Hey everybody how's it going.
Let me just switch my camera to the better one, because I can there we go love it how's it already doing.
Welcome to office hours live name is Brad husky from freelancing freedom.
Calm always excited to.
Have you here pleasure to have you here excited to see some familiar faces and some new faces in the live chat? Hey Kenny, how's it going James is here motivated and ready to go.
Focus now is the time.
Aleja is always pleasure to have you here.
Thank you for helping AMD, don't know what your name is, but how's it going good to see you here Mike writing, good to see you here, um Monique, awesome, good, say hi, everybody, whoever is here, say hi.
Let me know if you can see and hear me make make sure that our video and audio was good to go and we'll just jump right in this is great.
I'M excited about this, for those of you who are new to office.
Hours live every single week on Thursdays at 4 p.
m.
mountain time, 6:00 Eastern, unless otherwise scheduled and stated.
I go live right here on my YouTube channel to answer questions about freelancing, consulting starting a business growing your business scaling your business and all the nitty gritty.
That is involved with that whole business, I'm very passionate about helping people, discover their potential and their purpose and to create a business that they love using the skills that they have, and it's just something I love doing.
I'M always I'm always excited to get messages from you guys telling me that you've leveled up you've, you know changed your life in some way.
You'Ve started a business you've booked a client, I'm equally excited as excited.
When I get a message of someone who says, I saw your video and it inspired me to start my business as I am when someone says I quit my job and now I make six figures in a year.
I just love getting these messages, and these are messages that I just get me fired up to get to work and to serve you guys.
So that's what I'm here to do today is to serve you and to teach you a little bit about pricing, as you probably got.
If you got an email from me too, inviting you to the office hours, I was mentioning in pricing how today's the theme is about pricing.
It'S a very hot and common topic amongst three answers and consultants.
Regardless of your your stage, a lot of beginners have no idea about pricing thumbs up or high-fives plus ones in the live chat.
If you're in that, if you're in that area, no idea about pricing, no shame in that and experienced freelancers consultants and business owners alike.
I still struggle with pricing.
I mean I'm launching a course right now and I'm still like is this.
How did I get to this price and I'll go and make sure that all the math is right and there's so many factors? It'S just it's easy to forget.
You know or not know be in the dark to compare yourself and your price to others.
You know to worry if you're charging too much too little, it's it's hard.
It'S a difficult topic, so, thankfully it actually can be distilled down into a bit of a science and that's.
What today is about I'm going to show you that science, so that you know where, where your price comes from, and how to confidently charge, what you're, charging and you're probably going to find out really quickly here that what you are charging you you're under charging.
Now we're gon na get into that too.
Just wan na, say hi to the folks here looks like ok.
Monique'S is loud and clear, plus one we're good mary, jo hola, como estas good to see you here, Rebecca hi.
Everyone looks like yeah totally.
We got some.
We'Ve got some beginners for sure yeah, I'm gon na start with the question.
I'M gon na start with a question here.
What do you charge in your business? What do you charge? Is it you know? Is it an hourly rate? Is it something else you know, is it a monthly fee? What what is it? What do you charge? What'S your current, I charge my clients X.
So let's just pretend you and I forget everyone else is here: it's just you and me: okay, got it.
Okay, perfect! Very very awkward, intimate view here.
Just tell me: what's your price, okay, that go weird fast, because what we're gon na do here is we're gon na find out.
I want to ask you, you know now: you're sharing that you're, pretty you're gon na start sharing the price.
How did you decide that number I want to know? Where did that number come from? How did you land on that number? I'M willing to to guess that it's that you'd land on that number because of randomness, you threw a dart on the wall and just said: okay, there was my price.
You compared it to somebody else.
You said well, the going rate is, you know fifty bucks an hour, so I'm charging fifty bucks an hour.
I guess in all honesty you probably just landed on it randomly right, and this isn't me judging you or anything.
I'Ve goodness sake.
My pricing strategy, when I started, I was just goofy comical.
Let'S see Larry says right now: it's a bit willy nilly.
I like that willy nilly price, like it Alea, I'm in the process of transitioning from hourly to another cool, would love to know more about that.
Evan package pricing, mm-hmm great James by the job using hours, jobs take times the rate.
Okay, Mary, Jo, just talk to someone about reselling hosting totally under charging.
Disa says that question makes me nauseous.
Yep Monique per project, okay, packaging and monthly upkeep, keep says AMD Evan between two and four K and do 200 monthly retainers cool Dale, hourly 24 hour 24 dollars an hour content $ 40.
An hour dev Mary, Jo, worked up to 1800 for a three page site.
Not finding those who are willing to pay for it, as well as any copywriting Recio on top 65 bucks, an hour Roth, ah yo, how's it going Kevin clueless all over the place.
I don't even know, don't even know, love it.
These are the answers that I really enjoy because it's honest, it's real Rebekah's is still figuring it out, probably either a package or by our okay.
I love this.
This is so great.
Keep it coming.
I would love to see what you guys are charging and we can address these things as well.
At any point, during this office hours live, you have my attention to answer your questions.
Throw the questions up.
