If you’re new to freelancing, it can be a little overwhelming and confusing. There’s so much to think about and so much to set up. You need to ensure you’re doing the right things and not wasting your time and money on the wrong things. You also need to ensure you’re starting as you mean to go on, especially when it comes to business and pricing.
Recently I was chatting with Emma Cossey over on my podcast. She’s the go-to resource for everything when you’re new to freelancing. Emma’s passionate about taking away the fear around being a freelancer and ensuring you have everything you need to build a business that suits you and your personality.
Two essentials often get overlooked by new freelancers - terms and conditions and business boundaries. Terms and conditions don’t need to be full of legal language. They can be a list of boundaries and expectations between you and a client, simply...
There are loads of pricing myths out there in the online world. From pricing low when starting out right through to only being able to price per hour, these myths only serve to keep you stuck at a money ceiling of your own making.
So let’s bust 5 of the most popular pricing myths coaches and consultants, in particular, come up against.
Prices change all the time, and it’s never a just once done kind of thing. After my recent podcast chat with Osmaan Sharif, I started putting my prices up after every 5 clients. When it comes down to it, pricing really is just trial and error.
The only way you know if something is the right price is a) if it earns enough for you, and b) whether somebody’s prepared to pay for it! If it’s perceived to be too expensive or not provide enough value, people won’t buy it.
You must think about where your products and services fit in your process and how you...
Selling to Corporates is something many shy away from. There’s a worry it’s complex or challenging to sell to Corporates - and in many ways, that’s true. But it’s also a significant way for you to grow and scale your business. Corporates tend to be more expensive, and you can charge more.
I’ve recently been talking with Jessica Lorimer over on my podcast. Jessica specialises in helping entrepreneurs sell into Corporates and can help you see how adding selling to Corporates can become a revenue stream for your business.
A Corporate is an organisation that has multiple permanent employees on its books. They work to provide their end-users and customers with a specific service, product or experience. They aren’t defined by how much they earn. A solo entrepreneur can sometimes earn more than a Corporate! It’s the staff component that makes the difference between a solo entrepreneur and a Corporate.
Moving from hourly billing to fixed pricing is a big step towards pricing more effectively in your business. There’s a real fear that if you move from hourly billing to fixed pricing, you’re not going to charge enough. But when you’re billing per hour, you’re only billing for the hours you work - and that doesn’t cover everything!
One of the big problems with hourly pricing is you’re not billing for everything. There’s the time you’re thinking about the task, the initial client set-up call and emails, the background research work you may do.
And there’s another big issue. If you’re used to doing the work, you’ll naturally get quicker at it. If you then charge per hour, your billable hours may end up going down for each client you work with! Check out the podcast I recently did with Jonathan Stark for more details on how value-based pricing can help you bring...
Correctly knowing how to price services and packages is something many business owners struggle with. Often, pricing by the hour is the default option for service-based industries and new businesses. But if you want to have financial freedom, this needs to change - and fast!
There are so many reasons why pricing by the hour isn’t a good option for you. Primarily, you’re tying yourself into the time for money trap. You’re limiting your earning potential by the number of hours and days you can work.
But also, pricing by the hour punishes efficiency. As you get better at something, you get faster. The faster you get, the quicker you can deliver things - and if you’re charging by the hour, the less you’ll earn. Someone else can produce a lower standard of work over a longer period of time and get paid more!
You’re the CEO of...
So many business owners love making sales but hate the selling side of things. With email marketing, you can use psychology to generate sales without actually having to sell to people.
Email marketing gives you the ability to generate sales and inquiries that can turn into clients. I’ve been speaking to Rob and Kennedy, who run Email Marketing Heroes, about how pricing and email marketing can combine well together.
When it comes to pricing, we often think in terms of being competitive. We want to be competitively priced. It’s easy to start thinking about undercutting others or charging less because you’re new. You’re desperate to get out there and get some experience.
Another option is to charge the same as others in your industry. This keeps it ‘nice and fair’. Or you could go with a higher price if you want to look more exclusive and expensive.
But if you want to stand out, it starts with your...
Pricing and niching go together hand-in-hand. Having a niche improves your opportunities with pricing. But it also means you’re talking to the right people all of the time. Amy Caiger specialises in helping businesses get clear on their niche and how they can communicate that in their messaging, their marketing and their services.
Niching is essential as it enables you to have clarity around what you do. This helps you know how to communicate it in all you do, the world, and your ideal clients. Because it’s not enough to know your niche, you also need to communicate it clearly.
People often panic at the idea of niching. Often though, this is down to how it’s portrayed. A lot of people think they need to choose a specific demographic of person. They then panic when they don’t have that and resort to making things up.
And of course, when you start to make things up, and it's something that's not happening in your...
Hourly billing isn’t a good pricing option and it’s something that Jonathan Stark, former software developer and author of ‘Billing is Nuts’, is on a mission to rid the world off. The problem with hourly billing is you’re always putting an artificial ceiling on your income. You’re limiting yourself, based on the hours and days you can work, along with the traditional standard hourly rates associated with your industry. It’s why value-based pricing is so much more effective for you and your clients.
It often allows you to get started, long before you really know what your client wants. But it’s also not designed to build trust either. If a task takes longer than your client thinks it should, they question your efficiency and wonder if you’re padding out the hours.
The hourly billing model also penalises you for being good at what you do. The slower you work, the more...
Should you benchmark your services?
Benchmarking is an important part of setting your prices. Looking at your competitors can give you a good guide as to what people are paying for the sort of service you offer. It can help you see if your prices are in the right ball park and see what you are likely to make.
But it's not the whole picture. Some industries are very cagey about pricing (why I don't know, as if you wanted to be a client, it would be obvious) so it can be hard to benchmark.
If there is intense price pressure in your industry, it can be hard to have higher prices, but it is still possible. But also make sure you are not too cheap, as the perception is that you are not very good or that you are new at it.
Personal brand and pricing
A key part of pricing is thinking about yourself as a personal brand. I found this really hard at the start of my business, as I'd worked for corporates for over 20 years. There it's never about you, but always about the...
In some ways, pricing a product is no different from pricing a service. You take your cost of sales, and then work out your business costs and how much of your time it takes to produce an item and there you have it!
But it's not usually that simple. You have to buy minimum amounts of materials, and you have to deal with stock, which can really affect your cash flow.
And if you are dealing with retailers, often big ones, you can take a long time to get paid.
If you are in bespoke, handmade industries, it can be hard to charge what your time is worth to you. Communicating that people need to pay more for an individual item can be tough, but getting the customer to understand the value of something is critical.
It's also easy for product businesses to be a hobby and not a profitable business. The margins are often much smaller than in service businesses and there are lots of extra costs to take into account, along with buyers and price pressures. So it's...