Hi there! Welcome back to the Intentional Branding Podcast. If we haven’t met before, I’m Rizza, and today I want to tackle a topic that’s crucial for business owners and service providers—figuring out how much to charge for your services.
Setting the right price is essential. You want to ensure that your business is profitable because, after all, that’s the whole point, right? But you also need to stay competitive without underpricing yourself to the point where no one values your work. So, if you’re a new or small business trying to determine your pricing strategy, keep reading. Let's dive in.
How to Price Services
1. Choosing a Pricing Strategy
The first step in setting your prices is to decide on a pricing strategy. There are several options, like hourly rates, fixed costs with markup, retainer packages, commission structures, and value-based pricing. I won’t go into all of these, but I’ll share what works for me.
For one-off graphic design projects—things like posters, brochures, and ads—I prefer to use a per hour rate. But for larger projects, like a logo or a website, I use package pricing. I start with a base price to ensure my time is accounted for. If the client wants extra features or if the project scope expands, I adjust the price accordingly, accounting for the original cost plus the extra time. Package pricing also considers the value I’m providing, not just the time spent. For instance, I factor in how much money the website will generate for the client, my knowledge of customer psychology, and my design expertise. It’s essential to reflect the value you bring to the table in your pricing.
Setting a package price takes time and practice. You’ll win some and lose some, but eventually, you’ll find a price that feels fair and comfortable for you and your clients.
2. Consider Key Factors
When pricing services or determining product pricing, several factors need to be considered:
Calculate Your Costs
First, determine your costs. What materials do you use? If your work is digital, think about subscriptions like QuickBooks, Adobe, or Canva. For physical service based businesses, consider the cost of tools and supplies. Add up your monthly costs so you can account for them when setting your hourly or package rates.
Analyze Your Target Market
Who are your customers? What are their budgets? Are you catering to teenagers (and by extension, their parents) or college students with limited funds? Understanding your market is crucial.
Know Your Customers
Are you aiming for high-end or budget-friendly clients? There’s no right or wrong answer—it’s all about who you’re trying to attract. Think of it like the difference between Target and Nordstrom. Both serve their purpose, but they cater to different audiences.
Time Investment
Consider how much time each project takes. For example, with website design, I have a base price that accounts for standard tasks like setting up SEO and writing copy. Photographers, think about your editing time. Hairstylists, consider how long a haircut or dye job takes. Time is money, so make sure you’re accounting for billable hours in service pricing.
Set a Fair Profit Margin
This applies more to product based pricing and businesses. If you’re selling jewelry, for instance, calculate the cost of your materials and add a profit margin on top of that. Make sure you’re covering your costs and making a profit.
Choose an Appropriate Pricing Model
Is hourly or per-project pricing better for you? You might even use a mix of both. There’s a lot to think about, but finding the right model is key to your success.
3. Calculate Your Hourly Rate
Another way to determine your pricing is by calculating your hourly rate based on your desired annual salary. Decide how much you want to make in a year and how many hours you want to work each week. For example, if you plan to work five days a week for eight hours a day, that’s 260 days or 2080 hours a year. If your annual salary goal is $60,000, divide that by 2080 hours, and you get an hourly rate of about $28.85.
4. Competitive Pricing for New Businesses
If you’re just starting out, consider offering a lower price to attract clients and build your reputation. This strategy allows you to gather testimonials and case studies, which will be invaluable as you grow. There’s no shame in charging less than your competitors for similar services at first. It’s a great way to attract more clients quickly and learn as you go. As your experience and demand increase, you can gradually raise the prices for your own business.
5. The Importance of Tiered Pricing
As you gain more experience, it’s crucial to adjust your rates to reflect the value you provide. When I first started designing logos, I charged $50 and provided a few files. As I gained more clients and experience, I gradually raised my prices. I now offer tiered pricing, with basic logos at $400 and more comprehensive packages at $750. If your prices seem too high, consider offering a lower-priced option with fewer features. This way, you’re still accommodating your time investment while making your services accessible at different price points.
6. Start Low, Then Raise Your Prices
Pricing can be intimidating because there are so many factors to consider. My advice? Start on the lower end to attract a flood of inquiries. As you gain experience and streamline your processes, gradually raise your prices. It might feel weird at first, but remember, this is a business, and you need to make money. Plus pricing reflects your new experience and levels of expertise. Put your emotions aside and run your business like a business.
Final Thoughts
If I were to give you quick, simple advice, it would be to start on the lower end. This approach allows you to flood your inquiries and start working with a ton of clients. As you gain more experience and your processes become more streamlined, you'll naturally begin to raise your prices.
Remember, even though it feels weird at first to increase your rates, this is a business, and you need to make money. Set your emotions aside and run your business as a business. Pricing can be emotional—you don’t want to feel like you’re overcharging but as long as you’re confident in the value you provide, you’ll find clients who are willing to pay for your expertise.
Be confident, set your prices, and strive to continuously improve your service. Over time, you’ll find the right balance that works for both you and your clients.
That’s all I have for you today. I hope this helps you in figuring out how to price your services or products. Have a great day, and happy designing!
Z Squared Studio is a Brand and Web Design Studio based in Juneau, Alaska. Check out www.zsquaredstudio.com for custom brand design, Alaska logo design, or web design.
Or sign up for our DIY Brand Yourself Mini-Course if you're ready for a stand out, scroll stopping brand without hiring a designer.
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