What should I charge for my services? #ABC2020

What should I charge for my services? Have you ever quoted a client so low and then realized that you are spending time “forever” on that project? Yes, I have done that. What should I have charged for my services? 7x more! Felt stupid, no words can describe my self-disgust when I worked a client’s project for $4 an hour for what seemed like months! 

If you had physical products to sell retail or wholesale, that would be a whole different story. We could easily come up with calculations and formulas and average price in the market and decide on what your price is going to be per each item.

But apparently, you’re not selling T-shirts, candy or pillows. The question for debate here is what should you charge your customers for your services. On Day 10 of my April Blogging Challenge, this is what I’d like to address.

Traditionally people have come up with various “philosophies” of pricing. One such school of thought came up with “If people pay a lot of money for a service, they value it more. So, charge a lot.”

Another school proclaimed “If you charge lower than your competitors, people will think you have a low self-worth or your services are not based on expert knowledge. So, charge more”.

A third one said “You are bound to lose business by chasing away customers if your prices are very high. Reduce your prices”. So, what philosophy would you go with?

So, what should you be charging for your services? I’ve always found that customers are happier when quoted for the total project rather than hourly price.  Quoting an hourly price for any project small or large leaves customers skeptical. Something that the customer thinks should be done in 10 hours could take you 5 hours to 50 hours and they would have no way knowing what your total bill would finally be.

Here is a stress-free three step method to apply to derive at the right prices for your services.

Step one: Decide on an hourly rate

Do your research and find out what the average price per hour is for professionals in your niche. Then, decide on a figure around that number. For example, if you are an administrative virtual assistant and if most VAs have an average hourly rate of $30, price yourself anywhere between $28-$35, wherever you feel comfortable.

Step two: estimate how many hours the project will take.

Break down the project into tasks and calculate time taken for all the tasks. Leave room for step-backs, booboos do happen. So now you know the total time that could be taken by the whole project. Remember, most of the time it’s not just the doing of the tasks in the project, you have to take into consideration all the extra time that you will use on the project, i.e. to interact with the client, time taken for emails, phone calls, etc.

Leave some extra room on your time sheet for revisions and discussions and any other unexpected additions that the customer might throw in once you are half way through the project.

Step three: Calculate your totals

Multiply your hourly rate by the total number of hours that the projects might take. At this point add any other expense that you might incur on the project, such as gas for the car if you have to drive back and forth. Always add a 5% extra to accommodate unforeseen mishaps, additions or detours. So now you have a quote for the project.

Always, always, always communicate pricing and costs clearly with the client, preferably in writing. Track down your hours and minutes so you know for the future an approximate amount of time a similar project might take. Initially you might have a tough time putting a price on your services, but eventually you’ll be an expert.