Here's what I've learned about pricing over the years of running my own business and being the kind of person who thinks an awful lot about money.
Sell value, not time.
When you can sell the value you are creating for your customers; you can charge a lot more than if you could charge on time alone. Should an expert cobbler who has 45 years of shoe-repair experience charge less because he can fix your shoes faster and better than a rookie? Hell no. What is the value of continuing to use that pair of shoes you bought for $299 and plan to keep for the rest of your life?
Marketing is the mother of revenue.
There is a quote about never meeting a wise man who didn't read. Well, I've never seen a successful business that didn't know how to market. Whether it's traditional marketing channels or word of mouth, if you can't find people to sell to, you can't make money. Marketing is just connecting with your audience to let them know that you have solutions to their problems. Whether that problem is that you need a tax accountant or you want to convince people you are cool and worthy of love. Marketing is just a way to have that conversation. If you think marketing is gross, I suggest you spend a lot of time (hours and hours and hours) getting to know your own mind and learning how that story arrived inside of it. Remember kids don't believe everything you think.
Pricing is an experiment.
Sometimes you won't know what people are willing to pay unless you pitch that price. If you're going to engage in this experiment of raising your prices, first realize you're experimenting. In other words, understand the very real possibility that you may overbid and not get the work. But also realize, a potential customer might not bat an eye, and you'll discover how much money you're leaving on the table.
Pricing is perception.
Freelancers tend to struggle with charging more, and I think it has to do with how their clients, usually large corporations, view them. Hiring a freelancer is a way for the corporation to save money and exploit the loophole in our laws that allow informal work arrangements. There are simple ways to shift client and customer perception that shift your ability to charge more. Suppose you positioned yourself as a business instead of a freelancer. In that case, that legitimacy allows you to charge more because it's not just you in your pajamas for the third day in a row, totally making things up as you go. You can also set up an email like accounting@yourcoolbusiness.com that sends invoices. And just like that, the perception of your business changes, along with your ability to charge more.
When you don't charge enough, you get trapped in an undercharging cycle
When you don't charge enough, you usually have to take on a lot more work to earn enough to live. When you take on too much work, the quality of your work suffers. Having to service 50 clients is a lot different than having to service 25 clients. And when your work suffers, you might lose clients faster. Or you become known as the cheap option, and you'll continue to attract customers who are willing to accept low quality for a lower price.
For a lot of freelancers, your self-worth is a reflection of your pricing.
The truth hurts, I know. But some of you need to hear this and all of you should know that I've been there before. White women earn $0.79 for every dollar a white man earns. Black women earn $0.62, and LatinX women earn $0.54. It's easy to internalize society's ideas about your value and worth. And those are just the statistics for the gender wage gap. Your daily experience of life and how people treat have impacted your idea of your self-worth. We all have people and things to blame for why we donโt value ourselves, and we all have our work to undo and unlearn it. This is a life long process. I hope you can appreciate the journey.
Skill matters.
Good marketing canโt make up for lackluster skills. Price is still a function of skill. And remember that every overnight success takes about ten years.