The Perfect Pricing Strategy To Charge What Your Time Is Worth
On a recent trip to England, I stopped at Manchester for a beer.
At the bar,
I started talking with the locals.
We talked about their passion for soccer.
They bought me a couple of beers and I asked how they live in such a cold weather.
You know, usual stuff.
Then, we started having a chat about biz.
I was shocked when one of my new friends said he try not to charge for his work.
“I feel bad when I charge people for my time.”
Sound familiar to you?
There are more like him outside.
Many people – including successful entrepreneurs – having hard time with their pricing startegy.
Six figure copywriter, Neville Medhore,
just told Noah Kagan from Okdork.com
That he was hesitated to raise his rate.
In the article above,
I’m going to show you a pricing strategy which allowed me
to stop feeling bad about charging people.
(For the matter of fact, it’s even helped me double my hourly rate).
You’ll understand about some pricing strategies ANYONE can implement
for freelancing consulting or project works.
You will discover how to charge what you’re worth
without feeling bad anymore.
Why do we feel guilty charging for our time?
In my experience, there are 3 main reasons people feel guilty charging money for work:
- You don’t value your skills to others. in other words, you have awesome talent and you say “nah, it’s nothing special”. but others see it as a very unique and special talent, and they will also pay to learn from you to get your help.
- You don’t feel like an expert because you think you need more exprience, certicifactions. my brother is a lawyer. he has NO PROBLEM charing a lot for his time, because he learned law for almost 6 years. and it’s “normal” that lawyers take a lot of money per meeting.
- You’re scray of charing friends (or friends of friends) and it’s will hrtu your relationship.
How you can push away this negative thinking?
How you can be more confident on yourself and charge more money?
is to understand how to price.
When you’re prepared, you will feel less nervous and full of guilty.
How to Price Yourself & Charge for Your Time
On of the reasons so many people fear to setting their rate high is back there are many options out there.
It’s a bit shocking to think where to start:
- What is my hourly rate?
- Am I pricing to high?
- Is my work quality good enough to charge people?
If you just started a biz, I’m going to show you the most common and used pricing strategy.
If you’re pro on your niche or industry, you’ll learn how to break from the “handcuffs” of hourly rate and level up your cash flow.
If you target is to maximize growth and revenue, I’ll show to you how to do it when you have proven and in demand skills.
The most known pricing strategy for freelancers and consultants is an hourly rate.
One of the best ways to decide your hourly rate is to reverse engineer your last salary.
Let’s say you made $70,000 last year.
You worked something like 2,080 hours per year which means your hourly rate is about $33.
There a couple of things you need to remember.;..
First of all,
many first time consultants and freelancers forget their rate assumes a 40-hour workweek. but…if you can’t find enough clients to fill up all these hours? what if you are sick?
Second of all,
many people don’t calculate all the benefits like health insurance in their pricing. those are thing now you are going to pay by your own. No company help you now.
It’s doesn’t mean you shouldn’t use this strategy but you re-think about it.
A good rule to remember: If at the moment I won’t work 40 hours and I have to pay my own benefits, I will take the hour salary and double it – which will make it $65 per hour.
If you just starting this strategy could be useful one. and remember it’s always better to take the easy path and just started. Optimize later.
When you starting charge for your services, you can free your self from the handcuffs of time.
Instead of locking yourself on hourly rate, you will charge based on the value or results you are going to create.
Normally you will charge per project – based fees as you become more familiar with the results you can give to your clients.
Good campaigns can give 10% revenue lift for clients, and this usually equals to $30,000 more revenue for you client, so you can price it like this.
When I consulting, I prefer to deliver 10x of what I charge – so $30’00 average in revenue for a client mean I charge about $3,000.
In order to start billing on this way, you need to ask yourself, what value do you give?
And remember, it’s doesn’t have always to be pure revenue.
If you save your clients 10 hours a week, it’s worth thousands of dollars of saved time.
When you go on a project, be careful with your price based on the time you think you’re planning to spend.
Many people do the mistake and set their prices to low and work more than they priced.
This is why it’s better to start with hourly rate, until you are more familiar with your industry and client project requests.
Tier Pricing: Pro Tips to Maximize Revenue Growth
Before we are diving how you can develop pricing levels for your biz, let me go through why you should test pricing levels as you grow your freelancing or consulting:
- Will help you make more money – there is a famous pricing example, where tiers helped “anchor” people into paying more. always try testing 3-5 different tiers.
