How to know what to charge for your service
Posted February 8th, 17:00
5 min read
When I first started my copywriting and content marketing business, knowing what to charge for my services was one of the most difficult things to get right.
My previous experience as a freelance journalist meant that payment for jobs had usually been dependent on the commissioning editor’s budget.
However, I quickly discovered that writing on behalf of business clients was an equally rewarding way to make a living. Even better, it gave me the opportunity to take control of my own rates.
Other business owners may similarly discover new avenues of work, yet feel confused about what they can reasonably charge their clients. If you’re an entrepreneur who falls into this category, here are a few things I’ve learned while navigating the perplexing world of pricing.
Online research and competitor analysis
Like any self-respecting millennial, my first port of call for advice was Google. Loading up the search engine and typing ‘what to charge for copywriting’ presented me with approximately 439,000 results – not a bad place to start.
It’s worth browsing a variety of websites and taking note of any advice you can relate to your business. After reading and bookmarking a bunch of helpful online articles, I decided to alter my search terms and take my search a step further.
This time, I’d be checking out the prices of competitors. While it might feel a bit underhand to sneakily scroll through the websites of fellow professionals working in your industry, it makes sense to analyse the competition and find out what others charge for their services.
Competitor analysis is standard practice for large companies, so sole traders and freelancers shouldn’t feel bad about scoping out similar enterprises to theirs and comparing pricing strategies.
Of course, some of the businesses you look at may have better resources or more experience than you, in which case you shouldn’t attempt to compete at their level in terms of pricing.
Similarly, someone with many years of experience and industry-leading credentials to their name may feel comfortable charging more than other businesses in their field.
When Steve Morgan founded Morgan Online Marketing, his pricing strategy took into account the fees charged by his old workplace while also recognising his position as a one-man business.
“I knew roughly what one of my previous employers was charging, and so charged a little lower than them,” explains Steve.
“I’m a solo freelancer with lower overheads than an agency, but on the other hand I have years of experience, whereas some agency employees may be fairly new and inexperienced, so it didn’t seem right to charge too little in comparison.”
Knowing your value
A common mistake among business owners is underselling. I’m no exception – in my first few months of freelancing, I was guilty of accepting cheaper prices than certain jobs were worth.
In hindsight, I realise that these were situations where more confident entrepreneurs could have reasonably charged double the rate I agreed to.
Creative professions such as marketing, design and writing are particularly affected by this mindset. But you shouldn’t feel obliged to charge less money for the type of work you specialise in just because other people perceive what you do to be fun.
Bomper Studio, a CGI visualisation and animation studio, recognise that a creative company like theirs with high profile projects in their portfolio can command a substantial price tag.
The fees that they charge reflect not only the wealth of experience within the Bomper team, but also account for the extra resources needed to undertake multiple large-scale client projects at once.
“When we first established ourselves as a studio, we had to distinguish ourselves from freelancers, who are commonplace in the CGI industry,” explains studio and client manager Lewis Williams.
“As a studio we offer guarantees of reliability, specialist talents, quicker turnaround and the ability to deal with large quantities of work at once because we have a team of people all working together under one creative director.
“Obviously this comes with a higher cost to us as a business, and the overheads for a studio full of staff and equipment are higher than individually working from our desks at home.”
Lewis advises other businesses to take pride in their work and set reasonable rates that reflect the skill and experience behind each job.
“You don’t need to undercut everyone else in your industry,” he stresses. “Often this just attracts customers who see the low price tag and, as a result, don’t value what you have to offer.
“It’s always worth waiting for higher quality clients at a higher income, rather than trying to mop up any business you can get for whatever money you can get.”
Increasing your prices over time
As time passes, you’ll need to take into account factors such as inflation and increased operational costs, you may eventually decide to increase the price of your services.
While this can feel like a risky move, it is often necessary for business growth, and good clients will understand as long as it is approached in the right way.
Human relations director Caryl Thomas of HR Dept Cardiff West has successfully justified increased fees in the past by carefully explaining the reasons behind her decision.
“In my case, I pointed out the work we had carried out so far, along with the complexity of the projects and the outcomes they provide,” she says.
“I also pointed out the difference in price if they had paid by the hour, as opposed to on a retained contract. This shows the value that they continue to receive and makes an increase easier to justify.”
Steve suggests that a good option for sole traders is to increase prices over time as new contracts materialise.
“A freelancer’s best bet is to simply raise prices for new clients coming on board,” he says. “It’s much easier to do that than to risk upsetting legacy clients by suddenly hiking up your prices on them.”
In summary, it’s natural for entrepreneurs to worry whether or not their pricing is right. However, business owners who conduct careful research, take pride in their services and deliver great work for their clients should never feel guilty about charging a reasonable fee.
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