How do I price my services? What pricing strategy works best? I probably get these questions ten times a day because it can be really stressful putting a price on your hard work and time. You don’t want to undercharge and undervalue yourself, but you also don’t want to overcharge and scare away clients. In today’s post, I am going to go over the three common ways to charge for your services. For all of these pricing strategies there are pros and cons, so just choose what works best for you and make that money!
Hourly Pricing Strategy
This is probably the most common way to charge for your services because it’s straight-forward. It is also a pricing strategy that most people are familiar with due to the average day job paying hourly rather than salary. This is a preferred pricing strategy for many creatives that aren’t too sure how many hours a project will take and therefore don’t want to overcharge or undercharge their client.
By setting up an hourly pricing scheme, you eliminate this worry. In order to figure out what your hourly price should be you need to consider the amount of hours you will spend on the project, the costs you will incur and a profit margin. For more information on how to set up your hourly pricing scheme, be sure to stay tuned for next Thursday’s post about how to do it!
Flat Fee Pricing Strategy
Flat fee is another very common pricing scheme that is preferred by most clients. This is because they will know ahead of time the full total and can plan accordingly. Let’s face it, you can give an estimate of hours you will spend on a project, but you will never be able to give an exact number. Therefore, a client could be planning on paying you for four hours of work and end up owing you a bill for ten!
For flat fee pricing, you need to take the same things into account such as travel, materials needed, the estimated hours you will spend on the project, etc. It’s important to note that flat fee pricing doesn’t mean that you will charge every single client the same price, because each event is different. In order to give a flat fee, I would suggest that you start by considering the total costs for the event. Then consider how much money you want to make per hour and multiply this by how many hours you think you will be working. Add all of this up and you have a flat fee!
Package Pricing Strategy
This type of pricing strategy allows you to create individual packages and/or tiers. You can create packages for different kinds of events such as a wedding, quinceanera, baby shower, etc. You can also create tiers such as a basic, premium and diamond package that include more services, choices, etc. This is a great way to give your customers lots of variety while not overwhelming them with choices like an ala carte situation.
Think of a menu at a fancy restaurant. You wouldn’t see a steak on the menu where you have to choose the cut, each seasoning and how it is cooked. Instead you would see a few different combinations of flavor, cut and cooking temp. Now, just like a menu, you want to decide early-on if you will allow clients to add/remove things from your packages (similar to a meal on the menu). There is no harm in saying yes or no, but you want to have this decision made long before you walk into a consultation. If you will be allowing customers to alter packages and tiers then you will need to be able to itemize the packages to know what to add and subtract from the total to give them their custom quote.
All in all…
Deciding on prices can be one of the most difficult parts of starting a company, but I hope that this article helped you to learn a bit more about the different strategies out there. Keep in mind that these are the three most common strategies, but there are more out there to choose from. No matter what pricing strategy that you choose, be sure to do your research! You want to be pricing fairly without robbing yourself! Therefore, it’s important to consider your level of experience, education and location with any pricing strategy!
If you are still unsure of the next steps to take and/or what pricing strategy is best for you then maybe you would benefit from a business coach! Click here to learn more about my business coaching membership to create step-by-step plans for success.