- Go wide – try a bigger audience. different clients mean different prices, try to search for your ideal customer.
- Get more HOT leads. Lower priced levels can help you just to start. if your customer will get results you can move to higher tier packges.
So, how to do this right?
Step 1: Create base features you want to include for every tier
The first step is start to organize the base scope of benefits you want to give to each customer.
At Sumo Company By Noah Kagan, all the customers get access to apps, A/B testing, and all design templates.
What are your “base” features?
- Maybe it’s 1 hour time to respond to client requests.
- Free Report analyzing website.
- 1 hour a day skype call.
If you don’t know which features to use yet, it’s fine.
As you become more familiar with your clients, it’s will be more cleat to you.
Step 2: Develop avatar for each tier
When doing pricign tiers it’s widen your potential clients, and help you target larger groups of people with different needs.
From a little company that just need you to write email funeel vs. a client who want you on a monthly marketing retainer to help them send email and optimize their opt-in forms.
Let’s take example from Mailchimp:
Step 3: Always include more features and benefits
The last step is always adding special features and benefits to each level.
Here are the 3 questions you can ask yourself in order develop higher tier products:
- What your perfect client need help with?
- What about mid level client?
- What about about the most simple service you offer on the past?
On Sumo company by noah kagan they learnd that their biggest clients have a lots of tools they are using for their biz.
They use supporting email providers like Mailchimp, Aweber and Zapier.
And for our massive enterprise customers, it means supporting big enterprise products (Like HubSpot And Infusionsoft).
4 Ways to Explain Your Pricing Strategy to Yourself (and Your Client)
Even after you read the proven steps I’ve used – you can still feel nervous.
But please don’t quit now.
Here are for ways to make you feel confident in whatever pricing you decide.whatever pricing you decide.
It’s very common that people feel guilty when you can’t see directly the value you bring to them.
But the best method is just understand which problems you are solving.
Let’s take this example:
- If you are a merketer, you’re helping with sales, braind and cash-flow problems. even if it’s will not lead to $1 million in direct revenue.it’s still will increase the client base. for example – people spending more time on your site? people happy with your services?
- If you’re a copywriter, you’re solving a messaging problem for your clients. You’re helping your client create more attractive website copy, email drip campaigns, landing pages and more. You’re uniting the brand under one “voice.”
- If you’re a fitness trainer, you’re solving a health problem for your clients . This doesn’t necessarily mean weight loss: Maybe you’re helping people feel better. optimizing their diets. Lower their cholesterol levels.
To be clear on what value you creating, talk to your clients or customers about their targets. Then break down metrics or key performance indicators you can quantify and measure your success.
It’s will help you set your pricing right.
Most of the amazing products and services have gaind huge market share over the past years is doing ONE things really good: Save People’s Most Valuable Asset: TIME.
Uber: People don’t use it because it’s comfortable.
People use it because it’s saves to get from one place to another.
Time is a limited resource, and everyone values their time.
Even if the ROI is not so good, business owner will buy your services if they can have more time to do some other actions.
If your service is not generating direct revenue,
think about how much time your customer will save.
What happens when you give your family “great” advice?
Most of the times it’s go to the garbage.
People tend to ignore valuable insights if they are free of chage.
Now for example if you are getting advice from Tony Robbins, who charge $2,00 for a seminar. Tons of fans will do exactly what he says because of the cost.
I gave my friend a free landing page I wrote for him,
and instead of sending traffic and watch the conversions go up, he did NOTHING.
Money Motivates people to do things, REMEMBER it.
“I’ll just be nice man and give it for free.”
You can pay your bills with “free”? I want this to!
When you charge small you are not valuing yourself and people will try to take advantage of you.
REMEMBER: you have a solution for someone else problem and asking for money it’s totally fair.
If you are not sure about charging to much, just try simple startgey even charging $1 it’s better than give for free.
Let’s take those examples:
- If you are a graphic designer – start with $25-50/hr
- If you are copywriter, start with $40-70/hr
Go small, then slowly, increase prices as your biz get tractions and give value to your customers. (you can also add benefits and features and you increase your price.
When your biz grow, start trying expriments with pricing, try to 100% higer your price.
If you’re feeling guilty charging for your time, just start small and experiment.
Pricing strategy can be confusing, complicated, or scary — but with my four tips above, you’ll be ahead of the pack.
Comment below what did you take from this post 🙂