When I first started building websites and offering digital marketing services as a side business, I would often quote projects based on the minimum amount I would do the project for. I was constantly afraid of quoting too high and missing out that I would do work for peanuts. I was stressed out with hours of work and wondering how would I ever be able to do this as my full-time job at this rate?!
Even after working on side projects for 7 years, my prices did not go up much. It was only 6 months ago that I made the decision to increase my prices. My experience and portfolio has expanded by leaps and bounds and it was time! Not only that, but I feel more confident that I can produce high-quality work that clients would be happy to pay a higher rate for. Now that I’m full-time in my business, and 100% relying on it to pay for my life, my pricing needs to be in check!
In order to come up with my new rates, I made two budgets: a bare-bones living expenses budget, and a desired budget.
I added up the expenses that must be paid on a monthly basis such as rent, utilities, food, insurance, and retirement savings. These are the expenses that I need to pay in order to live and to keep my business doors open. That total + TAXES is what I need to generate every month.
My desired budget includes more savings for fun, travel, house savings, long-term investments, and other lifestyle luxuries. You could argue that this figure could be an infinite amount, and I do recommend stretching your goal, but be realistic! If you typically are generating $3K/month and can comfortably pay your bills with that, don’t put $20K/month as your desired budget. In this example, I’d recommend $5K to really push you to hit that goal—it’s in reach after all!
Another thing I took into consideration is the value of my services to my target clients. I do not price any of my web design and digital marketing services by the hour! I price my services per project, not by how long it will take me to complete the project. A great website that is optimized for search and generates a lot of leads for my client is a valuable asset that gives back month after month… Far long after the website has been built! Effective marketing communications can generate a lot of interest and produce hot leads. It has little to do with the length of time it took to write and publish these marketing pieces.
Always take taxes into consideration. Whatever figure you come up with, subtract 30% for taxes and see if that number still fits into your budgets. You don’t want to be stuck with a giant tax bill that you didn’t plan for.
If you have freelance prices that you are not happy with, I encourage you to increase your prices and not look back. You are probably worth way more than you think you are! As entrepreneurs, we commonly underestimate ourselves. I’m right here with you on this one and I know it’s a hard leap to take.
I’ve been implementing my new rates for the past six months, and the results have been fantastic! I feel like I have more control and more time on my hands than ever before. I’ve quoted potential clients that have declined due to prices being too high, and now I don’t worry about it. It’s not someone that I need to work with! While there have been a few declines, there has also been many project acceptances. Pretty cool right?
“You are worth so much more, so GO BIG”
Thanks for Reading,