I had an interesting conversation with a fellow self-employed type the other day. As so many other 1099 talks do, the chat turned to how much we charge for projects.
My friend had a very common problem–he was trying to figure out a fair price to clients for his services.
So What Is A Fair Price, Anyway?
When you begin working on your own, there’s no set price list for how much to charge for a particular project.
A personal trainer who runs their own business, for example, might charge $80 a session in San Francisco. That price might be a bit low in another city–in, say, Tulsa, $50 could be more appropriate.
Or a graphic designer might be asked for a logo by a rapidly growing company. Even though the logo might not take that much time to design, it’s going to be the brand identity linchpin for a big campaign.
Your Project Has Value To The Client
If you’re an independent contractor, your client isn’t paying you out of the goodness of their heart. Rather, they’re paying you because you provide services they either don’t have inside their organization or don’t wish to have inside their organization.
When you’re pricing your project, you have to take that big thing into account–You’re providing a service your client needs.
Don’t underprice yourself because you lack confidence in your own work or because you want to make sure you’re the winning bidder. You need a price that reflects your project’s value to the client.
Give The Client Ten Times The Value You Create
When pricing a project, it’s tempting to price it solely by the hours it takes to create. But that cheats the client, and cheats yourself.
When you’re working on projects for your client, if you’re charging an hourly rate, you’re not just charging for the act of working each hour: You’re charging for the client to reap the benefits of your experience in the industry you’ve spend a long time perfecting your skills in.
If, say, a technical writer is formulating a fee for a white paper project for their client, they should wonder… How many products will my client sell as a result of my work?
A fair estimate is to charge your client a tenth of the potential value your contributions will create.
You’re Not Just A Worker; You’re The Boss
One of the worst mistakes an independent contractor or 1099er can make is underpricing their work because they’re uncomfortable negotiating or afraid to walk away from potential business.
However, remember: You’re the boss of your own business. If your work offers serious benefits to your client–and that includes everything from creating the Facebook page for the pizzeria which helps drive business to designing the waiting room which makes new patients feel comfortable at the doctor’s office–you should be charging them for the benefits you create.
Clients benefit because they have a clear and transparent pricing structure–and, frankly, the comfort of knowing they’re not paying bargain-basement rates for low-grade talent. You, the freelancer, solopreneur or 1099er, benefit by getting paid at a rate you deserve.
Everyone wins, basically.