From $25/hr to $125/hr: My Pricing Journey

Entrepreneurialism

Mar 27

When I started my photography business in 2013, it was easy to set my rate. I researched what other photographers in the area were charging and adjusted based on my experience level/quality of my photos.

But when I started offering marketing, pricing felt like throwing darts.

Most marketing providers don’t list their rates on their websites so I had to improvise. At the time I had left a job making $15/hr. and thought adding $10 to that would cover my expenses and taxes.

Big mistake.

When you’re self-employed, not all of your time is compensated. I underestimated how long it would take me to run my business from answering potential clients’ questions to drafting proposals to onboarding my clients to invoicing and bookkeeping. Not to mention the time I spent marketing my business.

And while I thought I could fill close to 40 hours a week with billable client work, that wasn’t realistic for the nature of my business. (If your business is appointment-based, this is more reasonable.)

It also cost more to run my business than I thought it would. While I’ve DIY-ed my own bookkeeping and marketing from the start, paying for website hosting, QuickBooks, Lightroom, and all the other tools I needed to run my business added up.

After that, I had to pay taxes, which are always more than I expect.

In the end I had barely - if any - money left over to pay myself. (Learn about paying yourself here.)

Charging $25/hr. stunted the growth of my business and left me vulnerable to slow periods. I’ve overdrawn my business bank account more times than I’d like to admit.

Had I charged more from the beginning, I’d have a more robust emergency fund and would have saved so much pressure on my personal finances.

I learned over the years and my rate has increased to $35/hr, $45/hr, $55/hr, $75/hr, and a few years ago it jumped to $125/hr.

Your hourly rate may need to be high

I was teaching an in-person business class recently and shared my pricing journey. When I revealed that my consulting rate was $125/hr., my students were a little floored.

They asked how many consultations I book per week, and I revealed that, on average, I book one per week and they typically last two hours.

One student exclaimed that $250 is great, but after I reminded her of my expenses, taxes, and the benefits I give myself, she realized that it’s not nearly enough to support me and my business.

Unless your business is based on appointments, you’re not going to book certain services at a high frequency. If there’s enough demand to justify offering it, though, you need to charge well for to make it worth your time.

When it comes to products, you need to make sure you’re charging well beyond your cost of goods sold (COGS) to factor in that your products may not sell consistently — and that you have expenses beyond your COGS and taxes and should be able to pay yourself.

Charging on a project basis

While I have regular demand for my consulting services, the majority of my income is generated through website design. I charge on a project basis for this, meaning I charge a flat fee, depending on my clients’ needs.

This is a better option for projects because your client has a clear budget and you don’t have to track your time. If I were to charge hourly for website design, my clients could be blindsided by the bill and ask me to justify every minute I spent working on their project.

Charging a project rate also factors in time you may need to spend on the project that you shouldn’t directly bill your clients for. With websites, I often have to learn new features and code. I don’t feel right charging my client for this time, so my website design rates factor in unplanned time working on projects.

Remember to diversify your income streams

While website design is the majority of my revenue, I still offer consultations as well as online courses (check out Begin Your Business and Self-Employed School), and I receive royalties from my YouTube videos.

The demand for your offers may fluctuate, which is why it’s smart to have multiple income streams. Bonus points if some of them are passive.

Overwhelmed by pricing? Learn my top strategies in Begin Your Business. →

If you enjoyed this post, you can buy me a coffee or connect with me here. Thank you! =)