How do you solve a problem like pricing?

How do you solve a problem like pricing?

By far the steepest learning curve in my self-employed life has been in relation to pricing my services. No matter how many articles I’ve read, seminars I’ve attended, or friends I’ve asked, I always have what can only be described as a sinking feeling when asked to quote for a type of project that I haven’t done before. This week brought that feeling back when I was asked to quote for a job that was similar enough to previous work that I know I can do the job, but different enough that it’s tricky to estimate how long it will take and what will be involved.

In the past I’ve made many mistakes when it’s come to pricing. In the future, no doubt, I will make many more. Each time I’ve learned something about how to value my time and what I have to offer. Maybe that’s why this recent tweet from Arlan Hamilton, founder of Backstage Capital resonated with me so much:

Mistake number 1 – Not charging enough

In the beginning was the word, and words are what I am selling. My first big mistake in pricing was been undervaluing my service. I was almost apologetic asking for any money, had no idea how long it would take to do certain projects and was so used to living as a student that I was thinking and charging like one. I very quickly realised that this meant that if I was lucky I would be earning minimum wage. If something took longer than anticipated it could be a lot less than minimum wage.

Mistake number 2 – Charging by the hour

Related to my first mistake and in an effort to overcome it, I started telling potential customers how much I would charge by the hour. This turned out to be a mistake because a) my customers had no idea how long some projects would take and b) neither did I. This meant that for both of us there was a lack of clarity which in turn meant that inevitably one of us was going to be disappointed, more often than not, me.

Mistake number 3 – Quoting too quickly             

It turns out that plucking a figure out of the air and hoping for the best is not a good pricing strategy. Who knew? I’ve tried to avoid doing this in that most Irish way possible - by being evasive and uncomfortable discussing money. Sometimes the person I’m dealing with has been so direct and insistent that when asked I’ve panicked and priced on the spot. This has resulted in a return to mistake number one. These days when I’m about to send out a quote for an unfamiliar project I draft the quote in the afternoon, before reviewing it and sending it out the following morning. If I’ve slept well in between then the price is probably about right.

Mistake number 4 – Quoting too slowly

I know that I’ve lost business because I’ve taken too long to send out quotes. How do I know this? Well because I’ve asked for feedback. The delay in sending the quote has usually been because I’m sweating and stressing over how much to charge (see mistakes number 1 to 3!). I’m something of a feedback junkie so will generally ask for it if I don’t get the business. How else can I know what to do differently next time? I find it much easier to take rejection if it’s because the person thinks I’m charging too much – I won’t compete on price, if you want cheap there's fiverr, if you want quality let’s talk. However, if I’ve lost business because I spent three days procrastinating about putting a number in an email rather than because that number is too high then I will definitely kick myself for the following three days. Or weeks.

So, how do you solve a problem like pricing, especially if you’re selling a creative service?

There are plenty of helpful resources available, industry standards on pricing, this freelancer pricing calculator and colleagues (and even competitors) you can ask. A friend who also does creative work was telling me about a recent workshop on pricing for creative work by Blair Enns. He spoke about how people in first class on airplanes don’t feel hard done by because the people in economy class paid less. Essentially, they are paying for the same thing, to get from point a to point b. People have different expectations about the journey but at the end of it they will arrive in the same airport and have travelled the same route.

I’m starting to develop more confidence when it comes to quoting for new projects. I take other factors into consideration beyond money. Things like whether I think I can satisfy this customer, if it’s a long-term relationship I want to develop, a project that matches my values or whether the opportunity cost is too much in taking me away from other things I want to do. I’ve come to the conclusion that pricing for creative services is as much an art as a science, which is just as well really because I’ve always been more drawn to arts than science.

Book review: Build Your Dream Network by J. Kelly Hoey

Book review: Build Your Dream Network by J. Kelly Hoey

Want to find answers? Get outside

Want to find answers? Get outside