna do first is I want to share with you just a very simple way of coming to your perfect price. And this is something everybody can do, doesn’t require, you know, an advanced degree or anything like that. It’s some simple math. So here’s what I want you to do, okay? I want you to get a spreadsheet out, or a piece of paper or whatever it is that will let you, you know, write some, some numbers down. Take some things down. And what you’re going do is you’re going list, and on this list are going to outline every you have. Now you’re going to think about things like, you know, your rent or mortgage, insurance, food, entertainment, utilities, water, electricity, gas, internet, whatever that might entail, car payments, car insurance, health insurance, whatever is that’s coming out of your paycheck or an invoice or a a, a bill that you’re paying every month. You need to be crystal clear on what that, what that is, because that the bottom line of that is what your expenses are.
However, if you are, you’re not currently employed, or if you’re free freelancing full-time, then you need to at the end of that tack on whatever paycheck you want to pay yourself. And so to figure that out, what you need to do is you need to figure out, you know, what you want your income to be. So you know your list of expenses, you know what you have to cover in terms of cost. Then you need to go over and determine, you know, how much of money am I gonna have to make to cover those expenses? And then do I want anything on top of that? Do I wanna make any additional that I can put the savings that I can invest for retirement? Anything like that.
So you need to get clear on that as well. And I want you to do this for one month. Figure out what your expenses are for one month. Then what I, what I want you to do is I want you to, I want you to add 30% because 30% is going to be what you’re going to pay to the government when they ask you to pay your taxes.
Okay? So we wanna make sure that that’s covered too. We wanna make sure that that’s part of our plan. All right? So we’ve got our list of expenses, plus 30% plus whatever on top that you want to make as your profit, your income that you can then reinvest, you can save. So that number, when you’ve added all those things together, that number is, is what you are going to have expense wise for the month. So then what you need to do is you need to divide that number by the number of hours that you want to work per month. You want to work 20 hours a week, then you divide that number by 80. So 20 hours per week times four weeks in a month, right? Is 80. So you’re gonna divide that to find out what your hourly rate’s going to be. Now, if your freelancing, and I can, I can tell you that I was, I was like this way, there were times when I worked way more than 40 hours a week and that wasn’t my desire. My desire is always to, to work less.
But as I was getting started, as I was learning, as I was growing, as I was gaining new clients and I was doing work, I would go over that 40 hours. But you have to understand that not all those hours are billable. There’s a lot of time that we’re gonna spend doing work for ourselves, our own promotion, our own education, you know, setting up our own internal business. That’s, those are tasks that we don’t get paid for. So what I’m talking about now, when you divide that number by the number of hours that you’re gonna work, those are the number of billable hours. So if you want to work 20 hours a week, that would be billable time, okay?
That’s time, that’s billable to the client. Maybe it’s 25, maybe it’s 30. But I do wanna caution you don’t book all your time because you wanna leave some time in your weekly schedule to take care of administrative tasks to actually take care of your business. If, if you don’t leave any time in your business to actually grow your business, you’re not going to have a business for very long.
And trust me, you don’t wanna be figuring out your budget and paying your bills at midnight or on the weekends or time when you’d like to be with your family. That’s just not, that’s not a good place to be. There you go. Make a list of all of your expenses, your monthly expenses, add 30%, which is gonna go to the government tax time, okay? And then add another 10, 20, 30%, whatever you want to make in terms of a profit money that you can invest, that you can put in money for savings for rainy day that you can start to invest in for your retirement vacations, you know, all that sort of thing. Alright? That gets you to a number. When you find out what that hourly rate is, that’s your number. Now, if that number is too high, then you need to go back to your list of expenses and start trimming things. All right? Start taking things out of your budget that you don’t necessarily need. And I can tell you that as a freelancer just getting started, I did that, I had to whittle down the, my monthly expenses and things that I really didn’t have to have so that my, my requirements in terms of how much I had to sell would be less. Okay? That make sense? Okay. That’s the first, first thing you do. That’s how you get to really your perfect number. Now, you know, based on kind of your, your situation, cost of living and things like that, it might be go up or down, but generally that’s gonna give you a ballpark place to start. Okay? So then what happens? So then you start selling your services and you start, you start with that rate, okay? And, and that’s a, a fair rate because that is covering you and your expenses.
Now, let me say this, that is simply a starting point, okay? It’s a place that pays you and allows you to meet your monthly obligations and allows you to get started. Okay? But listen to me when I say this, that where your real value is and what your ultimate price can be as a freelancer, ultimately isn’t in what you can do.
