Are you charging enough?
Pain Points

Are you charging enough?

James Laurence Wood

We all have the instinct to lower our worth to encourage new customers, but this usually attracts the wrong kind of customer. You’re not Aldi — you don’t have enough hours in your life to make up for low prices with volume of customers.

So what can you do about it?

Charge for your time. But do it better.

If you’re estimating and invoicing customers based on an hourly rate, you ultimately end up limiting your income. But hourly charging is easy to understand and is what many customers are used to, so if you decide to go with it, make sure you’re doing it in a way that’s fair to you.

  • Avoid offering fixed price projects if you’re calculating it hourly, because if a project runs long your hourly rate will drop quickly.
  • State clearly in your estimates that changes to the brief, delays waiting for content, extra review cycles etc. will increase the final cost. Make it clear in your language all the way through that the client is paying for hours of your time, and say what’s included in your estimate and what’s not.
  • Always charge for all of the hours you spend on the project. It can be tempting to round down or ignore an extra hour here and there to avoid having to have the ‘it’s more expensive now’ conversation, but doing this every time will make you more confident at doing it and will correctly set the expectations of your customers.

Charge for value instead

There are two problems with charging an hourly rate: it puts you and your customers on opposite sides of the table (they want a project to take less time, you want it to take longer) and experience and expertise works against you (the better you are, the less time it takes you, so the less you earn).

As you get better at your creative role, your expertise will mean you work faster and have fewer corrections to make. You can increase your hourly rate, but it’s very easy for companies to make misleading comparisons with less experienced freelancers.

  • Get a better brief on project goals, especially around the business outcomes they want to achieve. In the end, everything comes down to a monetary value, either directly through sales or indirectly through increased exposure, better staff retention, saving time of their employees etc. So find out what this goal is when you brief.
  • Charge a proportion of the goal to help them achieve it. This can feel like a difficult conversation, but offering to help get your client 100 new customers for the average income they expect from 10 of them is a really simple business decision. Don’t take on the risk — this isn’t profit share — but use the client’s information about expected customer value and work from that.

Be honest with yourself

Freelancers often put themselves too much in the shoes of their customers, imagining what feels about right as a charge for their services and charging that. But you have a responsibility to yourself to charge what you need to live, and to thrive.

  • Track your time to make sure your estimates are accurate. There are many apps to make this really easy to do. Harvest is a good one.
  • Work out what you need to earn, what you want to earn, and how much you need to charge for your time for both. List all your outgoings for life and business, allow for taxes, pension contributions, sick days, holiday and business promotion time, then work backwards to calculate your billable hours and minimum / desired hourly rate.

This infographic is a great guide to how to do it. It’s in American, so everyone else will have to put their brain’s USA-translation mode on, but the principles are sound wherever you work.

Click to enlarge. Infographic from an original post by Creative Live.