How to start pricing your services
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I decided something BIG 6 years ago. I was working full time as a designer and I wasn't feeling fulfilled. After being there for a few years, I realized that I needed the proverbial “more,” whatever the hell that was… 😒
I thought about it, mulled over it, dwelled on it, and eventually became somewhat depressed about it because I just couldn't see how to reach this magical place of ‘love what you do and you’ll never work a day in your life.' –Who are these people??
I was 28 at the time and already felt burnt out in my career. I thought this can't be it, but how do I move up from here?
So the big decision? I had to start doing something else. Anything else! Until I figured out what my next career move was. As Marie Forleo says,
“Action brings clarity.”
So I just started doing what I already knew, and what I'd been doing (literally) since I was a kid: graphic design.
No, as a kid I had no idea that's what it was, but I'd loved designing and creating stuff on the computer ever since I’d found Publisher on my Dad's computer.
I used to design posters and calendars for myself, for fun. I even designed my grandma's funeral service bulletin! Not kidding, and if I don’t say so myself, it looked so much better than what the funeral services had offered. I actually still have one in my scrapbook somewhere! (Yes, I also scrapbooked as a kid.)
Anyway, I'm getting off-topic here.
So I'd begun to offer freelance design services and started telling people about it. I started a Facebook business page for it and opened an Etsy shop for pre-made designs, and –cringe– party favors… (Side note: I only ever sold ONE party favor to a random stranger, on my birthday that year. ONE. 😂)
So, I get it. I've been there! Any entrepreneur has. We all have to start somewhere, and most of us don't leave a kush 9-5 and jump right into making 6 figures.
Word on the street is to ‘charge what you’re worth’ and that's what I've heard most frequently over the years since I started back in '15.
Most often though, newbies don’t really know what that worth or worthy number is! And you're not supposed to know either. You don't know what you don't know or haven't tried.
…I also really don't like that phrasing, since that almost implies we're all worth a specific monetary value, and of course, that's not true.
What that phrase is supposed to mean is to charge what your SERVICES are worth. But again, how do you know what that is if you're brand new to this thing?
That’s why I’m adding to the noise today, on this topic.
I’ve seen several recent posts asking this very question in several Facebook business/design groups recently and it makes sense with the start of a new year. So let’s figure this shit out once and for all, –am I right?!
It's high time you figured out:
Should I work for free, or nearly free, in the beginning?
If I start charging, where do I even start?
What's too much or too little?
How do I build a portfolio (or social proof) from scratch?
Should your first projects be free or nearly free?
The big question for everyone getting started is, ‘Do I work for free or very cheap in the beginning?’
Honestly, this depends on whether what you’re offering is already in your wheelhouse or not.
Have you done it before, whether in a professional capacity or not, and seen good results? If so, I say charge for it right off the bat. Obviously, price your thing lower than the experts unless you already are an expert in this thing, but don’t work for free. How much do you charge? Read the cheap method directly below, then skip ahead to the next section.
If you have ZERO experience and need to get some practice in, then maybe consider one of these next 3 options instead:
The cheap method:
I’ll use myself as an example. I started my first in-house design job in 2006 or 2007, while actually taking some of my first graphic design classes in college. I’ve basically held design jobs while doing irregular freelance design ever since, making me generally confident in my skillset & the value I could provide to my clients.
When I first seriously started my design side-hustle in 2015, my prices were LOW because I just didn’t know any better (and they did feel high when I set them). 🤷🏻♀️ I always tracked my time though, because I wanted to know how much time these projects were taking in order to decide if my prices were right, and I was used to that in most of my 9-5 jobs so it was familiar territory for me.
I quickly realized that my pricing was too low when I saw the time spent was going to generate a measly check. So, I adjusted my prices accordingly with each client, slowly moving up, –and if this sounds like you, I’d bet that’s what you’ll have to do too. Everybody’s gotta start somewhere!
If you didn’t come from a job doing the service you’re now providing in your own business, then you should start low because you have no rate of success yet. Know what I mean?
If this is where you want to start, then skip the next two sections & go straight to how to figure out your prices.
