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From Making to Manufacturing
Should consumer product startups manufacture in-house or partner with a copacker?
Ever struggled with setting your pricing?
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Is imposter syndrome getting in the way of your income potential?
How to Confidently Set Your Pay Rate as a Freelancer
Turning limiting financial beliefs into business lessons learned. Here's how to price your services as a freelancer or contract worker.
When I began my entrepreneurial journey in 2012, which has included everything from photography to building websites, I was terrified of charging for my work.
In the midst of a quarter-life identity crisis, I was shaken by the impostor syndrome common to almost all fledgling entrepreneurs and freelancers and met with internal whispers that challenged me as I learned to navigate my new chosen field.
“No one wants to spend lots of money, so you must have the lowest prices.”
“Asking other people to give you their hard-earned money is sleazy and gross.”
“You don't have enough money to spend on marketing or branding, why not make and print your own business cards instead?”
“It’s okay to work for free or next to nothing since you’re still starting out; no one will want to work with a newbie.”
None of these beliefs are completely wrong. It’s difficult to figure out pricing when you’re first starting out as a freelancer or entrepreneur. It’s difficult to assign a value to your knowledge and skills when you are new to the work that you’re doing. It is important to be smart about business expenses and invest smartly, not just spend money on every shiny gadget or gimmick with a big promise.
But it’s all too easy for prudence to metastasize into fear. As I’ve talked with other entrepreneurs over the years, I tend to see a lot of the same mistakes fueled by fear. It’s taken me several years, but here’s how I’ve turned limiting financial beliefs into business lessons learned.
Don’t price yourself based on what you would pay for something.
We tend to undervalue our own skills, but just because you wouldn’t pay that much for something, doesn’t mean no one will. There are clients for every niche and price point. It’s a matter of finding them and serving them well. “Charge what you’re worth,” is a nice ‘grammable platitude, but leaves you way too prone to impostor syndrome. Instead, do some research about pricing in your field and niche, deliver a great experience, and price that experience so that you can profit.
“Affordable” is not a unique value proposition.
Many service industries, like taxi drivers, laundry businesses, and gas stations, depend on high customer volume driven by low prices. But you may not want to be known as the cheapest [whatever you do] in town. Doing so can diminish your perceived value, and there will most likely always be someone willing to work for less than you. Racing to the bottom of the price ladder is not sustainable, especially if you provide one-to-one services and there’s a cap to how many clients you can serve at a time.
Separate your self-worth from your job and income.
If you view money as a form of security, it’s easy to conflate it (and the work we do to earn it) with your value as a person. But as career coach Cynthia Pong reminds us, “The sum total of you and what you bring to the earth is not simply what you do for your work.” Take your emotions out of your pricing and money management, and you can make decisions based on objective numbers and facts, not fickle feelings.
Take your business seriously.
Detaching your self-esteem from your salary doesn’t mean you shouldn’t care about money at all. In fact, wedding photographer Cassie Valente is grateful to “[her] parents for raising [her] the way they did… [with] an immensely strong money-focused mentality.”
Before quitting her corporate job, Valente listed all of her expenses, then asked herself, “How many weddings would I have to photograph at my current price point in order to just cover groceries and rent and emergency money?”
With this data in hand, she felt confident enough to try full-time photography for six months. Whether you want to quit your day job or just have a serious side gig, make sure you’ve done your homework: write a basic business plan, figure out a budget, save up living expenses, and have a backup/bailout option.
Sometimes spending money actually costs less in the long run than not spending money.
Sure, it costs time and money to hire and train an assistant, but the hours you spend invoicing or messing with your website is time you could have spent working with clients. (And earning money!) Nobody likes fees and taxes, and it can be tempting to take cash only, use personal payment systems like Venmo (which is against their terms of service), or charge your clients credit card fees (which is illegal in some states).
All this scheming could save you a little money, but could ultimately cost you growth potential and bigger money. (Or worse, land you in a costly audit or lawsuit.) And running your business under the table, which is an unfortunate necessity for some people, could end up creating a lot of fear.
For many people, fear of not having enough drives every action, from clipping coupons to hoarding grocery bags under the kitchen sink. There’s nothing inherently wrong with being thrifty, but fear of scarcity is a self-fulfilling prophecy: if you’re always afraid you won’t have enough, you could end up making decisions that limit your potential.
You can conquer (or at least manage) your fears by facing them head-on with data and knowledge to support you. If you want to grow your business in 2020, start by committing to an honest accounting of your income and expenses. With that knowledge, you can plan to raise your prices, develop new service or product offerings, or even quit your day job. The only way to get over limiting fears is to do the thing you’re afraid of and show yourself that it can be done.
Wishing you a fearless new year in business!
