Ahhh, pricing. It\u2019s one of the least understood aspects of your business strategy as a creative. However, it\u2019s also one of the most important, because if you\u2019re not making a profit, you don\u2019t have a business\u2014you have a costly hobby. And aside from figuring out how much to charge, one of the other key decisions in pricing your creative services is which fee structure to use. There are several ways to calculate your total fee for each client, and each one has pros and cons to consider.<\/p>\n
Perhaps the easiest and quickest way to price your services is to base your prices on the number of hours you work. This is often the default payment structure, as we\u2019ve all been taught from our first jobs as teenagers that time and money are connected\u2014the more hours you work, the more you get paid. The benefit to charging by the hour is that it\u2019s easy for your clients to understand.<\/p>\n
However, there are a lot of inherent negatives. First, when you charge by the hour, you force your client to focus on time rather than on all the other ways that you bring value to them (such as your experience, expertise, creativity, process, etc.). Your worth is in the problem that you\u2019re solving for your client, NOT the number of hours it takes you to solve it. In addition, when you charge by the hour, you aren\u2019t rewarded for efficiency. Most people want their problem solved as quickly as possible, and your ability to do that is valuable! But if you\u2019re being paid by the hour, your efficiency won\u2019t be rewarded.<\/p>\n
Next, you can price your services based on a flat fee. The largest pro to this pricing structure is that since you choose a flat fee base on your costs and the money you need to make, you are assured a profit. It\u2019s also often very easy to sell a flat fee to a client because it\u2019s so transparent\u2014the client knows exactly how much they will pay, and you as the business owner know exactly what you will make. This fee structure works well for business owners who offer the exact same service, every time\u2014you know your costs, you know your value, you know your time involvement, and it\u2019s easy to replicate for each client.<\/p>\n
However, if there is any variability in the service that you offer (meaning that the process might be different, the time involved may be different, or the amount of energy or the difficulty involved in the project might vary), you won\u2019t always be paid fairly if you stick to a flat fee structure.<\/p>\n