Good freelancers price by the value they provide to their clients. Pricing by value emphasizes quality and benefits, not quantity or speed. Here’s how to implement a value-based pricing strategy.
Since I started my freelance content writing business a little over a year ago, I’ve gone through several iterations of my pricing strategy.
At first, I started charging per project, but then I realized that I didn’t do the math right because I was working more hours than I had quoted on and now the project fee wasn’t compensating me for all the hours worked.
Next, I implemented a time-based pricing strategy and started charging by the hour. I quickly realized that I was taking on plenty of additional tasks that weren’t being billed for. Items such as phone calls, research, admin, in-person meetings, travelling, and briefings.
An hourly rate wasn’t working for me, but either was a project-based fee.
I decided to re-evaluate how I was charging clients for the work I was providing and move into a value-based pricing strategy.
According to an article in Fobes: “Value-based pricing is a technique for setting the price of a product or service based on the economic value it offers to customers.”
In my case, as a freelance content writer, I stopped looking at my pricing strategy as hours I was spending to produce the work and started thinking of it as the value I was creating for the clients’ business and for its ability to increase their own bottom line.
Essentially—the “value” that was I producing for them, is the fee that I would charge them for my work.
I focus on attaching the cost to the value. That way, they’re paying for my expertise, my experience and my ability to deliver something truly valuable.
As a freelance creative, linking cost with time turns me into a commodity. It also means I lose money by working quickly and efficiently. I also lose out when I take on additional hours that weren’t budgeted for upfront.
Stop Charging for Your Time and Use a Value-Based Pricing Strategy
But how does value-based pricing work in practice? When you’re quoting a freelance client project consider the following:
1. What Services are You Providing?
Break each task down into a separate line item with individual deliverables (i.e. what the client will receive, such as a newsletter design, a blog article, landing page copy, etc.).
In your statement of work or project agreement, don’t create one small summary or the “gist” of what you’re going to be delivering. Each deliverable should have its own line. When you do it this way, then you can also create a price for each line item.
For me, if I’m writing five blog articles to be delivered one each week for a month, then that’s how I write it. Each blog title with the due date on its own line. That gives me five lines enclosed in my statement of work.
2. What is the Timeline for Each Deliverable?
Base your timelines on the average of previous projects. Then triple it! I know a 500-word blog article with light research and links embedded will take me three hours of solid work to write.
But I would never receive a brief and then turn around said blog article in three hours. That’s just crazy talk!
If it takes you three hours, tell the client three days. Don’t disclose how long it takes you to complete each task. Remember, we’re not charging by time.
In addition, put a premium price on rush requests that require you to deliver an item in 24 or 48 hours.
In one of my most recent assignments, my client needed 10 blog articles turned around in one week. I needed to drop everything else, plus work over the weekend to get the work done thoroughly in the required timeline. The premium rate was included in the project fee.
The reason you want to put a higher rate on rush items is you’re essentially having to stop working on other client projects—meaning you’re now losing money. In order to make up that money somewhere else, you’ll have to upcharge on the rushed delivery. See how that works?
Attach or include your timeline on your statement of work. If you get the project done early, you can sit on it while you work on other projects.
You can take extra care in double checking your work. Or you can even go ahead and deliver it early. Your client will think you’re a star because now you’ve over-delivered on your agreement.
Having a timeline for your work also allows you to balance your workload when you’re juggling multiple clients, multiple deliverables and trying to have a personal life.
3. What Kind of Client are You Working With?
This is probably the most important tip. Even above the first two.
How much you can charge a client totally depends on the credentials of the client. Which is why you really want to start prospecting for high-value clients.
If a client generates billions of dollars a year in business, then think big. If they have global offices in multiple countries, then think big.
If your client is working their business as a side job from their basement, then you might not get much of a squeeze.
But if you’re building them an amazing e-commerce platform that’s going to get them out of the basement and into their own office space, then re-consider how to price the value that you are providing to them.
Your quote should be dependant on the size of the company, their revenue, the scope of work and the delivery timeline. All these things combined will help you determine your value-based pricing.
Labourers Charge by the Hour—Leaders Charge by Value
If you are at the very beginning of your freelance career, depending on your niche area of focus, my recommendation would be to focus on building your portfolio.
Focus on getting those first few quality clients in the door. Focus on your work and pay attention to the value that you are creating with your deliverables. Focus on becoming an expert in your field.
Once you’ve got a little bit to show for yourself and have an understanding of how you’re truly making a bottom-line impact for your clients, the next step will be to re-evaluate your pricing strategy.
Good freelancers price by the value they provide to their clients, while others price by the hours they need to complete a task. Pricing by value instead of by time emphasizes quality and benefits, not quantity or speed.
Leaders are respected for their skills and the unique way that they transform client problems into smart solutions. This is how you want to separate yourself from the others.
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