There aleja my business manager, an assistant, will grab your question.
Throw it up on my Trello board that I have right here.
I don't know if you could see it, no camera is locked whatever I have it on my screen and I'll see your question I'll be able to answer it.
Okay, that's what this is about.
Answering your questions, whether you're student or you're - not if I see a student answers, a question, I'm going to prioritize them over just the general public but I'll get to all of them.
Hopefully, usually I do okay, so yeah throw your questions at me at any point, because today I'm actually gon na dive into a little.
I created a little micro workshop for you, because the topic of pricing is Dyke antic in the new launch course at freelancing freedom.
Calm, slash launch, which is open right now, totally shameless plug.
We go really deep into pricing, I'm actually.
The reason why I'm talking about pricing is because it's hot on my mind, I I sent out a message to all the students asking.
What do you want to know about pricing just to make sure that I'm getting everything in there that I need to know that? I need to share that.
I need to teach and I have an amazing pricing module within the course.
So I it's a huge topic.
I'M not gon na be able to go as deep as I would like to into all the aspects of pricing in a 30-minute.
You know free workshop, but I'm gon na give you something really great to work with.
I don't want to overwhelm you and then there's obviously some next steps in action steps if you want to go further and go deeper into pricing and in addition to launching your business in a sustainable and profitable way.
So I'm gon na, be I'm gon na, be answering your questions, throw them there.
We got them the Trello board, starting to grow already, and I'm gon na be doing a little workshop here for you live in real time.
This is content directly cherry-picked from the launch course, and only maybe 10 % of what is in the pricing module, because I could spend hours on this.
In fact, the pricing module will probably be hours of learning, so plus I'm gon na be demoing a little tool.
A calculator I created it's in its early Minimum, Viable version stage, but I'm going to be flushing it out as I grow it and tweak it and fine-tune it based on you using it.
I want you to use it and break it.
I'M gon na be giving it to for free, I'm gon na be demoing it today.
I'M gon na be building it out and I think I'm gon na build it out into something really great but right now it's a nice calculator in Google sheets and it's gon na, be it's you're gon na see what goes into determining your price.
Okay.
So, let's see some more, we got some stuff happen in here, but that's some stuff happening in the chat chat, um, okay, people still telling me about their pricing.
You know no plans, no ideas, just throwing it up on the wall.
Mary Jo says I just heard from another who is getting 10k for simple, not mind-blowing.
Website designs, yes, Monique kind of difficult to compete with some people who want to charge pennies to the hour ooh.
Yes, that's another thing positioning AMD.
Do you charge my feature or is it better by the hour? Okay, hey Harold papa, be here? Yes, oh good, and we got closed captioning for Harold.
Oh, I love it.
Thank you.
Youtube amen to that.
We get to serve Harold and the hard of hearing in real time.
Love it just happy about that.
Okay bear my Harry job.
Basically, how do I pop people on the head to realize value? I love it.
Is it better to publish price okay good? These are good questions.
Ask your questions as we go through will will make sure that they go into the Trello board and I'll answer them as we go through and at the end and all the good stuff and happy times here we go.
So let me just jump into my screen here and then we'll jump into a workshop.
My little workshop that I put together for y'all um screen one here we go boom yeah.
Who could see my screen? I know you could say my screen.
I didn't yes.
I know you do okay, Jason says: hey Brad, thanks for the great content, slash poison, you're! Very welcome! I'M glad that you chose your poison wisely.
What'S the best way to handle domain hosting fees, client setup to array for them charge for them love the question Jason.
We'Re gon na answer that question afterwards stick around Kenny.
What should i price my work items or by hourly rate love it? Okay, I'm gon na address probably a lot of these questions in the workshop here.
So keep the questions coming, we'll throw them into the Trello board and I'll address them as we go and at the end - and here we go so here's my here's.
My little workshop, my Minimum Viable workshop about pricing all right pricing workshop charge.
What you're worth as a freelancer and consultant all right? So, let's just dive in what we're gon na do in this little workshop again, it's not an in-depth workshop.
All about all the different nooks and crannies and all the details, there's lots of different models, but I'm gon na give you three of the most common pricing models: how to properly use them where to use them and to help you determine which one you should be Using if you're ready for that one and within these three like I can throw a whole bunch at you and I'm gon na, let you know a bit about a bit more pricing models, but a lot of people get excited about.
Okay, there's a lot there's all these different pricing models, I'm gon na choose which one works for me and all that you know they get excited about all the choices, but the reality is is like.
If you don't actually know your base rate, if you don't know what you're worth and the value you're offering, and how to determine your price in a mathematical scientific, formulaic way, then you're just throwing numbers up on the wall you're just guessing.
You know if someone says: why do you charge that and then you go hmm well, I mean right so, okay, here we go.
I'M gon na give you three of the most common pricing models: how to do them properly.
I'M gon na demo my free calculator for you, which you have access to I'll, give it to you, stick around and and then we'll talk more we'll talk more about pricing.
All right, don't worry about it.
Okay, pricing models number one haha, the hourly rate, hello, hello, normal hourly rate; everybody knows about the hourly rate.
