Pricing your offerings to make sure you're earning a profit (or at least paying your bills) is a critical part of business management.
MANAGING PRICING WITH CLIENTS
No matter how you’re billing (hourly, flat fee, or a mixture of both), it’s important to outline what has already been paid, what the remaining balance is, and any additional add-on fees (like extra work, reimbursements, etc.) that may have come up. How you organize everything is up to you, but make sure each and every dollar is included. That way, both you and the client will have no doubt how the final balance was calculated. If you’re descriptive and thorough, questions and confusion will be minimized and make the process easier.
Regardless of the cost of the project you're working on, it's absolutely critical that you get money up front. This helps the client have skin in the game and encourage timely payment of other funds. Most businesses require between 30-50% up front before services begin and then the rest of the payments are broken out with all funds due before final delivery of files or product. It's also important to consider how you word the initial payment language in your contract - here's a great discussion on "retainer" vs. "deposit." Finally, for projects under a certain dollar amount (i.e. $500), it may be wise to collect payment in full for convenience and security's sake.
DECIDING HOW TO PRICE YOUR SERVICES
Most of us are undercharging for our time. By undercharging you are essentially ruining it for everyone in the creative industry. It’s time to get clear on what it is you want to do and how you can make a comfortable living doing what it is you love. The creative industry is blooming with Social Media Managers, Graphic Designers, Content Creators, Coaches, PR, Bloggers, Photographers etc.. There is a huge need for us creatives in this online world so here are my top tips for growing your income.
My favorite tip is to work backwards. Start with your desired yearly income dividing that into a more realistic number with months or quarterly. Once it becomes more tangible you can start designing your packages so you can see what you need to sell to equal that monthly/quarterly revenue. Also seeing how many clients you can take on without feeling overloaded.
If your desired yearly revenue is $90,000 divided it by 12 months, which equals $7,500
If you want 3 clients/projects a month you need to make $2,500 on each client. 3 x $2,500 equals $7,500
Or two clients/projects at $3,750 a month equals $7,500
WHAT IS THE INDUSTRY STANDARD
Get to know the industry you work in, see what people are making at the top of the ladder and at the bottom. See where you fit in. Look at people who are crushing it and what they are offering, could you incorporate some of these services in your packages? I think research is key, you want to stay at the top of your game!
*Also look to see if there are programs that you can invest in to maybe learn some more tips for experts that will help you charge more.
Don’t let potentail clients set your prices for you. Sometimes it’s just not a good fit if they are trying to take advantage of you. I am all about giving a 10% discount here and there but don’t barter your services out of despairing. I always offer a good, better and best option for my clients so if they want to drop the price they will also be losing different options.
WHEN TO SAY NO
I am a big advocate of collaborating and working together on projects to benefit each other. But I want you to be smart about it. Here is what I have come up with to make sure you are spending your time in the right places. First come up with a quarterly “advertising budget” that you feel comfortable with. Next look at your rates and pricing and see how you can use your time as the budget to work with others. Once you have given away your time aka money you will have to wait until the next quarter to work with others. Play around with that budget and see the ROI.
Ex. If I am a photographer and I am looking to have an “advertising budget” of $5000 a quarter I know I normally charge $550 a session so my budget would be 9 collaborative sessions a quarter. Or if a big project came up that I normally charged $3,000 for I would take that on and have a remaining budget of $2000 for other smaller projects.
HOW TO REMEDY NON-PAYMENT
STEP ONE: If you've got a client who is late on payment, step one should always be to have sympathy. There may be a reason your client isn’t online right now and it may be because something crazy or unthinkable happened. Send an email to gently check in and see what's going on.
STEP TWO: After checking in, wait at least a week, then go forward with reminding the client of your policies. Your contract should outline what happens when your client misses a payment.
STEP THREE: Nothing gets a client’s attention like a request for money. This is when you should bill for work completed as well as any delay fees. Your contract should outline that the client owes you payment for any work completed and if you have a delay clause, you can invoice the client for work you’ve done as well as any late fees.
STEP FOUR: If your invoice is still unpaid and your client isn't responding, cancel the project (if applicable). Send a notice to the client that the project is cancelled and let her know that she needs to pay the previous invoice. Chances are, at this point, the client may never respond, and that really sucks. You can hire someone like Julie to attempt to get payment on your behalf, or you can leave it. The choice is yours.
Now it's your turn!
Download Profit for Passion worksheet BELOW.