009 : PAYMENTS, PRICING, PITCHING

Hey Freelance Friend,

This is the money issue.

We’re going to run through setting your prices, how to actually get paid and how to pitch.

It’s going to be a bit of a deep dive, so make a cuppa and settle in.

It’s gonna be good!

Prefer to listen instead of read? I got you!

Audio version here:

1. PRICING

Maybe you are just starting out as a freelancer, maybe you have been in the game for a while but have a new service, or maybe you feel like you are undercharging…

Whatever the case may be, setting and reviewing your pricing is a critical part of your Freelancing journey.

It also never stops.

Let’s get this one out of the way early.

Your prices have to go up MINIMUM once per year.

Inflation right now is 2% (although in recent years it has been rampant)

So let’s just take this 2% as an example.

Every single thing you pay for in your country has gone up, on average, by 2%.

So if you don’t move your prices incrementally with this rate of inflation, you are giving yourself a de-facto 2% pay decrease.

This does not take into account any other factors whatsoever which would merit a pay increase. Factors such as:

Being better at your job than you were a year ago

Even by the simple act of doing your job for a year, you are getting better at it.

You have learned more, you have became more skilled, you have probably done some courses or watched YouTube videos or read books which have upskilled you in some way.

In a company you would go from being a junior designer, then mid weight, then senior, then god tier designer.

But now you need to be the one to give yourself that promotion and pay increase.

Maybe it’s not a massive jump like it would be going from one ‘level’ to the next in a company, so it can be more incremental.

Being faster at your job

You have probably, deliberately or not, streamlined your services somehow over time.

• Getting that client portal set up on notion

• Streamlining your own workflow

• Using AI

• Hiring a VA

• Subcontracting parts of your workflow

Whatever it may be, if you are providing the exact same service in 4 weeks and it used to take 6. This is of value to your client, and should be remunerated as such.

Okay… we skipped a part. We are talking about increasing your prices before even setting them… I got a bit carried away.

Let’s talk setting your prices. The obvious ways, and the not so obvious.

We will talk about setting an hourly rate and also charging project fees. Your own preference or industry standard may dictate which route you go.

If, like me, you charge project fees. You should still have your hourly rate in your back pocket, so you know what it would be.

Some ways to work out your desired hourly rate:

Lifestyle Based

How much does your ideal lifestyle cost?

1. Add up all your usual costs like rent, food, childcare etc.

2. Add up other items like gym membership, holidays, subscriptions etc.

3. Come up with a monthly amount.

4. Decide how many hours you want (need) to work per month

5. Divide the hours per month by that total lifestyle cost et voila, you have your desired hourly rate.

(This is also a great exercise to understand if the service you are offering is sufficient enough to match the lifestyle you want)

Industry Based

Not my favourite, but it’s simple and quick.

Google and see what the average rates are for your industry and level.

I don’t work in hourly rates. I work via project fees. Here are some ways to calculate a project fee:

Hourly Rate x Scope Based

So you have your hourly rate in your back pocket.

1. Look at the deliverables requested by the client

2. Work out how long you think this will take you

3. Add 20% because…things happen

4. Times those hours by your hourly rate

Value Based Pricing

Would you charge a big company and an individual person the same for your service?

You may think it’s ethical to do so, and it certainly is simpler.

But value based pricing ensures the price they pay reflects the value to them.

You may be a graphic designer who designs movie posters.

Your friends need a poster because they are screening their first movie to a cinema of 30 people, and hope to sell some tickets.

You could also design the exact same thing…a movie poster… for the new Avengers movie.

Having value based pricing allows you the freedom to quote based on the client.

You are able to charge more to a big corporation, but you also have the freedom to quote less to someone you really want to help, or really want to work with.

The ‘Charge What You Feel’ Method

This is one of my favourites.

Let’s say you usually charge £2000 for your service.

One client approaches you who you would LOVE to work with and you even think to yourself “I’d probably do this project for FREE” (don’t)

Another client approaches and you find it super boring, and the idea of doing it for your usual £2000 just doesn’t feel great.

Well, how much would they have to pay you for it to feel good? £3000? £4000?

Think about it, and send a quote with that number which will make you feel good about doing the project.

