>> In a hurry?
In the post, I share tips and tools for pricing services as a freelancer, emphasizing that even when the initial production doesn't involve direct costs, the time invested must be considered. I recommend setting a standard of living by calculating monthly expenses and a percentage for savings, as well as determining how much time you are willing to work. With this data, you can calculate your hourly or daily rate, ensuring that you don't charge less than what is necessary to cover your expenses. It’s crucial to be aware of the value of your work and to adjust prices based on the project's scope. Maintaining strict control over your finances is essential to value your time and enhance opportunities in the market.
This week, a friend messaged me asking for help in pricing a service. She is a visual artist who had produced a video using objects from her home, filming it by herself during isolation. When she posted it on her social media, someone expressed interest in producing similar content for a channel and asked her how much it would cost. Since it didn't cost her anything to make the video, she was confused about what price to charge.
This is always the challenge when it comes to pricing services. It seems like it costs nothing because, after all, you just need to spend some time and execute the request, right? But that’s exactly what you need to charge for—your time.
Even a product, like a cake, for example, that you can quickly calculate the cost of each ingredient used, contains a variable that should always be included in the cost: time.
But how do you determine the cost of your time?
What I typically do, regardless of the service I’m providing, is first define a standard of living. For this, you need to know how much you spend monthly, so start there. Create a table adding up all your fixed and variable expenses, plus some extra for emergencies or savings.
I don’t dictate what your standard of living should be because I believe it varies for everyone. You know better than I do what you need to live comfortably and achieve what you want in life, and this amount is usually different for each person.
For example, I defined that to develop video production services for advertising, I need to cover my fixed bills, have enough for at least one vacation each year, and have a little extra for new purchases or savings. Even if I just covered my bills and had a small extra, I could manage; or if I could travel and the extra was a bit larger, I would feel quite comfortable.
So, I established a minimum standard of living, which is the amount I need monthly to survive. A medium standard, which is life running smoothly with my basic desires satisfied, and an ideal standard that reflects my climb to the top of the world. It’s not too far from the medium but ensures I’m in growth mode rather than maintenance mode. Here, you can include investments in equipment. For instance, if I need to buy a new computer in three months, how much more per month do I need to add?
I’ve included a sample cost of living table with fictitious values, but it’s important to adapt it to your actual calculations. Remember that annual costs, like taxes or subscriptions, should be divided by 12 months in this table to know their monthly cost, even if they are only charged once in a given month. I also keep a percentage in the table that should not be spent (except in emergencies), which goes straight into savings or another investment. You can modify this percentage if you prefer, but I don’t recommend removing it.
Another part of your standard of living is how much time you are willing to work. To ensure health and time for personal projects, I usually consider working between 6 and 8 hours a day, only on weekdays. Defining this doesn’t mean I actually work 8 hours every day for all 22 days of the month; my work doesn’t operate that way. Sometimes I work 20 hours on a Sunday and then take Monday and Tuesday off, but here I’m setting a standard I consider healthy, which will help me price my time. You can also create three types of time standards: a minimum, dedicating as much as you can; a medium, dedicating healthily; and an ideal, which is your dream work dedication.
Once I have all this information, I can calculate. Let’s assume some numbers for easier visualization:
Minimum standard of living/month: R$2,500.00
Medium standard of living/month: R$3,500.00
Ideal standard of living/month: R$4,300.00
Time dedicated to work: 8 hours a day, 22 days a month — or 176 hours a month (8x22).
Now you can determine your hourly and daily rate based on the type of work being quoted, defining which parameter is best for your pricing.
Minimum standard of living: R$113/day or R$14.20/hour
Medium standard of living: R$159/day or R$19.90/hour
Ideal standard of living: R$195/day or R$24.40/hour
For example, if you need to film an event that lasts 3 hours and then edit the video over 2 days, potentially with an additional day for adjustments, how much should you charge?
Let’s quote based on the ideal, which is the price you aim to charge for your service to ensure constant growth:
That would be R$97.60 for filming (3 hours for the event plus 1 hour for travel) or R$195 for the filming day (you decide), and R$585 for the finalization. Thus, the ideal price for you would be R$780, assuming you’re the only one working and you already own all the equipment. You can round it up and charge R$800 to see how the client reacts, and you’ll already know where you can negotiate.
Understand that, in this rationalization, you couldn’t charge less than R$452 for the service, which is the cost calculated from the minimum standard of living, because if you work below that value, you’re essentially paying to work, as your expenses exceed that amount. This is a good benchmark to know how far you can negotiate your budget and when it’s better to decline a job and seek one that truly meets your needs.
When money gets tight, I know many people are tempted to accept any job regardless of the price, and I have done this too. However, it’s crucial to know the value of your work and to remain calm during negotiations, as this not only values you but also the market you’re in. Consequently, the chances of being offered work below your value will decrease over time. Sometimes, it’s necessary to invest some time determining your market value, and for that, you need to work on your self-confidence. If you must take a job below cost, explain that this is a value exception, as you are investing in a long-term partnership for future work. If you believe this investment isn’t worth it, seek out one that is.
Other types of investments can also be involved in price determination. Sometimes, you accept to work below your cost because you know that job has the potential to attract more work in the future. Those are the types of investments worth making.
Another possibility is that depending on who is requesting the service and the potential reach of the work you’re going to do, you may see an opportunity to charge a bit more. This is because your time investment on that project will have a reach that extends beyond your physical dedication. This deserves a value increase, for example, for large brands or grand projects with mass dissemination. Assess if that’s the case and be open to negotiating with your client to ensure the project remains viable.
Once things start flowing, you'll see that your pricing calculations can change. If you become highly sought after and suddenly everyone wants to work with you, one day you'll notice you’ve earned more in a month than you initially set as your ideal. In other words, your price just increased, especially for new clients, because your actual monthly earnings now dictate your hourly or daily rate, not a supposed income like at the beginning. The market is telling you what you’re worth, and it’s often more than you initially thought.
So, to determine your price, it’s crucial to maintain a strict monthly record of how much you spend and how much you earn. By doing this, you might even discover a better way to charge than the method I explained. After all, you now control your finances, and every moment you invest in organizing this will be more valuable than anything else.
Believe it.
Want personalized help? Get in touch, and let’s talk!
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