Pricing is the worst. Let’s just get that out of the way right off the bat, shall we?
I’ll be honest… I used to aaaaabsolutely hate having to price my work. As much as I’d LOVE getting a client request in my inbox, I’d procrastinate on it hardddd because I’d stress so much over what to charge.
5 years in, though, I’ve learned a TON about pricing…. I’ve even co-written a full pricing course for beginners called Panic-Free Pricing!
In this post, I wanna share with you the top 3 pricing mistakes you might be making.
Before we jump in though, I want to let you know I have a free workshop which is way more in depth than I can go in a YouTube video or blog post. If you’re interested in pricing you’ll wanna check that out here.
Let’s get into these 3 mistakes though… all of these kill me, but ESPECIALLY #3.
Rather watch than read? No problem! You can listen to me chat about these mistakes in real-time by clicking the video below!
Mistake #1: Starting the work before you agree on the price/get a deposit
Every once in a while in our private Facebook group for pricing, we have people come in and show final images of the work they’ve completed and say “how much should I charge the client for this thing I did for them?” And Joanne and I (Joanne is my co-author on the pricing course) both just wanna reach through the computer screen and give the person a “tsk tsk”!
Seriously. If you take NOTHING else from this post, take this…. Never ever ever ever ever ever ever ever ever start a job without first agreeing on the price. EVER. NOTHING good comes of it!
Many beginners avoid talking about the price upfront because they just want the job so badly and they don’t want to screw it up… or because it’s family and friends approaching them for it so they feel weird. But lemme tell you… what’s gonna feel even WEIRDER is having the awkward “how bout THIS much?” conversation AFTER you’ve already completed the work. This is where you end up devaluing yourself because you don’t want them to think it’s more than they anticipated. And it’s SUPER awkward.
OR even worse… you tell them the right price (which is probably pretty high), and they say something along the lines of “oh my gosh, I can’t afford that! I didn’t think it’d be that much… never mind.” And you then you’re stuck with a project you’ve already created but never got paid for.
So long story short… ALWAYS discuss price up front. Don’t start on a job until you’ve already agreed on the price. And even better, ALWAYS get a 50% deposit before you even start.
Mistake #2: Only charging an hourly rate.
It is really important to know what your hourly rate is. One of the biggest mistakes I see beginners make with pricing is that they don’t properly calculate their hourly rate, and they end up making way less than minimum wage!
I’m not going to walk you through how to calculate your hourly rate right now (because we go over this in the free workshop), BUT I do want to talk about why you SHOULDN’T always just charge using your hourly rate.
When I say don’t charge hourly, you might be like… Well… What’s the alternative?
The alternative is project-based pricing (or flat-rate pricing).
So hourly pricing would be telling your client “You can hire me for $80 an hour to complete this project” VS project-based pricing would be telling the client “You can hire me for a flat rate of $2000 to complete this project”.
Most beginners default to charging hourly. For example, say a client approaches you with a project, and you tell them you’d be happy to work on it and that your hourly rate is $40/hour. This way is by far the easiest way to quote, which is fine… but not in ALL instances.
The problem is that this type of pricing gets tricky when:
- A) You get more experience and you work quickly. If you work quickly or efficiently because you’re experienced, you’re actually penalizing yourself. Less hours=less money, so technically the more experienced you are, the LESS you make. Which is backwards.
- B) You don’t have a clear idea of exactly how many hours it’ll take you, so your client has no idea what to expect. Is it gonna take 2 hours (so $80), or is it gonna take 12 hours ($480)? This can really tick a client off if they’re not expecting it.
There are other instances where this has some major cons, but these are the main two.
Project-based pricing, on the other hand, can allow you to avoid those problems, AND often make more money.
With project based pricing, it’d look more like… A client approaches you with a project, you ask lots of questions, get the whole story, and start to make some estimations on how much time and work will be involved. Then you take that ballpark time estimate and do the math against your hourly rate (because you should still be calculating that). You add in some other factors based on the exact job details, and you come up with a flat fee to quote for the entire project. The client gets a total, all-inclusive number, and there’s no wondering. It also means that if you work quickly, you’re going to get paid that total flat-fee amount no matter what… doesn’t matter how many hours it took you.
Project-based pricing can definitely feel scarier because it means quoting bigger numbers, but in the long term, it’s way better for you and your business (in most cases).
Long story short, ONLY pricing hourly is a pricing mistake tons of beginners make. (Until they’re told otherwise!)
Mistake #3: Discounting.
This one gets me super fired up. Discounting is mistake #3 I see a lotttttt. And I’m totally guilty of having done it when I was starting out too! But that is DISCOUNTING. Most commonly, discounting for friends and family.
It’s like, as soon as you open up a business, the people whose unconditional support you need most (aka: your friends + family) automatically assume they’re entitled to a discount.
So I’ll just say it upfront… My policy is no discounts. At all.
But that doesn’t necessarily mean you have to charge your family and friends full price every single time. In fact it means the opposite… For them, it’s free.
And you might be like wait isn’t free worse than discounting? We talk about this a tonnnnn in our free workshop, but let me explain in a nutshell…
The basic concept is this: If you are close enough to someone to reallllllly wanna do them a favour and give them a deal, then do it for 100% FREE. If not, do it at 100% FULL PRICE. Then—and this is the key—invoice them the same way no matter what. But if it’s someone you’re doing the project for as a favour, indicate the full value of the project on invoice. Buuuuuut, include a 100% discount to bring the total to zero.
THE FULL PRICE OR FREE METHOD IS AMAZING FOR TWO REASONS:
- First, you’re never devaluing your product or service by discounting it. In both of these instances, whether it’s full price or free, the value of your product or service does not decrease. Both the client who gets the item for free, and the client who paid full price, they both know the value of what they’re receiving.
- Second, you will never run into issues with having to decide where to draw the line with discounting. You do work for free for your closest friends and family, and everyone else is full price. Period.
You never have that awkward feeling when you want to discount for your bestie, but not that friend of a friend. Will the friend you don’t discount for take it personally, or feel like you are taking advantage of them? It’s murky. Using the Full Price or Free Method, you avoid all that. You pick who receives free work and who doesn’t, and stick to it. No guilt.
Make sense?! Again we talk about this way more in the workshop, but this is like… my favourite revelation I ever had when it came to pricing. I used to discount everythingggggggg if I just knew someone. Even if it was just a friend of a friend that I didn’t know very well! I ended up discounting almost everything I did in the start since it was all word of mouth. But once I stopped, it was such a game changer. And I want that for you too!
BONUS Mistake #4: Thinking you should charge lower because you’re a beginner.
You don’t have to do that!!!!!! I’d say this is the toughest one for beginners to get past because it makes sense, right? You’re newer, so you shouldn’t charge as much. But that isn’t always the case, and more often than not you’re actually shooting yourself in the foot.
And That’s A Wrap!
So tell me in the comments because I’m genuinely so curious…. Which of these mistakes are YOU most guilty of?! I was super guilty of all of these mistakes when I was just starting – no judgement if you’re guilty of them too!
And then again, make sure you’re signed up for the free workshop… it’s called “The 5 Keys to Confident Pricing” and if you’ve EVER felt a little iffy or nervous about pricing, it’s gonna help you.
And finally, your dad joke…
I bought a wig for only 25 cents!
It was a small price toupee.