Ok, this post was first supposed to be called «How can you stay in business when you price your services so low!», but instead I decided, when I was calmer, that a bit of education was better than an actual rant.

I both sell services and products and have been doing so for a fair time, so I’ll tackle both.

How to price your Services.

First, you need to understand that YOU ARE NOT YOUR TARGETED MARKET, so don’t be afraid of numbers. Also, you are probably your worst critique. With that in mind, you need to stay firm when it comes to your rates. And to be firm, you have to actually CALCULATE what it cost you to be in business. So if somebody wants a custom logo for 50$, you can simply say no because you’ll know that it’s simply ridiculous. How do you calculate your rates then? Simple!

(BTW, I’m not inventing this, I gotta give props to The Freelance Switch and their convenient Hourly rate calculator. Try it for a big time-saver!)

1- Calculate your business cost for a year:

• How much is your annual Office Rent?If you work from home you may wish to write the percentage of home rent that is for your office space.
• How much do you spend annually on Travel? Think about airfares, taxis, buses, gaz
• How much do you spend each year on Computers, Furniture and Equipment?
• How much do you spend each year on Software?
• How much do you spend each year on Communications – Mobile Phones, Telephone, Faxline, Internet?
• How much does your annual Insurance cost?
• How much do you need to spend on Legal Fees?
• How much do you need to spend on Accountancy Fees?
• How much will your Office Supplies cost annually?
• How much will you be spending on Advertising and Promotions? (printing cost, banners, graphic or web design, etc)
• How much will you be spending on Anything Else? For all those expenses that don’t fit under any other heading like Couriers, Business Taxes, Association Fees etc

2- Calculate your personal cost for a year:

• How much is your annual Rent / Mortgage payments?
• What is your annual budget for Daily Expenses?
• How much do you intend to save for your Retirement Account?
• How much do you spend each year on Occasional Expenses? These might include things like servicing your car, holidays and so on
• How much will you be spending on Anything Else For anything that doesn’t fit under the other headings

3- How many hours can you actually Bill? Be more in the downside here!

• How many days a week do you work on average? For Example if you worked 4 full week days and three half days you’d write 5.5
• How many days of vacation do you need annually?
• How many sick and personal days do you need annually?
• How many public and religious holidays?

Knowing all these facts will help you in the long run. This said, don’t forget to add a % for your savings/profits, because yes, you DO want to make a profit!

(image credit: from I am designer)

Stop under evaluating yourself.

Ahem, I have been working with business women and mom-preneure for some time now, and I feel very sad when I encounter an artist/maker/business gall that sells her wares for almost nothing. This is sad because by under evaluating your work for fear of «not selling», you end up in the same band wagon: not making any decent money.

When selling your services, you need to make researches about your targeted markets, who is buying your goodies, or who SHOULD be buying them. And believe me when I say that «everybody» is NOT a good targeted market. The smaller the niche, the easier it will be for you to prepare a decent marketing strategy.

Keep tract of your time.

When I started doing freelance gigs, I was charging by the project. It was the right thing ti do at that moment because I had no idea of the time it took to design a whole website, code it, install it and do the happy dance afterwards. I had lot’s of learning to do also, so I felt that my errors due to my lack of education should not have been charged to my clients.

My methods have changed since then: I am now tracking my every billing hours trough a time tracking app which allows me to know exactly what time I am spending and thus charging to my clients. When I quote a certain amount of time for a project, it’s based on facts from previous jobs, so I’m pretty confident in my assertions. So you guessed that I now charge by the hour, and I have been happy to do so for 3 years now.

Got questions? Feel free to ask!