How to Price Your Services

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Time is money.  Pricing projects isnt easy.  There are plenty of factors that should be considered:

  • How long will the project take?
  • How clear are the client’s requirements?
  • How well do you know the client?
  • How likely are you to get future work from them?
  • How skilled or experienced are you to handle the project?
  • How busy are you with other work?

Hands down, pricing our services is tough.   So tough that no one has really mastered it.   And then you also have to decide how to charge: hourly or fixed price?

Do your own research

It is really important that you know what your work is worth.

  • Every freelancer situation is different

There are different factors that differentiate one freelancer to another.  It could be the country of origin.   For example, a freelancer living in Manila who is single, with no kids but the only breadwinner in their household has different set of priorities and responsibilities to someone who is married with kids, and who lives in India.

  • Check out current job ads

Check out sites and look for jobs who closely match your skills.  Take the salary range and average them.  This should give you an idea of how much your counterparts are currently making doing exactly what you wanted to do.  Obtained price might not be an ideal but it should help you figure out a salary range normally charge in your specific location.

  • Chat with other freelancers

I don’t recommend going to any freelancer and asking outright “what is your hourly rate;” that would not boost well for you and will make you look bad.

If you have some close freelancer-friends in the field, who do similar work to yours in their freelancing, then you could possibly chat with them to find out their average hourly rate (or at least an idea of what their rate is).

Or, join forum or facebook group intended for freelancers or virtual assistant. In Manila, you might want to join Jomar Hilario Virtual Assistant Guru in Facebook.   Members of the said group are very friendly and will try to help you the best they can.

Figure out your Working hours and hourly rate

Typically, a person would be working 1,920 hours a year. It is 40 hours (8 hours a day) week times 48 weeks (52 weeks less two weeks for vacation and two weeks personal/medical days).   Then divide the average salary by the hour’s calculation to get an average hourly rate.

This should give you a starting point, next is to figure out other expenses like overhead business expense e.g. monthly internet usage, electricity, computer equipment and things like health insurance which are normally handled by an employer.

Estimate Project Lengths as Accurately as Possible

Estimating how long a project will take is the key to pricing it well. If you can’t estimate the length of a project you’ll never come up with a fair price, and more than likely you’ll end up losing.  

Ultimately, it will be up to you on how flexible you want to be with your pricing. Be careful about negotiating too much — if you drop your price 30% or more from the original estimate (without the project scope changing in parallel) it might look like you were trying to price gouge before. You lose money on freelance projects when you book yourself too cheaply and can’t make more money on other projects and opportunities that come your way.

Related articles

 

How to use Teambox

Teambox is an awesome online project management tool.  Teambox is a  friendlier version of the popular Basecamp collaboration software.  It has a  simple, clean layout with awesome graphics.

Check out my tutorial on how to use teambox.

Tools to Help You Manage Your Projects

Working on a project or when your working with a team, you’ll be assigned to bits and pieces of the project same as with your teammates. Pretty soon the project will be in a thousand different places. You’ll have task list, documents save on different computers and google docs accounts, various emails, instant messaging about the project, time tracking in  yet another app.  With all of this, there is a possibility of confusion or your digital tools are dragging the project down.

A solution is a good  online project management tool especially for us freelancers or virtual assistant.  It helps you to be organized. Best of all, it promotes communication, transparency and accountability.   Everyone has the same access to a project’s information and target lines. Each member of the team knows his or her  role. No one is left in the dark.

I scope for free online project management that any freelancer can use.  There are some that are not really user friendly.  Some have layout whose graphics can cause confusion.  Some I find to be really good.  They are so good I created tutorials for them.  It is important to mention that although the following tools are free there is usually a paid version to accommodate larger teams and more projects.

Here are free online project management tools in no particular order that might help your team manage projects and be as productive as they can be:

  • Teambox – extremely easy to use with awesome graphics and clean layout.  Free version allows up to 5 users.
  • Freedcamp – very easy to use with a robust set of features and only one price plan, free.

How to use Freedcamp

Freedcamp is an online project management software.  It offers many features in a simple interface.  It is a collaborative Software, Document Management System, Issue Tracking System, Resource Management, Scheduling, Web Application at an excellent price.

Type of People on how income is generated.

In his book “Cashflow Quadrant”, renowned financial guru Robert Kiyosaki has identified four distinct types of people based on how they generate cash and earn money. He called this the cashflow quadrant. Briefly, let’s take a look at the characteristics of each of the four quadrants:a

E – Employed

This is the quadrant applicable to most people on the planet. The employed works for someone else’s business and in exchange, earns a fixed amount usually given on a monthly or bi-monthly basis. Being employed means actively engaging yourself and devoting your time and effort on a daily basis to earn money. The entire labor force belongs to this category, from call center agents, taxi drivers, anyone working out there on the streets all the way up to the CEO of a top multinational company.

S – Self-employed

You are self-employed when you own your own job or become a small business owner. Doing freelancing jobs such as online writing or blogging also fall under this category. You might be wondering why a small business owner is considered as self-employed when ut should have been under the “B” quadrant. It’s because small business owners usually need to devote their own time and energy in running their business and ensuring smooth daily operations.

I – Investor

An investor is someone who uses a significant amount of his/her own money and puts it in several investment instruments such as paper assets, real estate, and commodities. The most common examples of these paper assets are stocks, bonds, fixed-income notes, and mutual funds. The more aggressive investors put their money on volatile, high-risk instruments such as forex, gold, and other commodities. Whatever instrument they use, the objective is the same – to gain a steady source of passive income from these.

B- Business Owner

Unlike the small business owner belonging under the self-employed category who needs to devote his/her full time, energy, and attention to keep the business running, the business owner in this quadrant is someone who owns an enterprise that does not need his/her physical presence to keep it running. People who belong in this quadrant can travel around the world without worrying about business operations as he/she has managed to employ several personnel to manage the business.

Among the four quadrants, Kiyosaki encourages his readers to be passionate and creative, to make the leap from being in the rat race (represented by the E and S quadrant) to having financial independence (as demonstrated by people in the I and B quadrant). Without even looking at official statistics, it can be concluded that majority of the population belong to the “Employed” quadrant. Most of these people are tied to the secutiry of their day jobs and are afraid of stepping out of their comfort zones to come up with other means of generating income.

Well, the good thing about this is that they don’t have to make an aggressive leap from E toing in  B or I quadrant. They can probably start by having a small part-time business, investing in mutual funds, or opening a stocks account. From there, they can slowly gain knowledge and experience to help them slowly cross the border.

Based on above, which cashflow quadrant are you currently in? How do you plan to jump from the left to the right side of the quadrant?