Originally published on April 18, 2018 on The Original BritishPandaChick blog. I made tweaks to the original post so it would work for Code Newbie.
This lesson in Skillcrush 300 is all about pricing. The lesson talks about setting the right prices for your services and setting up a service page on your website. Skillcrush also reviews the business development cycle which has helped many freelancers make money. This post will be focused on pricing tech services, but you can use this information to set the prices for any services you want to offer.
The Business Development Cycle
In order to set any prices, Skillcrush encourages students to understand the business development cycle. This cycle repeats so you stay organized and maintain a constant stream of clients. That means making money.
I will also argue that the cycle is a way for any freelancer to troubleshoot their process when things aren't working so they know what they need to improve or change to achieve a specific result. The cycle can be divided into four parts. These parts are:
1. Freelancers market themselves and identify potential leads.
Leads are another way freelancers describe clients. You already got a head start on this with your ideal clients from the previous post in this series. For this step, it is time to take that information and reaching out to potential clients.
2. Once a client is interested, freelancers write a proposal and negotiate the terms of the project.
This means talking about timelines, deliverables, and money. The result is freelancers and clients being on the same page and expectations for the project. Many freelancers I've talked to use contracts to make everything clear for both parties what they are supposed to do.
3. Freelancers do all the work.
Clients are given scheduled times to review the project as it is being made and give feedback. Freelancers take that feedback and refine the work until both parties are happy.
4. This is just where you repeat with different clients.
Freelancers wrap up the project and finish the final items agreed upon in negotiation. Skillcrush says ideally as a freelancer finished working with another client, they begin the process with another one. As freelancers get more experience over time, they will have more loops happening at the same time.
This process is different for every freelancer so don't worry if your process is different from another freelancer. Skillcrush actually encourages this since a process that is authentic to you is going to make a bigger impact over one that is identical to what others are doing. One of the ways freelancers do this is by making sure their process is on-brand. This is another way of saying you should be true to yourself throughout all aspects of this process from client outreach, communication, and the deliverables.
Skillcrush uses their founder Adda Birnir as an example of how this works in action. If you sign up for the Skillcrush newsletter (which I highly recommend!), look at the bottom of Adda's message. Her signature is a sign of who she is and the brand image Skillcrush wants to be known for.
This signature wouldn't work at other companies. That is fine since brands are not one size fits all. Each brand is different and uses different strategies that work best for them. All that matters is if it matches her brand which it does.
In order to stay organized and keep all the loops going, freelancers use templates and establish processes to keep everything efficient and repeatable.
Think of templates as stencils for artists. Stencils allow artists to repeat the same shape so everything looks the same multiple times. It also saves them time and allows them to use that extra time on other things related to the project.
Pricing is an example of one of the templates freelancers have in place. It is often a starting point on each proposal. Freelancers who know all aspects of their pricing will be prepared for any questions and conversations with a potential client.
How to price your services
There is no right or wrong way to price your services. They actually change depending on a variety of different factors. While there is no right or wrong way to price your services, the ultimate goal is to pay the bills and thrive.
This means some experimenting to find an initial rate you feel comfortable starting with. Pricing will change depending on the complexity of the project, client, as well as other factors. It is a guessing game, but Skillcrush encourages students to watch how their clients react towards their prices as a test.
If a client accepts your rate quickly, you are undercharging and could increase your rate. One freelancer suggested during a webinar raising the prices until a customer says that it is too expensive. This freelancer said this is often the best indicator you found the right price to charge.
Hourly vs. Per Project
The decision to charge per project or hourly rate is a debate often talked about at Skillcrush as well as freelancers. Some strongly recommend charging per project while others recommend doing per hourly rate. Skillcrush encourages students venturing into freelance to charge by the house. The hourly approach allows flexibility and is straightforward with clients.
Hourly rates are helping new freelancers customize their prices a bit for each service as they add up a full project budget. One of the great perks of hourly rates is that it gives rough estimates of how long certain tasks are completed. If you aren't sure how long a task is going to be, hourly rates will help ensure you are not overcharging or understanding your clients.
Freelancing is learning a skill so your process will change as you get more experience. This experience will also mean a better understanding of how long projects will take. When you feel ready, you can switch from charging hourly rates to per project. For now, I'll show you how to figure out your hourly rate.
How to calculate your rate
When it comes to figuring out the prices, students are encouraged to round their billable hours to the near half-hour possible as well as including extra wiggle room for things that may pop up throughout your timeline. Students can as much padding as they like to their prices. In order to calculate your hourly rate, Skillcrush outlines some steps you can take to find the right rate for you.
1. Research to figure out your starting hourly rate for a service.
Thanks to the internet, there are plenty of ways to do this. Skillcrush suggests students look at freelance communities, job boards, and other freelancers to get a sense of what their rates are and how they charge for specific projects. These rates are going to vary depending on the location, niche, and freelancer. There are tons of websites available for freelancers with different tools to help you compare freelancer rates and more within your specific niche.
2. Figure out your annual income.
Once you have done your research and gotten a sense of what your hourly rate is, it is time to figure out what this means for your annual income. Understanding your annual income is important not just for pricing, but it also helps figure out to balance your time. This is especially important if you are planning to freelance part-time.
In order to figure out your annual income, Skillcrush provides students a handy formula to use. The formula is taking the hourly rate you just decided on and multiplying it by the number of billable hours you want to work in a week. Next, you take this amount and multiply it by the number of weeks you work for the total or estimated annual income.
hourly rate [X] number of billable hours you plan to work in a week [X] weeks you plan to work in a year = estimated annual income.
Regardless of your annual income, Skillcrush recommends using this formula to double-check your annual income often. Don't forget there are plenty of resources online that advise freelancers on making the right annual income and have tools that can help you find the right amount you should aim towards.
3. Estimate the price for a service.
Once you find an annual income amount you are happy with, now you can start working on pricing your services. This amount will be the flat fee for every service you plan to offer. Skillcrush offers another formula for their students to find just the right prices for your services.
Simply multiply the number of hours it takes to complete a project by the hourly rate. This will give you a flat fee for that particular service you want to offer.
number of hours it takes to complete a project [x] your hourly rate = price for that particular service
This formula is a great way to check your hourly rate and play around with different hourly rates when you are ready to change them. The goal of this formula is to see if the price seems fair and find the price that you feel is the best fit for charging.
Create a service page
So far you've done all the hard work by figuring out your services and hourly rate. You have a good idea of what you want for your annual income. Now it is time to add a services page to your website. The services page will list all the services you plan on offering and details about these offers.
Do not put your prices on your services page! A lot of freelancers and Skillcrush discourage this since pricing changes as you get more experience and you'll be changing how you package your services. Instead, the goal is to have a sense of what to charge so you can describe them on your page and answer questions from interested clients when they ask for a price.
Service pages are going to be different for every freelancer since every brand is going to be different. However, Skillcrush does encourage students to look at other service pages as examples to help them build their own versions. As a matter of fact, if you look closely, many of these services pages have a few similarities. These similarities include a short description of each service, a visual for each service, and a clickable call to action.
Congratulations! You now have your services and prices figured out. With this information, you can start making a services page for your website. If you need help with any of the HTML, CSS, or Bootstrap on your services page, check out the Skillcrush 101 and FCC Bootstrap series here on Code Newbie.
Next time, Skillcrush 300 review continues with a look at online presence. Online presence is a must for everyone as well as freelancers. This post will share tips on how to brand yourself online.