Do you charge what you’re worth?
Do you even know what that means?
Well, I don’t! I don’t have a super fast no-fuss formula for pricing my products and services. I’m especially bad when it comes to services. Sometimes I charge too little and get mad at myself for doing so. Other times I set the right price and I get the feeling that I overcharged.
Do you know how to set the right price?
If you search for articles on setting prices for your products or services, people just tell you to charge what you’re worth. Many business owners use this phrase to justify their high prices. While those prices work for them and their clients, they might not work for you. The truth is, ‘what you’re worth’ is not a fixed sum. It means something different to every person. And that’s why I want to give you a few tips on setting the right prices for your products.
How much do you want to earn?
The most important thing when setting prices is how much you need or want to earn. You should take into consideration your costs of living, business expenses, taxes, and insurances. Don’t forget to factor in how much money you spend on that product.
You should also create an income plan (yes, it’s different from your business plan). Write down how much you make now and how much you want to make next month or next year.
Don’t be afraid to raise your prices to reach your income goals. You might lose clients at first, but you will find new clients that can afford to pay your new rates.Do you charge what you're worth? These 3 questions will help you set the right pricesClick To Tweet
How much do other people charge for the same product or service?
I don’t think all freelancers should charge the same rates. We have different levels of experience, costs of living, and we are not working with the same people. Nonetheless, you should at least have an idea of how others are pricing the same freelance work.
And in my opinion, this is very important when you price your products. Many people that buy digital products don’t care about your education or living expenses. They also don’t care about the time you spent creating that product. They want a quality product that suits their needs. So it’s important to set a competitive price that also reflects the value of your product.
Even though some people might go for the cheapest product, do you really want to be known for your cheap products or for their high-quality? What’s more important to you, to sell five products that are $2 or a single product that is $10?
Some online marketplaces even suggest price ranges for the type of product you upload. This will help you set a competitive price that doesn’t undercut the other products in the same category.
How long does it take you to complete the work?
Some projects might take days, while others take months to complete. Pricing higher and working with only a few clients is usually better than working on many smaller projects.
If you offer products and services, you should also take into account the opportunity cost. When you do client work, you do not work on your products, and vice versa.
Since I have a product-based business, I focus on my digital products and I often have to turn down custom designs. While working with new clients might bring me extra income, products are often more profitable in the long run. So I work mostly with long-term clients or on projects that are different from what I usually do.