‘How much should I charge?’ is a common question among new contractors, freelancers and limited company owners. A great deal of market research or experience from your old job (if you’re staying in the same line of work) can help you to make a greatly informed decision, but what else should you keep in mind?
Charge Based on Time
One of the most popular metrics for pricing up your services is to base the charge on time. Start with an hourly rate then use it to form a half-day and full-day rate. This is such a simple way of choosing what to charge and it cements what you’ll be giving the client, but it can also open you up to the prospect of undercharging if you don’t get your hourly rate right. Find out what you were paid per hour in your last similar job and factor in things such as research time, travel costs, and overheads.
Charge Based on Quality
If you know your work to be worth a certain amount, then by all means charge for it. Although time is a much easier metric to measure by, pricing by quality will allow you to feel confident that clients are happy paying for what they’re getting. It also makes you accountable for the work produced. If you’re not confident with pricing on quality, try pricing on ‘perceived complexity’ – how difficult the job seems to be in the initial phases. This way, you’ll be charging for the extra effort that will bring their project to the same high standard.
Do Some Research
There’s nothing sneaky or malicious about doing some online research into what your competitors are charging. In fact, they’ve probably looked you up too to see the same thing. This is a way for you to remain relevant in the market and keeps you on a competitive level with everybody else who is vying for your clients. If websites are no help, try asking for a quote via their email or ask people in your network who have used those companies before. There’s no shame in asking!
Have Faith in Your Abilities
None of the above will work if you don’t have belief in your own abilities, however: instead, you’ll find yourself undercharging and undervaluing your own work. Some businesses might take advantage of this and you could go for months or years without being paid what your work is actually worth. So believe in yourself! If you really don’t, get a mentor or your accountant to help you nail down some prices, talk to clients and make the process of charging/quoting clients more streamlined to lessen any doubts you may have. Best of luck!
Looking for an accountant that understands your needs as a contractor, freelancer or limited company owner? Get in touch with Gorilla – company formation and contractor specialists – to find out how we can help!