Building on a great blog post by Seth Godin.
In my (previous) career as a presentation designer, I walked the path from selling hours to selling presentations, but I did not start with this “pricing for value” right away. Finding your pricing strategy as a freelancer is tricky, especially if your field of work is not yet well established (which was the case with freelance presentation design back in the mid 2000s).
What did I do?
- At McKinsey, we were billing hours, and I made an estimate what someone at my level (just before partner) could charge per day without the direct McKinsey brand. That daily rate was the input for project proposals priced per day, with a directional, but not binding budget. If the client gave an unclear project briefing, insisted on tons of meetings and revisions, or had lots of iterations, that was her problem. (I always was confident enough to offer a full refund for unsatisfactory work though, and there were probably only 2 projects in 15 years that took me up on that offer).
- This daily rate soon translated into the dreaded hourly rate, and I was truly selling time. Not scaleable and instantly comparable to all other by-the-hour consultants that work at a client. It was important though for me to find out how much time it actually took me to create presentations. Which type of projects I could do amazing work in very little, and where I delivered less “bang for the buck”. Most designers could calculate their time by pages that needed make overs, each page so many minutes. In my case, I had to come up with the whole story (concept) and then execute it in PowerPoint and get the client to buy into it. Far less predictable. Bit by bit, I moved to projects I liked most, clients I connected with most, and noticed that I got much, much faster at my work.
- As I got busier, I could raise my hourly rates (pure demand/supply, “sorry, no problem, let’s work together some other day”, but arguments about hourly rates, I hated those. So I switched to project pricing now that I had the confidence to size up project properly. I always did keep an hour book keeping in the background to keep myself in check, but never used it to renegotiate projects budgets with clients. It was much easier to raise prices for entire projects than hourly rates (which usually needed to be approved by purchasing departments)
So in a sense, I captured part of my productivity and experience improvements through this approach. It was not a carefully planned strategy though, it happened more or less automatically over the years.
The key: do projects you enjoy, do great work, and specialize in highly specific field of design / highly specific type of clients where you can truly build a premium micro brand (sorry for the marketing speak). Good luck!
Photo by Agê Barros on Unsplash