Knowing or deciding what to charge can be one of the toughest questions for freelancers or entrepreneurs who are building a new business or going into a new line. But don't let it become a source of undue stress. There are some practical principles that can make it easier.
The first step is to find out the "going rate," as far as such a thing exists. There are two factors to consider here. The more important is: what do others charge? Second, who are your clients?
The only way to find out what others charge is to ask. Ask people you know who provide or use similar services. If you find it difficult to get information this way, search the web for similar services, contact them pretending to be a potential client, and ask their rates.
Using either or both of those methods, you can determine a range of rates that are reasonable and expected.
Next, think about who your clients are, actual or potential. Are they local small businesses or scrappy startups likely to be on limited budgets? Are they well-funded startups? Are they big corporations with plenty of money? A large national firm can probably pay more than the mom-and-pop cookie bakery down the street. This can help determine whether you should ask for the higher end of your range or the lower end.
But once you're aware of the "going rate," the primary principle is to always ask to be paid what you're worth. Perceived value is real value.
Here's an instructive example from the music industry. Independent musical artists often wonder how to price their CDs. (Yes, people still buy CDs, especially at live shows.) Some musicians think like this: since the total cost of recording and manufacturing my product was only (let's say) $3.75 per CD, if I sell them for $10 that's a nice big profit. A second run of the same CD costs even less (say $1.50) to produce, since no further recording costs have been incurred; so now at $10 retail, I'm really rolling in profits. Right?
Article comments