As an entrepreneur, before you send out that first quotation, you need to decide what you are going charge your clients. How do you find the right balance between too high and too low? Should you charge hourly or per project? The answer isn’t straightforward and if you find yourself struggling with this problem, you are not alone.
Once you leave the safety of a structured company to start your own business, all the various financial responsibilities now fall on your shoulders. Ensuring your expenses are covered, never mind making a profit, depends on whether you charge enough. To help you decide on exactly how much is enough, consider these four tips:
Calculate a good average rate
A good place to start is to question friends and acquaintances who are also working for themselves – working successfully, not merely surviving. Find a good balance between the highest and the lowest hourly rates. If you offer services such as cleaning or driving kids to school, rather structure your pricing per room or per month. Finance can be a sensitive topic but try not to shy away from it, sometimes asking a direct question will save you months of anguish.
Test your average rate
A suitable average rate should keep both your client and your bank account happy. The first few months or even years are an up and down learning curve of what works and what doesn’t. Early on in the business you may scare off potential clients by sending quotations that are too high. At other times you might find yourself working on a project for days before realising that you quoted far too little. These experiences are what help you build an accurate view of your worth.
Charge your rates with confidence
Once you have found a rate you are comfortable with, charge it with confidence. There is nothing more satisfying than a returning client who chooses you for a new project, not because of your ridiculously low prices but because they know and trust your skill and talent. Having these clients stay and grow with you through the years is a great confidence-booster.
Prices are negotiable, so are services
Sometimes a potential new client might ask you if the quotation is negotiable. That is a fair question. Shave off as much as you can while still remaining profitable. Remember that you are also in a position to negotiate. If the client feels the quotation is too high, you can suggest taking a few items off the list. Make an effort to meet each other half way.
The value you assign your service needs to be weighed up against the kind of client you want to attract. Understanding how much to charge your clients is a personal and a professional financial decision. You may have a lot of bills to pay at the end of the month, but that doesn’t mean you should turn your only client into a cash cow. Overcharging the client is not a good idea, but neither is undervaluing yourself. Find a balance between what you want, and what you need.
I am a graphic designer and illustrator from Johannesburg, South Africa. Having first studied Visual Communication at The Open Window Institute in 2006, I went on to work for various publishing companies before starting my own design studio in 2016. Currently I live with my husband in Randburg.