You would be surprised how many times they will turn around and say yes…

(shhh…its okay, we all undercharge because we are impostor syndrome riddled Freelancers)

The ‘Here Are My Prices’ Method

Work out the cost for your service based on any method you choose, then showcase them on your website.

Ensure you qualify them correctly and that your website does a lot of the work you would usually do on a client call to help them understand the value of your service.

You may lose out on a bigger company paying you your set rate when they would have possibly paid a lot more.

You may also lose out on a project you would have happily done for a bit less.

But what you may lose out on, you gain in having clarity and less wasted time jumping onto calls with people who can’t afford your services.

Pro Tip: Have a “from” price, so you have scope to increase it based on value. Also put a * saying you offer discounts to charities and even individuals, and to reach out to you to learn more.

2. PITCHING

You have an enquiry for a project and are now in the process of pitching for the work.

This is how things usually go as a new Freelancer:

“I really want this project”

“I don’t want to lose out on this project”

“I should figure out a price I think they will go for, I dont want to quote too much and lose this one.”

You pitch at a price which is a bit below the amount you would ideally like to get paid.

You send the proposal for, let’s say £1000, and they say “YES, perfect! Let’s do it!”

You will feel one of two ways:

1. Amazing, I got this one!

2. Wow…they said yes immediately…I went in too low and left money on the table.

Now, the other scenario:

You really want this project…

You also want to get paid a good amount for your work

You figure out a price which you will be happy to do the project for AND you feel like is maybe a bit above what they are likely to accept.

You send the proposal for, lets say £3000 and they say “Actually, that’s a bit higher than we envisaged for this project”

You then negotiate and as a gesture of goodwill, you agree to give them a £3000 service for £2500.

They feel like they got an amazing deal, they also value your services more in their mind due to the perceived quality from the price point.

From the two scenarios described above there are some vital differences:

You didn’t have to negotiate / You did have to negotiate

You got less money for your work / You got more money for your work

The client perceives you as ‘cheap’ / The client feels like they got a great deal for some higher quality work.

You may be thinking, quite rightly so, that this is an ideal scenario but the second option will definitely increase the risk that you just don’t get the project at all…

This is true, but what you are also doing is weeding out the potential clients whose primary focus is on paying the lowest amount to the Freelancer that will accept that.

These are not the clients you need.

3. PAYMENTS

Okay so you worked out your pricing, you learned to pitch for what you are worth.

You have the client!

So lets get to work, right?!

No!

You need a robust contract and invoicing procedure in place. You need those things signed and sealed before you lift a finger.

Yes, even before that creative kick-off meeting they are so excited about.

Get this done ASAP.

In terms of when and how to get paid:

I do 50% up front before any work is done then 50% upon completion.

This ensures that, if they change their mind and pull the plug part way through, you never get left empty handed.

Believe me, it happens, even with the nicest clients.

Some people request the whole amount upfront, let’s say £1000. Or an option to split it 50% / 50% for £1100 (extra admin…).

Often clients will just pay the £1000.

Some people do 50%, then 30% at a critical juncture like the first major revision, then 20% at the end.

It’s up to you, but and most important thing, is get paid up front.

Do not ever, ever, EVER work with absolutely no security whatsoever.

If you are entering into a project with no contract, invoice, deposit payment or anything, you are assuming 100% of the risk if this project falls through or your client just changes their mind and ghosts you.

Also, a 50% deposit ensures that the time you block out in your calendar is paid for, so if the client cancels, you aren’t left out of pocket and having to scramble to replace them at severely short notice.

There is a cost associated with a lot of things that can go wrong during a project, and it will always be paid by you on your side of the deal. So protect yourself and your income.

4. Freelancer Feature

Every week we feature one of our lovely subscribers! This week allow me to introduce:

MJ Faulkner

MJ is a fresh faced Freelancer and self titled baby of marketing.

She is also one of the leading lights of LinkedIn. Bringing energy and enthusiasm to an otherwise incredibly boring platform.

She also just dropped a profile refresh which is super nice!

MJ kindly dropped by to give us some Freelancer insight:

Want to connect with MJ?

Next Week

010:

Wow…10 editions of Freelancer OS.

This one is going to be a mystery. No title, no hints, but something super exciting…

With you next Thursday at 11:00am (UK TIME)