How to determine rates/pricing?

[Hypermommy]

I'm new at all of this and I have a question that I'm sure has been asked about a million times, but I can't find it in this thread. How do you determine your rates or pricing? Do you do it on a per project basis (i.e., a 20 page scrapbook will cost $XX) or is it based on the number of hours you estimate you'll spend or what?

Just don't know where to begin to even figure out what the going rate might be and could use some advice, please. Thanks!

[KimGuymon]

Personally, I prefer the "per project" or "per page" price over the hourly rate. From the customer's perspective, they will know up front what it costs and that lights a fire under you to get the project done efficiently because time is money (the less time you spend the more per hour you make). As a customer, I'm always wary when someone charges me PER HOUR for a project they do off-site so that I can't see if they are really working the hours I'm being billed for. Not that everyone is going to be dishonest, but, quite a few will be OR the customer will simply not understand why the project took so many hours and may get a nasty surprise at the end. If someone doesn't scrap, they may think pages can be done in 5 minutes and expect that the final cost is a whole lot lower than what the bill says. If you agree on the final price up front, then everyone is going to be happy when the project is done. The LAST thing you want is for a customer to be unhappy at the end and have their final impression of you be one of dissatisfaction. You want them to be deliriously happy as they write the check for the amount they agreed upon a few weeks earlier.

[cheribear]

I can get really fussy and mess with things endlessly until I am happy with them. It wouldn't be fair at all for me to charge by the hour.

~Cheri

[Hypermommy]

I kinda figured a "per project" basis was the way to do it for all the reasons stated above. Okay... so if that's the way to go, then I guess I just start searching the web and trying to find out what the going rate is?

[cheribear]

I think that's a good start, but also check out who your potential customers would be and what they would be willing to pay for your services - and consider what your time is worth to you. Even if you charge per page rather than per hour, you need to consider, if the average time I spend on a page is X hours, what do I have to charge to make it worthwhile doing for others?

[disciple]

Pricing is a touchy topic and is subject to numerous variables such as location, value, competition, etc.

I would first check to see what your competitors are charging. Are they charging by the page, the project or what. Don't just check one competitor, check at least three so you have a good idea of what your market will bear. Make sure the competitors you are checking are based in your area (if that is where your client is from) so you have accurate information. Then you should price your service competitively based on similar services.

If you are able to provide additional services or products that your competitor does not offer this is reason enough to charge a bit more. You can also charge more if your services or products are better than your competition. You should be prepared though to give the reason(s) why your client will benefit from your services over that of your competitor.

Because S4H is new to many areas you may not have any competitors so pricing could be a bit more tricky. In that case you must figure out your hard costs and how much time you feel it will take you to complete the project. Decide how much you want to make per hour and then multiply the number of hours times the dollar amount you want to make per hour and then add your hard cost to that amount. See example below.

Hard Cost - (kits, fonts, paper, ink, etc) $45
Estimate Time 20 hours @ $25/hr

20 x 25 = $500 + $45 = $545

This is all just theoretical at this point until you see what your specific market will bear. In my opinion the biggest thing to remember is don't price yourself too low! There are 3 GOOD reasons not to do so.

Low rates ALWAYS lower your profit margin. If you charge less than the going market rate (you may be creating it) then you are hurting yourself unnecessarily now and in the future.
Low rates ruin your credibility. People are paying you because you are an expert at what you do. In general people don't mind paying an expert for their expertise.
If you differentiate services based on low price then what kind of clients will you attract? Those who are only concerned with price and I promise you they will be the ones who complain the most.What kind of clients do you want?

What kind of money do you want to make?

If you start your pricing off to low how difficult do you think it will be to raise your prices, especially for those whom you have already done work for?

Do you want to work for clients who are only concerned with price or would you prefer to work for clients who want the best and are willing to pay for it?

These are decisions you will have to make.

[Hypermommy]

Excellent points and you've given me a lot to consider. I also just noticed your blog and am heading there right now. Thanks!