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Setting the right price for Freelance service always takes a toll on our creative brain. We are always confused between quoting a higher price thereby risking to lose the potential client, or quoting a lower price and then regret later that there was room for more.

We will look at various ways to get the pricing right as a freelancer. A lot of people ask for hourly pricing of a particular profession but there is no standard price in freelancing service. The same work could be done for X or 3X price depending on various factors. A lot of service pricing also varies because the output is subjective. A logo can be designed for Rs.1,000 or Rs.50,000. While all the deliverables can be same, the impact of the logo on the business cannot be determined immediately.

When we have enough work in hand, we generally tend to quote more. This may not be the best way to determine price. Instead, look at near future work pipeline. As a freelancer, always tend to have visibility into next 3 months of work pipeline.

Source of Leads Determines Pricing

  • Referral based Lead- If potential client comes through reference of a past client, you can charge more. The idea is that the referrer has already done the selling for you. You should gauge if the lead is talking to a competitor also, if yes, you should be careful. The real selling here is done by the referrer.
  • Online Sites/ Directory – If someone is coming to you through an online directory or industry forums etc. you should be careful to not quote high. The lead has not qualified you yet and they might be talking to competing service providers, so don’t turn them off with an off the mark pricing.
  • Past Relation – If the potential client already knows you, like a distant family, family of a friend or just happens to be connected online, work on educating them before quoting the price. I would still quote low here. There is a good chance that they are only enquiring and will only commission the project if the price is low.

Long Term vs. Short Term Engagement Goals

In most cases, there is never a one-off work from a client. A business will need most B2B service multiple times in their lifetime. So having a fair price will make sure the client will stay with you for a longer term. Initial work requires a lot of research and communication overhead. Once you have worked with the client for sometime, you will require lesser effort to deliver.

I would always consider a 30% cost of sales, so a potential repeat customer could be quoted that much lower.

Hourly Pricing vs. Package Pricing

Hourly pricing is probably how you think of your work. Western worlds have a wages system and most work is priced at hourly pricing. In India, hourly pricing rarely works. Most people do not calculate their hourly value. The client doesn’t know how much time it will take you to finish the work. Even if you quote the number of hours along, it is always an approximation.

  • If you think the scope of the project is well defined, keep a package pricing. Keep enough room in the price to accommodate small changes in scope.
  • If the scope of work is also a work in progress, keep an hourly pricing. This generally happens in long term engagement.
  • A good thing to do is to define a starter scope with a package pricing. Quote an hourly rate along for anything beyond the scope.

Cost Based Pricing vs. Value Based Pricing

When trading a product it is easy to determine the cost and add a profit percentage to that to quote the final price. In freelance services determining the cost is difficult and also a bad way of quoting the price. The office rent, laptop, internet, avg. hourly wage etc. is all unnecessary to consider when quoting a price. You should always measure the potential impact of your work and determine what value it holds for the client. You should then price your service as a function of that value.

Even when you don’t actually think this way while determining the price, it is a great strategy to drive the bargain discussion this way.

There are 3 reasons that you should look at when trying to quote price to a new client.

  • I want this client – Brand value of the client is high in the market that you want to target. Having this client in the portfolio will increase your chances of winning more business in future. In such cases we should look to charge just the bare minimum. I would go to the extent of doing the work for free if I get to mention them publicly. “Exposure” as a currency is acceptable here.
  • I want to experience this work – If you are trying to change your work domain or add a new domain. Or even if you are just new to the field of freelancing, you should charge less. Just charge a basic fee. Treat this as learning at the client’s expense. Don’t do such work for free and also don’t keep a price that would compare more seasoned people. The right strategy is to quote a price and give in to the client’s bargain.
  • I want to maximise profit – When it is none of the above cases, you should charge high. If the client isn’t a well known name and you are already good at work they want you to do, quote them high. You should regret less if you lose the client do you to price here.

In any of the above cases, try not to compromise on work based on what you got paid. Remember the pricing was different because of other factors, not because you wished to deliver a half-hearted work.

Note: Refrens Smart Invoices is the easiest invoice system for freelancers in India. It’s FREE forever. Try Now.

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