Charging your customers the right price
We’ve been through the freelancing journey, and we’ve gathered and seen thousands of freelancers prices with instaprice, have spoken to a few pricing masterminds, brainstormed, then wrote this guide for you.
Here are the main Pros and Cons of having and not having a pricing strategy
As Gustaf Alströmer from Y Combinator says in this video
“It’s attractive for you to offer your product for free however if you don’t charge your customers, they are not a customer and you don’t have a company”.
While the video refers mostly to business owners, it applies to all professionals running a business, regardless of the size.
In this article, we’ll be laying the foundations for the resources to come and we really need to address the elephant in the room: Pricing. It’s scary, and we’re right here to dish out the tricks that will give you the confidence to send out the right quote to your clients.
Top 3 reasons you need to charge customers and define a pricing strategy
Communicate your value
You’ve probably heard about Value Propositions and if you skipped this step when you began freelancing, go back to it right now. You really need to know what value you bring to your customers before thinking about sticking a price tag on your work. Here’s a nifty Value Proposition generator that will help you sum up what you can bring to your client’s table and why they should pay you for it.
All the components of Customer Perceived Value. As you can see, the cost, or price of the service, is only one of the aspects your clients perceive.
While pricing is only one of the components of value you have to communicate, it can be a real deal breaker when done wrong. The better you manage your value communication, the more chances you have of finding clients and getting paid fairly for your work.
From our experience, to be successful it’s important you find your Goldilocks zone or a price that’s “just right”.
Every customer will have a different perception of the right price to pay for your services and we suggest using this easy strategy to maximize your chances of appealing to more of your target clients:
Pick what you think is the ideal price point, and choose some features you feel reflect it
Add a premium version with more features at a higher price
Create a lower-priced option with fewer add-ons
(optional: Having a clear and well-thought-out pricing strategy can help you build trust and establish credibility with potential clients, as well as facilitate negotiations and justify your rates if necessary. )
Save time and effort
According to data from Fivver Workspace, in 2022 86% of freelancers worked from home.
Clearly, freelancers have a thing for saving time, so why not work smarter and spend a couple of hours working out your pricing, so you don’t have to spend hours Googling frantically before sending out quotes for each and every project? It’s a no-brainer!
From interviewing our users, we estimated that having a ready-to-go pricing model might save you 70% of the time when quoting to clients. That’s what they call price efficiency. Don’t be scared by the technical definition, let us break it down for you:
Do the work beforehand: Take action to make things easy for your clients and yourself. Being able to make the right pricing decisions in the shortest amount of time is an asset.
Use technology: Backing your ask with data is never a bad decision. A data-driven, technology-driven approach can be particularly effective with clients.
Double-check: Don’t take information for granted. While the first Google or Reddit search results may be accurate, make sure you know your pricing before sending a quote.
Grow
The freelancer economy is growing and the trends seem to be promising regardless of the looming recession. Let’s say there is an opportunity to be seized.
A few more things to consider:
73% of companies plan to hire more freelancers in the next two years, creating a higher number of blended teams - 2022 survey by MassChallenge
More than 40% of freelancers aren’t happy with their income stability and predictability - Freelancersmap’s 2022 report
While the first point is simply good news, the second point is precisely why we built instaprice. Both of these are easily fixed. Not having a good pricing strategy at this moment in time, possibly translates into less income. Undercharging translates into financial insecurity and frustration, while overcharging makes it difficult to attract clients.
Simply having a pricing strategy allows you to have balance, leaving you with a budget to invest in the growth of your business.
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