It’s not really tied into your services, per se. What you are worth as a freelancer is directly tied to the problems that you solve. Okay? When I just recently had a, a new roof put on my house, we’d had some damage to it. And so I went out and I, I looked for a rep, reputable roofer. And when I was talking to this roofer,
I didn’t ask him how well he could pound a nail. I didn’t ask him what his ladder climbing skills were. I simply asked him, are you able to put a new roof on my house because my house needs a new roof and what’s it gonna cost me? Okay? So when I got this bid, he shows me, you know, what it’s gonna take to get this new roof on my house. And he doesn’t, he doesn’t show me, you know, his, his hammer, his hammer skills or his ladder climbing skills, he shows me a solution to my problem. And at the end of the day, that’s what I was paying money for. I was paying money for someone to come in and solve my problem, alright? If that guy would’ve told me that, Hey, I can also work on your car. I would look at him and I go, well, which are you? Are you a a roofer or are you a mechanic? Because honestly, I I, I don’t doubt you, but I think it’s highly unlikely that you’re probably gonna do both very well.
Okay? I was able to look up this guy’s website and see that he had done lots of other riffs in the past, and I had perfect confidence because he had track record. And that is something my friend that you want, start right now. Build your track record, get some clients working for you at your minimum billable rate. Get as many of them as you can and start solving problems.
The more clients that you can get in and the more clients that you can solve problems for, okay? You are creating a track record for yourself. And that track record is what is going to get you more work. That track record is going to speak to the problems that you can solve and how well you can do them, okay? People are really not gonna care what you know, that you, that you have some killer Photoshop skills or that your, your, your skills with WordPress are crazy good, okay? If they can look at your portfolio and look at what other clients have said about what you’re doing, trust me, that is gonna be worth more to them and gonna be gonna be better for you in terms of getting paid, because your client is going to see that if I hire this person, they are gonna help me get results. I e solve my problem. Okay? So I want you to reframe as you’re getting started, as a freelancer and your pricing, your services, start with your minimum, you know, price and start serving clients. Start serving problems because here is number three.
This is how you are able to never guess about raising your rates. As you start to fill up your, your Freelance pipeline, as you start to serve clients and you start to solve problems and you start to get results for these clients, then you’re consistently going to be building business. Hopefully some of those clients that you had early on are gonna come back and buy from you again, which is gonna be this cyclical, this type of recurring revenue that’s going to kinda snowball in your business. And it starts out slow. But over time, as you build confidence, as you are able to solve more problems faster, your productivity is going to go up, you’re going find more clients along the way, they’re going to pay you, you’re gonna solve their problems, they’re gonna have confidence, and you’re going to have this combination of finding new customers and solving their problems and taking care of existing clients and helping them solve more problems. And see, the wonderful thing about, about this is that you start to, you start to compound your growth potential, okay? Now, when that happens and you start to fill up your calendar, as your, as your schedule starts to fill out out past week one into week two, possibly into week three, you are at a a point where you should start to raise your rates. Okay? So what I recommend is, as you start to fill your development calendar, that means there’s demand for your services. That means that there is, people are paying you what you’re asking for, the services that you’re providing and the problems that you’re solving. Okay? So at that point, there is an opportunity for you as you bring on new clients, as you add them to your calendar, to slowly, incrementally raise your rates. Don’t go from zero to 50, go from zero to five, five to 10, 10 to 20, and in smaller increments, because when people buy from you and you tell them that you’re busy and you’ll need to schedule that workout, subconsciously, what that tells the buyer is that, okay, this person’s busy, they’re working for other people, which means they must be good and worth the weight. So subliminally, you’re telling your potential clients that, yes, I am worth it and I’m willing to do the work for you, but you need to go at, you know, get in line, okay? I’m serving other people first. And that’s a terrific place to be in my friends, because cuz that creates an incredible value proposition for you, okay? That puts you in a great position to be able to control how you chart. So case in point, over the last 12 months,
I have raised my rates four times, okay? As my schedule continues to fill, I’m finding new clients. As I’m bringing these new clients on, I’m increasing my rate with them. And guess what? People wanna work with me because they know what I can do and they know the problems I can solve. And to date, money has not been a big issue.
People will pay to have their problem solved. I needed a new roof on my house, it costs several thousand dollars. They were done in half a day. It didn’t take very long. But guess what? I paid that check and I didn’t think twice because I needed to have a good riff on my head or over my head, and I wanted to make sure that it was done right.
So what you can do is great, but the problems that you can solve for your customers is where the real value in your price lies. So let’s just recap. If you don’t know what your perfect price is, figure out your expenses. Add for the 30% for taxes, add for your profitability, for savings, retirement, vacations, whatnot. That’s your total divide that by the number of hours that you wanna work per month to get your hourly rate for that month.
That’s where you start. Then you start serving clients, start solving problems. Then eventually you’re gonna build a track record and you are going to create this desire for people to work with you and your value is going to go up because you are staying busy. All right, my friends, I wanna wish you the very best. I want you to go out There, there and be who you were created to Be.
