I never imagined that I would become an entrepreneur. I always wanted to be in the C-Suite but no part of my imagination could ponder doing it on my own. I guess I always thought that starting a company was for people who grew up in rich families. People who had parachutes and places to land if everything blew up in their face. That wasn’t my life.
But then everything blew up in my face anyway. When I decided to take the leap into entrepreneurship, I was faced with a choice: look for another job with some questionable manager or start my own company. I couldn’t imagine working for one more bad boss. I chose the second option six years ago this year.
What they didn’t tell me is that I’d have to face a lot of my shit – particularly around money.
The “We Had No Money” Issues Are Real
Growing up without much money shapes a person. The feeling of scarcity will sit with you long after your circumstances change. As a new business owner, navigating the world of spending on people and tools will scare you. For me, every expense felt like a big decision with the fear of backsliding into financial instability lurking beneath the surface.
Here I was trying to make decisions that impacted my ability to make money. I couldn’t research enough before saying yes to anything. The decision that felt the most intimidating was pricing. I was especially nervous to ask other people about their pricing. If you can’t spend money, turns out it’s pretty hard to talk about it too.
I knew what some people were charging, but broadly I had no idea where to start. Once I gathered the courage, no one would just tell me how they were pricing. I was guessing most of the time and I promised myself that once I figured something out, I’d share it.
Advice For Pricing Your Services
Almost once a week, at least one of my friends tells me they’re thinking about going out on their own. That means at least once a week I talk about pricing your services in the world of recruiting and HR. Turns out, a lot of us have money issues we’re trying to get over.
Before I get into this, I want to be really clear that I’m not an expert on pricing things. I am starting this conversation because I know that most people are scared to talk about money, especially when they grew up without a lot of it. Open conversations allow all of us to reach a little higher and get what we deserve. In the hope that a little transparency can do a lot for others, I’m going to share my pricing philosophy today.
My context, in case you are new here, is that I run a job post writing business. We deliver training, consulting, and writing services.
Here’s what I have learned about pricing your services that you should know if you’re starting any type of consulting business.
- No matter what, you need a good, solid contract. Not 100+ pages of legal bullshit, but something simple. Your contract should use plain English to explain what things cost, when you get paid, and cover your ass on the variables i.e. things that take you way more time that will cost them money. If you want to save some money, I’d suggest starting with something ChatGPT generates and then going to a lawyer to be like, “so, is this any good?” Make a list of what you want the contract to protect you from and then go to the lawyer. If you’re not clear, the contract won’t help when shit hits the fan (been there). Oh, and edit it every single time you run into a problem.
- Hourly vs. flat rates. I find that most people respond well to flat rates but you have to be smart about how you structure your contract when you stick to flat rates. For example, making it really clear that all edits have to happen in 1 round or telling them you are on-site for a maximum of X amount of time. Clearly assign fees for anything that falls outside the very specific scope. I mean everything.
- Price for travel vs. virtual. Charge more for in person vs. virtual. If I am taking time away from home, that always comes at a little higher premium. I like my home. I want to be there.
- Have a minimum. Look, work is worth money. Set a minimum and stick to it. If you’re working with a corporate client aka a business with more than 10 employees, that number is at least $500 or more.
- Speed. People should know they will pay more for speed. Keep that in mind when someone is telling you “we need this tomorrow” and rushing you. Time = money. For a baseline, I’d say 25% of whatever you’re charging for a rush fee.
- If someone is kind of a jerk during the planning process, charge at least 10% more. It’ll help your brain when you feel frustrated with the project later.
Navigating Value Vs. Effort
For our advanced entrepreneurs – let’s talk value vs. effort. This is more of a theoretical thing.
When you get started, most people charge for effort, meaning I worked this long, I make this rate per hour. The end, thanks. That’s good for when you’re learning. It’ll help you understand how much time things take. Tip: Use time tracking technology and spreadsheets to keep all that information in one place so you can use it later. Trust me on this.
When you become an expert – ideally the go-to for 1 specific thing like me with job postings – you can charge for value aka what is this worth to your customer? As you start to do repeat projects, you will know the outcomes your clients value when you’re pricing. Their outcome saves them $5,000? A $500 video seems pretty reasonable. If they only make $50 per sale, $500 might feel like a lot.
Oh, and go to therapy. It’ll help.