How to price your product or services (& get over "Money Guilt"!)
So, you've taken the plunge and started your small business! You feel good about your web and social media presence. You feel solid about your inventory/product/service. You want to start booking clients...and then that moment inevitably comes SOMEWHERE along the line where you think any one of the following thoughts:
I'm new at this... I feel guilty for charging money.-
Other people know more than about this than I do.
Who am I to charge for this service?
Why should anyone listen to me?
This was a stupid idea.
I HATE having to chase down clients to pay me!
I feel guilty charging my friends.
I feel guilty charging my family.
I hate money.
Any of those sound familiar? Read on...
Lord knows, it's something I have had to go back and work on many, many times. And tbh I will probably will have those moments throughout my career. BUT, it's helpful to own that about myself, and to set up clear guidelines for times when any of those nagging money thoughts cross the ticker tape of my brain.
I came across that sentence "know your worth, add tax, never discount" when I was researching how much to charge for copywriting. BUT, I feel the sentiment goes way deeper than that. It speaks to not only owning what your business/service/goods are worth, but to owning what you believe YOU are worth.
I think money can actually be incredibly emotional because it shines a light on what we feel we are worth. If you're having any trouble or guilt about charging people, or just plain don't know where to start when setting your rates, here is a method I have found super helpful when helping people set their prices.
First, research your field. You can go on many different sites to do this; I particularly like Glassdoor or indeed for more "corporate" jobs, Thumbtack for physical services like DIY projects/products or assistant help, Etsy for artistic or handmade goods, and Upwork for freelancing rates. Make a list or chart of what other people are charging for the same or similar goods/product/service.
If you are TRULY 100% new to something, you might consider taking a few weeks to build a portfolio/get a few jobs under your belt. This will help give you confidence both in yourself and your product, as well as give you insight into any issues you may have to troubleshoot in future. For me, I found out that time management was going to be a HUGE factor in determining my writing rate; initially, I was only charging clients for an hour or two of my time when it was really taking me 4-6 hours to complete the task. Get honest with yourself on how much time you're *actually* spending before setting an hourly rate or even a fixed price.
Once you have sure-er footing (don't worry- you probably won't ever feel 100% ready, that's totally normal) it's time to set your rate or your pricing FOR REAL.
In its simplest form: YOUR PRICE = YOUR COST + PROFIT MARGIN
DETERMINE YOUR COST: Go back to that chart and/or list you made of the competition's pricing. Then, evaluate your expertise level and determine where you fall on the spectrum. Be sure to remember to include the following things in "your cost":
How much supplies/rent/materials cost you
Whether you'll be charging by the hour vs. a flat fee
Introductory phone calls, research, emails
Taxes, fees, and any memberships you need
Oh, yeah, and YOUR TIME!
SET A GOAL PROFIT MARGIN: Once you've determined how much you're going to be spending on your business, it's time to focus on how much you want to be making from your business. It sounds simple, but it's kind of amazing how few people actually do the math to work out how much they need to earn per month in order to hit a yearly financial goal.
Side bar: I find it helpful to break it down in measurements of time; start with what you'd like to make for the year, divide that into 12 months, then into 4 weeks, then into however many hours you're aiming to work per week.
Once you know your profit margin, add your cost. Then you ARRIVE AT YOUR PRICE!
Now, you know your *monetary* worth. But the more important part of this picture is that you know your *TRUE* worth.
Always remember: there is only ONE YOU. Consequently, you bring something completely unique to the table, even if other people do the same job. Be aware of your place in the market, but it's wise to avoid constantly comparing yourself against others' perceived success. You're doing great, and you should be proud that you're going for it.
At the end of the day, you are providing something that someone needs. You have every right to be compensated for meeting that need. YOU ARE WORTH IT.