#66: How to Price Your Projects

On today’s show I am going to talk about why you should aim for providing only project rates and how to go about setting those rates. A lot of us struggle with pricing, even those of us who have been doing this for a while. But here’s a secret: We’re all just making this up. The best pricing is often project based, and that is a made-up number when it comes down to it. You need to reframe your mindset and get your head around the fact that you are a freelance business owner. You are the boss. You are in charge of your own business. This means, you need to shift your mindset 180 degrees from waiting to hear what someone will pay you, and asking what someone will pay you, to telling someone what your rate is or telling someone what you charge for that project. It’s such a huge mindset shift in so many ways when you finally embrace the fact that you are in charge of your business. If someone cannot afford you, then you move on to the next potential client. When many of us start freelancing, we take what we can get and we allow the client to set the pricing and the parameters. Or, when the client asks what our rate is, we give them an hourly rate, often too low. But when you embrace the fact that you are the owner of your own business, you will start to think about pricing differently. Your overarching goal should be to think of every assignment and gig as a project rate and to propose project rates to every client. But first, let’s talk about hourly pricing and why it is such a problem. First, hourly pricing means you are charging for your time. And that is one thing we all need to stop doing—charging based on our time. Time is finite. There is only so much money you can make each week before you run out of time and energy. You will be unable to grow your business this way. Also, time does not equal the value you bring to a project. You need to base your fees on your value. Third, hourly pricing penalizes you for working fast. And, if you and the client don’t discuss how many hours a project might take, the client could be surprised and frustrated when they see the invoice at the end of the month. Since some listeners are writers, let’s talk about per word rates. Ideally, everything would be project rates, but sometimes you are in an industry that does dictate the style of pricing. For writers, that’s a per word rate. You can try to push back on this and suggest a flat rate for writing an article, but often editors’ hands are tied based on an antiquated system. With per word rates (and really, all projects) I build in systems to work faster while still providing top quality. For writing assignments, that could mean recording interviews. Sometimes I record only to listen to certain parts (I mark timestamps in my notes when the person says something great or that I want to check back on). Sometimes I record and have someone else transcribe the interview. It’s worth the financial investment because it saves me time and energy in the long run. (I also hate transcribing with a fiery passion.) Writers, please know that a per word rate exists often only in journalism. In content marketing, especially for companies, you can often charge a project rate. If you come from the journalism world and are accustomed to per word rates, leave that behind when you are pricing your projects. You might get stuck with a per word rate, but don’t suggest it up front. Start with a project rate. Now that we accept that we should all be charging by the project, how do we actually do that? I was serious when I said these rates are made up. Not one freelancer or consultant has it figured out and has created the perfect project rate every single time. No two projects are the same. No two clients are the same. Here are just a few things that go into creating a project rate: The expertise you bring to that particular job. The value the client will get from your work. The amount of energy you will need to put into the project versus doing an easy project. Whether the client requires regular check-ins or for you to attend phone meetings—charge for those meetings! Whether the client is a new client or a beloved current or former client. Whether the client is a pain in the butt or has a history of scope creep. Whether the client is a major corporation or a small nonprofit you want to help out. The extras that are required—are there more rounds of editing? Are there extras like social media posts that need to be included? The project timeline—is it reasonable or hurried? Is it a rush job? And the list goes on and on! Here is my system for coming up with a project rate. First, I have a secret hourly rate to give me something to start with. Now, I said don’t use an hourly rate, so if you do start with an hourly rate, use this very loosely as just your “base” to get started. Don’t stick to it. Next, ask yourself all those things about what type of project and client this is, including: Are you an expert at this type of work? Are you in high demand? Did you come highly recommended to this client from another client of yours? Do you bring a certain skill set that is difficult to find? Even if you don’t, are you good at what you do? Have you done this before? Are you confident you can produce a quality product? What type of client is this? How much value will they get out of your project? How much energy will this project take—this is not time, this is ENERGY. Do you get the sense that this will be a tiring project, taxing on your brain, that the client is a pain in the butt, that you don’t really want to do the job? Take the time to evaluate to the best of your ability all the parameters around the project, not just the skill set needed to do the project. One of the best ways to do that is to have an initial phone call with the potential client. I know some of us hate the phone, but a phone call can be critical to finding out this information so that you can provide an appropriate project rate or a proposal. You can also learn a lot about someone when you talk on the phone with them—you can gather hints about what the client will be like to work with that you can’t get over email. For the phone conversation, write out a list of questions so you don’t forget. In fact, you can create a template of questions to ask every client. Questions you may want to ask, besides the details of the assignment, are: How would you like to stay updated? Can I just send you emails when I have questions? (This question could tell you a lot if they say something like, “Oh, I’d like you to join us for our weekly check-ins” versus “I trust you. Just let me know if you run into any problems.” Do you have samples of previous projects I could take a look at? Who is my direct contact? Is it one person? Are there multiple people involved? What is the review process like? How flexible is the timeline? A potential client may ask, “What’s your rate?” I often respond with something like, “I’ll be able to put together a proposal for you with a project rate after we’ve talked through the details.” You can also ask, “Do you have a budget in mind?” Sometimes they won’t and that may be OK. But if they say “about $500” and you are talking about a project that might start out at a base rate of $3,000, you don’t need to waste your time talking with them anymore. It can be helpful to educate them, though, even if they don’t change their budget. You are helping boost your industry by letting them know quality work is worth way more than that $500. And maybe they’ll increase their budget! Once I have all these questions answered and I have considered all the parameters, I take my base rate and start to increase it. After you come to a number, ask yourself this very important question: Do I want to do this project for that amount? You do not want to offer a rate that you will end up resenting—resenting the rate, the project, the client, yourself. Also know before you get back to the client what number you will not go below, in case you have to negotiate a bit. You don’t want to get flustered and negotiate a number that is too low for you. If you need to walk away from the project, you can simply email and say, “After further reflection/looking over the details, this is not a good fit for me.” Don’t say you’re sorry. Don’t continue to offer explanation. Don’t over-explain. You are the boss of you. It’s not a good fit. End of story. Biz Bite: Buy the good pens. (or elevate your workspace) The Bookshelf: “Notes from a Young Black Chef” by Kwame Onwuachi   Resources: Episode #39 of Deliberate Freelancer: Raise Your Rates—Without Emotion Episode #18 of Deliberate Freelancer: How to Set Higher Rates Episode #1 of Deliberate Freelancer: Change Your Mindset: You Own a Freelance Business Laura Vanderkam talks about “buying the good pens” on The Productivityist Podcast, episode 322, The New Corner Office with Laura Vanderkam FreeConferenceCall.com Rev.com (transcriptionist service)