How much to charge perhaps the hardest part of the freelance business. Jason Blumers offers a few tips for better pricing habits.

1. Price by the service, not by the hour. Though very normal for the creative professions, one of the most non-strategic things you can do is to charge by the hour. Why do you charge by the hour? You may have read about charging by the hour in a book, seen your previous firm do it, or heard a friend say that’s how you were supposed to do it. Charging by the hour is non-strategic on many levels:

a) When you charge by the hour, you and your client begin your relationship with diametrically opposed desires. You want to bill more hours, they want you to bill fewer hours. That is a sucky place to start a relationship.

b) Billing by the hour does not consider outcomes for the client. When clients come to you, they want some kind of result from your work. They want to invest in your abilities to bring clarity to chaos and deliver effective messages. When you deliver a bill based upon your arbitrary internal costs, it may not translate into specific desired outcomes for the client. Always consider the value of the outcome to your client when you set pricing.

c) Billing by the hour does not allow you any creativity in billing. Always try to tie your up-front fee to what the client values. And when you discover their value triggers, then you can get creative to make more money. For example, you can ask a client “what is the greatest outcome you can imagine from my work with your company?” Maybe they’ll say “I want your work to be so effective that we sell 15 to 20 percent more products compared to this same time last year.” Now you can attach your price to their outcomes. So you might say, “My base price is $50,000, but if you sell between 15 and 20 percent more products than this time last year, then I will receive a bonus payment of 5 percent on your additional sales.” This links what you get paid directly to outcomes. And the clients won’t mind paying if you helped them sell more stuff. Everybody’s happy!

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