The free method
This one is a little scary to think about, honestly. Yes, I could see why you’d be inclined to design a brand or website or your first coaching session for free because you’ve never done one before BUT CHOOSE YOUR CLIENT CAREFULLY. Why?
You probably don’t have a contract in place yet, so you don’t want to be held responsible if your [insert service here] causes some unexpected results: the brand doesn’t resonate, the website doesn’t get any traffic, or make any sales or the coaching was ill-advised. When we’re new, we make mistakes.
You’re generating a rep that tells some clients that [insert your service here] can be totally free, which can hurt the entire industry in regard to its freelancers, independent contractors, and even small businesses. Take the design industry, for example. On ClientsFromHell.net (which I used to read a few times a week when I still had a 9-5; it’s so relatable!) has thousands of anonymous posts by freelancers about client horror stories and other ridiculous situations. I read one that said a “freelancer” provided a service then sent a bill and the client replied with something like, “Why are you charging me for this? Freelancers are supposed to be free.” 😒
Since I’ve only ever been in the design industry myself, I can’t speak to how offering freebie services affect other industries, but in the design industry itself, it’s lowered some of the perceived value of our service over a number of years.
We have a lot of problems besides that, too, (as every industry does) but when clients think of designers they’re usually split 50-50: either ‘designers are expensive’ or ‘designers are cheap.’ And I believe that’s partly because of entry-level designers not knowing how to charge properly.
Again, I’ll use myself as an example. When I realized that I was sick to death of traditional print and branding design services, it was because:
A) I’d had a series of shitty client/work situations at my 9-5 where I couldn’t choose who to work with, how to charge for the work, or what projects I wanted to take/refuse, –plus it felt like the client base was mostly ‘el-cheapo’ clients who wanted #allthethings for free while simultaneously providing our death by a thousand papercuts. 😂 It robbed me of the joy I had for designing; I could rant for ages about this, but I won’t do that now. 😉
B) I had been forced to build my own website (for lack of funds to hire it out) and I ended up loooooooving that design process. Bear in mind, that my entire design career had been in the printing industry prior to this and the last website I had designed myself was in Adobe Dreamweaver. 😳
With web design, I was able to apply my decade of experience, along with conceptual & purposeful design skills to my website and soon realized… I didn’t want to be designing anything else. So much that I think I redid that initial website of mine about 2 or 3 times within a year.
The problem? I had never built websites before, other than my own. Luckily for me, my family (whether they know it or not) is full of entrepreneurs! So I just started asking around: who needed a website overhaul or who needed one that didn’t have one yet?
Bam! I landed 3-4 websites that year. I didn’t charge for them because I knew I was still learning, I needed to develop a process, the family member needed the ‘break’ (plus I knew they wouldn’t mistreat me during the process) and I needed to build a real portfolio before I felt like I could charge a stranger for this service.
After that I was fairly comfortable with the overall process, I’d gotten a service contract, and I’d set my first web design price.
I know not everyone can be so lucky though, so if this is you and you’re thinking ‘I don’t know anyone that needs a website though…’ that’s okay.
You can also look around at your local businesses, reach out to one and ask if they need help redoing their website for free.
MAKE SURE you tell them you’re building your portfolio and as you’re still learning, don’t have any real-life experience doing this yet, and you aren’t charging because of that. (Also, be overly kind if you offer constructive criticism about their current site; they may not realize it’s crap).
If that feels uncomfortable for you, and you have no family members to test your services out on, here’s what I’d suggest instead…
The fake it ‘til ya make it method
I know, I know, that sounds so bad, but hear me out! Pick a company and do one of the following:
Redo a real, shitty website that needs it, but not for-realsies. In other words, re-design it the way you think it needs to be, and take full-page screenshots of each page when you’re done to add to your portfolio. You can use a free trial of most website builders to do this; Squarespace gives you two weeks to build for free and you can usually extend it one more week if you ask their support for a trial extension.
Create a website for a company that doesn’t have one yet, take lots of full-page screenshots and add them to your portfolio. The plus side for this, you can use this final product to market your services to that real business later, if you feel so inclined. They might even buy it from you if they see the end product first & know it can be tweaked.
