Pricing can easily get out of control if you don’t have a plan.
We’ve all struggled with it. And you may still be struggling with it. Pricing isn’t easy.
Why?
Because it feels so personal.
It’s the money you want to make and it’s the money someone else is giving away.
Here are three symptoms of getting stuck in pricing:
Symptom 1: Fear of losing out
I think the most common struggle with pricing plays out like this:
You don’t want to overprice an opportunity and lose out so you tend to undercut yourself, play it safe, to win the job.
The fear of losing the whole project outweighs everything else.
I know this because I’ve been there. I was in that mode for almost three years.
I didn’t want to lose all of the money, even if it meant I worked for less than my target rate.
The problem with this thinking — you’re never going to grow your rate, grow your margin, and buy back some time.
Take Action: first, please remind yourself that you’re not going to lose out 100% of the time if you charge your target rate. Second, have reasons for the rate you charge and explain the cost of a project to a client. Education is powerful in building trust with a client, so educate them on what factors into price.
My pricing calculator helped me quote and reach a healthy margin of $10k on this most recent project.
Symptom 2: Shooting from the hip
Another struggle is not standardizing prices and just shooting from the hip when an opportunity comes across your inbox.
Again, I know this too well because I didn’t have a standard rate early on.
I didn’t have a calculator for how I would get to a final number. I would just sort of add things up in my head.
And yes, I was making some decent money, but I was also leaving a good bit on the table because I didn’t have a standard way to calculate my rates and project costs.
Take Action: spend a few hours working on your standard rates and making sure it covers your operating costs and provides a profit margin. In our industry it’s pretty common to have day rates OR project rates. I prefer project rates so I can take the whole project into consideration and quote based on the needs. I have a Pricing Calculator you can download for free if you want my pricing method in a spreadsheet.
Symptom 3: No profit to show
Setting a rate, like $100/hour, sounds great in theory but is it enough?
It might feel like enough (depending on where you live - probably not much in California).
But if you don’t know what your time and your operating expenses are worth, then it’s a shot in the dark.
My fear for this community is that we work too hard for too little profit. Yes, we’re in this business because we love the creative. We love the art. But don’t miss that word I used…
BUSINESS.
We are in BUSINESS.
And businesses need healthy profits to thrive.
It’s exhausting to work hard for clients, strategize, shoot, edit, revise… and end up with a small profit to take home. You can only do that for so long before you burn out.
Take Action: open a spreadsheet and make a list of your gear and the value of it. Divide that value by 24 (for average months that gear will be in use before changing). Now make a list of your monthly expenses (software, music licensing, subscriptions, etc.) to just operate. Now include the salary you want to make in that month. We’ve now arrived at a good number for operating costs for the month. You need to know what this operating cost is and then determine how many projects you want to work to cover that and how much profit you want for the business on top of that, and that will influence your rate (how much you charge per project or per day).
GUESS WHAT?
My video business has grown by at least $50,000 this year because I standardized my prices even more.
I cut the fear. I stopped shooting from the hip. I stopped giving so many discounts. I owned my prices.
And doing that one thing… has led to some significant growth.
That’s not even new business. That’s just better pricing.
CONCLUSION:
Don’t let years go by and not address your pricing for what it is.
Don’t let these three symptoms progress for too long.
I promise you this — if you dig in, within one month you can have healthy prices that support you and your craft. Prices that you can share with confidence.
And start to win projects at the price you deserve.
Cheers my friends,
-Trent