4 Signs You Are Under-Charging Your Clients
Freelancers often start out (and end) charging too little for their services. It’s normal to feel like you’re asking too much – especially when your fee is more than you yourself have ever paid for anything – but businesses have bigger budgets than most individuals have so your desired price tag is probably fine. A couple thousand bucks is not as much money to them as it is to you.
Get this and you won’t feel so bad about charging more than you could afford to pay yourself. In addition to having a skewed perception of business finances, there are some other things that might be standing in your way of charging a fair rate:
1. You don’t feel valuable enough
While you’re learning about your trade, you do a lot of work, if not all of it, for free. Once you’re good enough to start charging people for your work, it may not be an easy transition to go from unpaid to paid. Either you still feel like a novice or all your clients are still your friends. If you want to make a living, at some point, you’ll have to stop doing so much pro-bono work.
2. You charge by the job
Charging by the job is fine if the job is under your control and you have a lot of experience doing this exact work. It can lead to losses when you are doing work that is under somebody else’s direction. When you have to make adjustments to your final product, you could end up doing a whole lot more work than intended. It could be hours or days more work. With the price set in stone, you’ll end up working those hours or days totally unpaid. You can track your hours spent on projects and bill your clients for those hours or, if you prefer, you could continue charging by the job but track your hours just to be sure that you are asking the right price. If your hours go over, tell the client that you will need to charge them for the extra work.
3. You assume all clients are the same
If you are a video editor and create a professional sales video for an unknown blogger, the blogger probably won’t gain much value from your service and so the blogger won’t want to pay you much for it either. Now, offer that same great video to a successful business owner and he will realize that the return he’s going to get from the promotional material and his ability to distribute it is going to be very high. If you keep going after small clients, you might wonder why you have such trouble charging a decent rate. Gain more powerful clients, however, and you can actually charge what your time is worth because the value of the video is higher.
4. You haven’t thought about your salary
What you get paid from your clients is your salary. What do you think you’re worth per year? Now divide that by 12 months, by 4 weeks, and then by 40 hours. Have you been charging this hourly rate? Now consider the fact that you have to supply all your own materials. And, unless you are very sought after, you probably won’t have 40 hours of work per week all 52 weeks out of the year. Using this method, you can determine what your absolute minimum price is and what your ideal price is. Figure in all your bills and expenses to come up with your minimum. This is the price you have to charge to get by. Almost without fail, a freelancer will charge less than a full service company that offers the same services. That’s because there is so much less overhead like advertising and office space and employees and all kinds of other expenses that freelancers don’t have. Business owners know that they are going to be getting somewhat of a deal using a freelancer than using a full service company. So don’t be shy, charge what you’re worth! It’s still going to be less than what your client would be paying if he used a full service company.