Everything You Need to Know About Pricing Your Services
Deciding what to charge (and how to communicate your pricing once you’ve decided on it) is one of the most difficult parts of owning your own business or freelancing. Even thinking the word “pricing” gives me a little shudder. Finding that perfect balance between pricing what you’re worth and attracting the right clients is a key component of your success. I know how challenging it is to set and stick to a pricing structure, but it doesn’t have to be.
Follow our steps below to untangle the world of pricing and finally feel confident in setting (and even raising when necessary) your specific prices. We go over everything from how to dive into your data and determine costs, to the best way to display your pricing on your website and embed forms (easily done in our go-to website platform, Squarespace) to help you determine your client’s budget right when they initially reach out. Ready to get started? Let’s do this.
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Pricing Your Service-Based Business
Service-based businesses are especially tricky when considering pricing. You have to take into consideration your value, your direct costs, and your indirect costs. This is different from selling a product directly, where you can do something like a cost + model and price in your skill and value on top of some concrete expenses.
Instead, pricing your services is a lot about perception. As with most things in business, the best way forward is to start with your customer, then work backward. What role do you fulfill for your customer? Think through exactly the pain point or need that your service solves for them. You will want to reflect on if your service is something of a commodity, or if your deliverable is an anchor in their own business plan or personal needs. For example, is it on the more task-oriented end or is it on the highly creative and customized end of the spectrum? Remember that your expertise is the main heft of your services and it is so easy to downplay our own expertise. Resist! Think of it in terms of this analogy: cutting the wire is just one small part of your services. Knowing which wire to cut is the main heft—your expertise and experience are what your customers are investing in. Don’t sell yourself short.
Source: Mathilde Langevin | Unsplash
Comparing Your Offering and Telling Your Story
You’ll also want to spend a lot of time doing market research. Ask your industry peers and attend (virtual!) conferences and mixers to understand how they think about pricing. Especially in creative industries, people are less direct about exactly what they charge. However, you can almost always get good insight into how they think about what they charge. Knowing who your competition is in the space and exactly what their offering looks like is a key part of pricing research.
Telling a story around your offering and clearly articulating your value proposition is critical. Why would a client come to you versus someone else? What is differentiated about what you offer? So much of communicating pricing is communicating value through your brand. Ideally, you want to be in the market for repeat clients or clients who will refer you forward to new business. This means that through your pricing you’ll also want to communicate the collateral benefits of working with you. Does it mean a perfect track record of on-time deliverables? Access to a community of other like-minded clients? Other free resources down the line? Again, think like your client—when they get to work with you, what else do they get besides a concrete deliverable?
Make this information easily accessible to your future clients and customers on your website. We love Squarespace’s pre-made website templates for small businesses, which can help you organize this information if you’re not sure where to start. Clearly articulate and list exactly what you offer and take the guesswork out of your services. Highlight areas where you are different than your competitors and really hone in on your specific niche.
Try establishing credibility with free client resources. For example, if you’re a brand designer, write a few evergreen blog posts on the different pieces of your brand process (how clients will use a logo, submark, alternate logo, brand pattern, etc.). Think about questions you regularly receive from clients and turn them into blog posts. This will save you time in the long run as you won’t have to answer every question individually, and you’ll establish your expertise for future clients at the same time.
Structuring Pricing – Project vs. Hourly Wages
For a service-based business, pricing primarily works around time. One of the ways to start thinking about pricing is giving yourself an annual wage, and then work backward. If you are targeting to make a certain amount per year, what does that break down to monthly? Then go further and think about what that means in terms of hours you’re looking to put into this business—especially if you have other work or business streams. Once you have a general idea of this, you’ll have to do some tinkering.
So much “invisible work” goes into the hours spent in a service business far beyond the exact project for a client. You have time building your network, building your website, acquiring new clients, and following up—the list goes on. You also have to think of the opportunity costs of the time you spend doing this that you’re not doing something else. For brand new business launches, this can be significant. Lastly, you’ll want to really evaluate other fixed costs like new technology you need, or even adding team members to help with additional tasks.
Source: @alainakaz
Project or Hourly Pricing?
The decision to price by project or hour often comes down to industry. What do your peers do? Are you served by replicating that, or is there an advantage in acquiring new clients if you did something different? For businesses just starting out, a fixed price for a project can be a great way to gain exposure and build your portfolio. The client knows the total cost upfront, and you can take all the time you need to get up the curve learning new aspects of servicing them.
For more established businesses, hourly may be a good fit. Hourly may also be your preferred method of pricing if you know that deliverables can have wild swings in your time commitment. This approach, however, requires a lot of upfront communication with clients, and to clearly and transparently track your time.
Pro tip: Even if you’re not working on an hourly pricing model, track all your time. Seriously, all of it. It will help you immensely in determining how long tasks are taking you—from client-facing tasks to the invisible business tasks like updating your website or creating marketing graphics to post on social media. Start tracking how many hours you are routinely working every day, week, month. Getting a handle on this data will help you determine what is working from a time-perspective and if you need to do something differently.
Should I Make My Pricing Public?
There are a number of pros and cons to making pricing public. Offerings that are highly customized often don’t lend themselves to public pricing because so many factors will go into consideration in shaping the client’s final outcome. However, you see many higher-end creative services note that “Pricing Begins at $XXX” to give clients a sense of where they could start discussions.
This type of transparency is really useful. It does two things. It lets your clients benchmark an offering so they can appropriately budget. It is also respectful of their time. They know you’re straightforward and that you’ve got a sense of your value. And, it keeps you from answering inquiries solely to question price. (Highly price-sensitive clients are probably not long-term clients for many creatives.) Clients eventually need pricing information, and you may be missing out on some engagement if you’re not willing to give them a bit of a benchmark.
Alternatively, if you’re more on the task end of the spectrum, or even a creative whose work tends to be repeated in modules (think, photographers who work in 1-hour blocks), then transparent pricing can work in your favor. You can also think of offering a single discrete product with a very straightforward price. For example, 20-minute, single-location headshot sessions that result in two digital prints for $X. We love the commerce functionality available in Squarespace that allows you to add a physical, digital, or service-based product to your site. Creating a product for some offerings (rather than letting clients inquire directly) will help speed up your process and let you skip any price questions or haggling attempts.
When adding pricing to your website, consider using an embedded inquiry form (so easy to set up via Squarespace) that allows clients to check their project budget from a pre-determined list (i.e., Under $500, $500-$1500, Over $1500, etc.). It allows for price transparency while also showcasing price flexibility according to project scope.
The Spectrum of Public Pricing
Lastly, you may want to consider giving a more nuanced view of your pricing publicly. For example, you may display on your site some bands of pricing on specific projects that you know you do routinely (e.g., Single logos, $250 – $500). However, depending on the client you are trying to attract, you may also want to include some promotional pricing language.
This could look like, “Ask us about specials for new clients!” Or, “Discounting available for women-owned businesses and non-profits.” You could also include details on how clients can pay you, if you offer payment plans, or other ways that the contract process works. At the end of the day, all of these pieces work to get you closer to the client and remove barriers to sealing the deal!
Start your free Squarespace trial today (no credit card required) and use code ‘EVERYGIRL’ for 10% off when you’re ready to publish your website.
This post is sponsored by Squarespace, but all of the opinions within are those of The Everygirl editorial board. More