Make up a fake company and create a website for it. This one can be a little harder as far as creating content for the design goes. If you do this, I’d advise you to do some research so you know what to put on each page.
Once you’ve got some stuff to add to your portfolio, I’d put a disclaimer in the project info or caption under the image(s) in a gallery to let people know that these are not live websites being used by real companies. The displayed designs prove you do actually have skills, but the disclaimer means you aren’t misleading anyone by letting them think these are successful real-life launches.
I know you’re wondering about this too, so let’s go ahead & address the elephant in the room here. When you create a free trial in Squarespace, the website shows up in your account dashboard each time & stays. It doesn’t require a payment plan to live there unless you want to launch it to the public (go live). The trial will expire and that’s okay too, the content will remain but you won’t be able to edit it after it expires until you either get an extension on the trial or pay to launch it.
READ MORE: How to take screenshots of full pages & create device mockups
final thoughts
Again, I’m using my own industry for example, and I know these methods don’t necessarily work for all other industries. There are no screenshots to put in your portfolio for new coaches, for example. Use these general concepts to create your own ideas on how to gain experience. You might have to get scrappy in order to figure out how to get the ball rolling, but that’s okay!
How to charge for your services
Again, since I’ve only ever been in the design industry, I can’t speak to how you should charge for photography, coaching, your first yoga 1:1 session or class, etc. But here’s a method I’ve been taught by several very reputable people that should still work for you!
It involves some math, so whip out your calculator, grab a piece of paper, and open your notes app because this is interactive & I’m about to ask ya a few questions.
List all of your expenses, everything that’s reoccurring:
rent/mortgage
power bill
heat, water and/or trash removal, if you have them separately
internet &/or tv
cell phone
car payment, insurance & fuel
groceries
misc subscriptions:
Apple Music/Spotify, etc.
Netflix/Hulu/HBO Max, Amazon Prime, etc.
play money for dining out or any other Covid-safe activities that cost money
anything else you can think of
With that in mind, how much do you need to make annually, in order to pay your bills?
Let’s use a round, even number that is easy to divide up: $50,000
Double that. Your business will have expenses, including tax payments, and so does your personal life; doubling that amount makes it more probable that you’ll spend less than you make.
$50,000 ✖️ 2 = $100,000
DON’T BACKTRACK OR CHANGE IT YET. I know you want to! That’s a scary number, right? 😳 I know; it was scary for me too. Sit with it for a minute though, because we’re about to break it down even further.
Divide that number by 12. Now you have your monthly goal.
$100,000 ➗ 12 = $8,333
Divide that number by 2. Now you have your bi-weekly goal.
$8,333 ➗ 2 = $4,166
Divide that number by 2. Now you have your weekly goal.
$4,166 ➗ 2 = $2,083
Evaluate. Ask yourself:
If I offer services, how many client projects at my current price would I have to complete each week to make $2,083?
Is it humanly possible to work that much?
If you’re trying this full-time: with 8-hour workdays, how much would I have to work to collect that amount?
If you’re part-time: with only nights & weekends available, how much would I have to work to collect that amount?
Could I do this level of work year-round? Or would I burn out quickly?
Would I have time to eat, sleep, –otherwise take care of myself or have any kind of life outside of work?
If not, then raise the prices or change the overall goal a little and start the process over.
If I sell products, can my weekly, biweekly, or monthly sales equal similar amounts?
Is it humanly possible to create/source, list, sell, package & ship that much?
Could I do this level of work year-round? Or would I burn out?
Would I have time to eat, sleep, –otherwise take care of myself or have any kind of life outside of work?
If not, then raise the prices, figure out a better marketing plan or change the overall goal a little and start the process over.
What could I add to my products/services in order to help me reach that goal in a realistic way?
Service add-on ideas: consults, 1:1 help sessions, audits, templates, coaching or mastermind sessions, etc.
Product upgrades: customized products, subscription boxes, 1:1 tutorial lessons, slightly increased prices for offering payment plans for higher-priced items (ie: pay a little extra to spread it out, or pay less when you pay in full), bundle like-items to increase interest, etc.
Repeat if needed! This is also a great strategy for re-evaluation when you need to increase your prices later.
