How to calculate the cost of your services and not get too cheap

2024 Author: Malcolm Clapton | [email protected]. Last modified: 2023-12-17 03:44

Much depends on the state of the market and your arrogance.

If you are switching to freelance or just decided to earn extra money, sooner or later you will be asked about the cost of your services. He can lead to a stupor: you do not want to sell too cheap and lose the client too. Therefore, you have to look for compromises.

How to know how much you can borrow

It happens that one person asks for a service of 5 thousand, and another - 50 thousand. And both look at each other in bewilderment, because each thinks about a colleague: "Is it really possible to work for this money?"

The point is that there is no fair price. The correct amount is the one that the customer is willing to pay and for which the contractor is willing to work.

So, for your part, you must calculate how much you need, and then adjust this value so that you find the required number of clients for a comfortable life. Here's what you need to do for this.

1. Find out the average prices in the market

This figure is needed just to understand how much your colleagues generally charge. Unfortunately, for everyone personally, this price does not mean anything, because there are too many variables behind it.

Take copywriting. There are venerable authors who charge tens of thousands per text. But there are not so many of them against the background of people who call themselves copywriters simply because they wrote essays well at school. The latter are ready to take 50 rubles for 1,000 characters, and, naturally, they bring down statistics. It will be so in any industry. There are inexperienced people, there are simply inept people, there are pros with impostor syndrome who do not believe that they can be paid more. And there are stars who take not only their talent, but also their name, agility, self-confidence.

You need the average cost in order to be ready to justify your value to the customer and explain why you need to pay more. Because customers, too, often focus on average amounts. Although there are exceptions: some believe that the more expensive the better, but this is not always the case.

To form your idea of average prices, study vacancies and thematic groups.

2. Calculate the cost of an hour of your work

First you need to understand how much money you need per month. Ideally, this figure is made up of three parameters:

• how much do you need for a comfortable life;
• how much do you spend on incidental expenses in the process of work: paper, electricity, etc.
• how much do you need for airbag, investment, training, and so on.

It is best to consider this in an annual perspective to account for intermittent costs and possible vacations. The resulting amount must be divided by the number of hours that you are going to devote to work.

Of course, this is a utopian meaning. You may decide that you need millions, which means that an hour is worth 10 thousand. This will not work, especially at the very beginning of the journey. Therefore, it is worthwhile to adequately approach the calculations and accept the resulting figure as a goal to which you will strive.

It is important here that only you need the price of an hour of work, the customer does not need to name it. The time spent on labor is not at all an indicator of its result. It also gives space to bargain: “Are you going to do this for two days? Yes, there is work for an hour! Pay should be tied not to time, but to value, so it is better to take money for a specific result.

The cost of an hour of work will also help you choose projects more successfully. Let's say you are offered one ten-hour project for 5000 and one three-hour project for 3000. Five thousand is more than three. But in the second case, you will have time for two more 3,000 projects or 7 hours of rest. If you are overwhelmed with tasks, sometimes it’s cheaper not to work.

3. Rate the uniqueness of your offer

It's time to collide the average prices and the cost of your hour. Let's look at the situation from the side of the customer: why pay more if there is a crowd of people willing to work for a lower pay? So you need to convey what your value is. And here literally everything matters: the quality of work, and the speed, and the enthusiasm with which you respond to urgent tasks, and the ease of communication, and the willingness to sometimes do something beyond the terms of reference, and your personal brand.

In general, no one will figure out for you what your strengths are and how you will present them to potential customers. The cooler you are (and you can prove it with a portfolio and reviews), the more you can demand - it seems that everything is obvious here.

Knowing these three points, you can already calculate a compromise figure in which your expectations, skills, and also the amounts that the customer is willing to pay you will converge.

How to experiment with pricing

The figure you calculated is good in theory. In practice, everything will depend on how adequately you have compared your skills and desires. And also on how much the situation limits you. If the refrigerator is empty and mail is not bursting with customer requests, you can reduce expectations and temper appetites.

If finances allow, it is better to occasionally fulfill expensive orders than constantly make cheap ones: the financial result will be the same, and there will be more free time.

I'd rather scare the client with a large sum than sell it off. Figuratively: to earn some 500 rubles, you can write 10 thousand characters for 50 rubles, or you can write a thousand for 500. Do I, a writer with great experience, agree to peel 10 thousand characters for half a piece? Of course not. Does the customer agree to pay adequate money for a sensible result? If yes - welcome to work. If not, go to the stock exchange: they will write there and for 10 rubles, the question is just now.

Ivanna Orlova copywriter

It is also worth remembering that you do not set the price of your services once and for all. You can raise it if you become more competent or just want more money. The most convenient way to do this is from a position when you have many customers.

A client comes for a service, we do it for a conditional 100 rubles. We set the second price at 200 rubles. The third one gets 400 and at this moment we raise the price of the first one. From the fourth we are already taking 800 rubles. And so on until the number of abandoned customers exceeds the critical mass.

Dmitry Kuzmin editor, author

This approach allows you to gradually switch to more expensive orders and not lose anything in money.

Things to Remember

1. There is no fair price. There is an amount that the customer is willing to pay for the benefit of your work.
2. To calculate the cost of your services, you need to reach a compromise between your expectations, competencies and market realities.
3. As soon as there are a lot of orders, increase your rates.