The pricing conversation as a creative always feels like a strange one. Where people come to you treating you as less than an expert, but also aware that they can’t accomplish something on their own. When it comes to any pricing conversation with a potential client, there are some musts to know when it comes to your pricing.
Keep reading for the full post after the jump!
Confidence + skill set + years of experience = your price point.
While many will advise you to base a price point off of your expenses, hours you long to work, and the level of business you’re working with (major brand vs. mom and pop), I believe in a different equation. Start with the skillset and years of expertise you bring to the table. What limiting beliefs do you have surrounding money? Is your skillset to the level of your competition within the market? Where is a starting line to build your business and what does unleveling look like?
If there’s a rush, there is a rush fee. NO QUESTIONS ASKED.
While this doesn’t apply to every creative field, in my world, fast turnaround times, lack of boundaries, and the need for immediate gratification. If there’s the expectation of a fast turnaround time, add a rush fee to your pricing. There should be compensation for not taking time off or working through the weekend (no questions asked.)
You charge for the transformation you bring.
More than a service, your price point is determined by the transformation you bring to your clients. How you increase their ROI, make their business better, and improve their lives, should be reflected in pricing. You offer more than a service. Your service improves someone’s life and brand for the better. You show them how their money can make more money, providing an amazing experience.
Feeling booked out, overwhelmed, or have to build a team for the demand? IT’S TIME TO RAISE YOUR PRICING.
Over the past few months, this is a process I’ve been walking through personally. I can no longer manage the daily needs of my business on my own. I’ve built it past my capacity. I started by adding systems, adding a team member, and reducing non-essential components to my business. Yet there was one striking factor. Regardless of the late nights and early mornings, I couldn’t get it all done. The answer became clear, I needed to raise my pricing. (Something I was fearful to do in my market, yet I hadn’t raised my pricing for over 5 years. Painful, I know.)
As service based provider, don’t offer discounts or do spec work.
If you truly believe in your product, don’t always discount or low ball a bid to win. By doing so, you implicitly cheapen the value both yourself and drive other creatives into the ground as well. Simply put if a potential client truly values your service and wants to work with you, they will find a way to work with you.
When you choose not to track your time, it is volunteering for someone’s business. (At worst, it’s allowing someone to steal from you.)
Let this one sink in a bit and feel the weight of it. When working as a solo team, you might not believe this is vital to your pricing structure, however, knowing how efficient you are determines the profitability of a job. (Particularly as you scale to an agency environment with more employees.) Time is your only non-renewable resource. Money comes and goes; however, time is fleeting. Whether you simply choose to time block out your day in a paper planner or to do list, or use a time tracking app a project management software like Asana, Trello, or Dubsado, incorporating this discipline, will inform the true hours (and numbers) spent on a project.
Know your numbers, projections, and hire a great accountant.
I can’t stress this point enough. Around week 3 of every month, we reevaluate. What does this mean? We plot out projections for project starts, incoming revenue, projects to wrap, what worked, and what didn’t work throughout the month. Sometimes it looks like taking a hard look at business expenses, figuring out the places for investment, and the next steps for both sustainability and scalability in our business. (We’re all about sustainable and scalable growth in our business.)
The terms you need to know.
Value based pricing
As mentioned above, this is a pricing model based on the value you bring. This particularly works for larger companies, major brands, and mid to large size companies that already understand the value your company can bring. Within these proposals, include a fuller pitch within the bid truly selling the value propositions you can bring to their experience.
Package based pricing
Often used in creative fields such as photography, a package based model offers a service and what it includes for a flat rate. Within this pricing model, having clear and set boundaries to keep projects moving is vital. When offering packages, I encourage listing an hourly time tethered to the package. It will protect both yourself and offer the client a clear understanding of the time allocated to the project.
Hourly based pricing
Keeping proposals simpler in nature, an hourly based pricing model offers services for a price per hour. Within this pricing model, make a clear differentiation between what IS and IS NOT billable hours within the project and scope of work. Do you also bill for the admin, project management, and consulting surrounding the project? Within this pricing model, time tracking is vital. If you struggle to create under pressure or discipline, I wouldn’t recommend this pricing model for you as office hours are directly correlated to project production.
Retainer based pricing
Perfect for sustainable and consistent income, a retainer package offers a client ongoing services for a great value due to the ongoing nature of work. This pricing model is perfect for digital marketing, a company who would need ongoing design work, or social media management. As you’re working through the seasons of your business, identify clients who have the need for ongoing work. This will add sustainable income where there isn’t the constant need to onboard or off board clients, but rather offers sustainable and reliable income. When working with projects for long periods of time, find moments to creatively renew your energy on the project. When working with retainer clients, ongoing relationships are vital, communication is key, and clear cut expectations and boundaries are necessary.
Are you a creative looking to up-level your business? We have strategy sessions available. Contact us below.