When I started out, one of the things I had the most trouble with was pricing. At first, I let the customers set the price.
This was odd, as I have spent a lot of time writing budgets. I earned a level 1 diploma in bookkeeping, which didn’t go into much depth, but later I budgeted films, information videos and other media projects in intricate detail. I was writing up budgets for everyone else’s wages and freelance fees without considering the value of my own time.
Pricing products seems relatively easy. You see what the competition is charging for a product of similar quality, and you do a feasibility study to see whether you can compete.
But putting a price on your own time can be a challenge to many of us. If you price your time too low, you might not be able to deliver on time and on budget. If you price it too high, you might feel anxious that you aren’t worth as much as you asked for.
You can always do an hourly rate, but even then, what should that rate be? What if you can’t find competitors to base your rate on?
One solution is to start out as an employee. After working for someone else for a while, you might start to see some of the hidden costs involved in what they do. Of course, after working with them, you might decide not to go it alone.
Another is to hire a pricing expert. A consultant can work out your pricing with you. That is, if you can find a trustworthy consultant that you can afford.
However, neither of these will help if you don’t do some basic preparation. A consultant’s fee will be wasted if you don’t know what you want to know.
A simple rule of thumb for a media worker going it alone is that for every three pounds the customer spends, one will go to your salary. The rest is not profit, far from it, the rest are costs related to all the time you spend networking, doing paperwork, and paying for basic overheads.
Now, as with all rules of thumb, this varies enormously depending upon exactly what your role is, what kind of equipment you use, how busy you are, your location, what kind of clients you have, and a number of other factors. Some jobs involve many more “unbillable hours” than others.
However, in a pinch, if you find yourself having to pitch a price and there’s no time to do a spreadsheet or hire us to do one, I’d go for the three times rule. Charge three times what you’re going to pay yourself, and then work out the expenses to fit that fee.
Of course, that’s assuming you’re doing the job alone. If you’re working with a team, go for three times the team’s salaries.
You might add to that price certain other expenses, like travel and living, if the job is outside your usual commuting distance.