Okay, let's talk a little bit about the hourly rate.
The hourly rate, as we all know, is when you charge an hourly rate for your services.
You work.
Eight hours you charge a hundred dollars an hour.
That'S what eight hundred bucks you just it's! It'S a plain, vanilla, normal way for trading your time and your money.
Okay, it's a one-to-one kind of transaction.
Your client says I need this.
You go it's gon na.
Take me ten hours, here's my rate boom, pretty standard service based pricing model right now.
How do we determine that hourly rate? What are the pros and cons? What is the real world application? Let'S talk about it, okay, pros and cons.
Why it's good! Why is the hourly rate good? Well, it's guaranteed income for the hours that you work.
You work eight hours you charge for eight hours boom, you're good to go.
It'S super normal nobody's, gon na, be surprised by your pricing model called the hourly rate right.
Your client goes how much for the project you go 100 hours and this many many hours this much per hour.
They go okay, cool! I get it, I'm not confused.
I'M not skeptical, I'm not wondering where that price came from.
I can see you're pricing, your line items I could see you know yeah.
Okay, that makes sense right.
Why is why else? Is it good? Because it protects you from scope creep chime in folks? Why do you think pricing hourly is good share? Some sure, some of your reasons why you think hourly rate is good the pros of hourly rates.
You know protection from scope creep.
That'S that's a big one, so you work on a project and you quote them ten hours.
You do your 10 hours and you say good the project's done.
The client goes.
Oh, but Mary, Jo I'd like this extra feature, no problem, client Bob, it's gon na be two more hours there.
You go guaranteed income.
Of course, the client can choose not to pay, but you know in launch will deter, will help you figure out how to avoid those clients, so you get only the good ones, but those are some reason why it's good feel free to share your ideas.
Why? You think hourly rates are good.
Okay.
Now, let's talk about why it's bad, okay, you're, a commodity, oopsies, what's a commodity, it's something that can be bought and sold on the cheap.
You know when you we think about.
We talk a lot.
We talk about a lot about the service, the product or sorry, the service commodity continuum in the launch course at freelancing freedom and on one end pure service, is like think, a plumber think an electrician they provide pure one-to-one service now, on the other end, is the Commodity think gold think you know precious metals now in that spectrum, if you are providing a pure one-to-one service, that's that's on one end of the spectrum, but now, where you start to commoditize yourself is when you start turning yourself into something that has no identity.
No personality, and it doesn't matter if it's you, Mary, Jo, if it's you Mike, if it's you James, providing the service, I don't care.
What I'm looking at is your $ 20 an hour.
Is your $ 40 an hour now, I'm gon na find somebody else who charges $ 40 an hour who's better or someone else who charges $ 20 an hour.
This is the commodity game you buy cheap so that you can get as much as possible.
You know you don't want to pay high prices for commodity unless you know you're gon na get more from it.
So you want to stay out of the commodity zone and go into the more of an actual value zone and so you're a commodity.
We don't want to do that.
Okay, you can't scale, because your earning potential is limited by the hours in the day.
Nobody here is gon na work 24 hours in the day you and I only have 24 hours in the day.
That'S it okay and we're not working 24 hours, you're working eight hours, but when you start up your business, the reason why you one of the reasons why you start up a freelance business and go your own way: q, Fleetwood Mac song, you can go yeah! Oh wait: okay, not gon na! Go that we're not gon na go there.
So you do that because you don't want to work yourself like crazy.
You don't to work eight to ten to twelve hours in the day you want to work six hours right some days.
You want to work for other days.
You find working 9:00 cuz.
You got something good going on, but you want that flexibility right.
So, okay, let's say we only got the eight hours in the day.
You are you gon na be billing for all eight of those hours.
No you're gon na be doing work.
That'S unbuild, you're gon na be doing admin.
Work you're gon na be doing marketing research reading you know unforeseen things.
Lots of stuff you're not going to charge for probably twenty to thirty percent of what you do in the day is unbuild time.
Okay, so now you're down to five to six hours of billable hours in the day, if your rate is 50 bucks an hour, some basic grade to math that I have to use my calculator for don't judge me is what fifty bucks an hour five hours there.
You go.
You got a cap of $ 250 a day which is what 7,500 bucks a month.
That'S nice, okay, sure, 7,500.
Bucks a month is great if you're gon na be booking consistent, five billable hours at your 50 out $ 50, an hour rate, but is that it is that it? What if you want to make 10,000 well? Okay, now you got ta raise your rates.
You got to work harder work more, it's not scalable.
Okay, Mary, Jo says yeah definitely scope creep.
Is why it's bad yeah Bob more small projects? Yes Dale was just about to say, scope creep.
It'S a number one reason for hourly rates: yeah.
That'S that's why it's bad James need to make minimum take-home each week for cost of living yeah hosting plans.
Sometimes you need an app or go watch The Avengers during the day, Yeah right.
So these are reasons why it's bad.
Also, here's the here's another final one, why it's bad, raising your rates! Now that you realize, like oh man, I got an earning cap.
I quit my job so that I can have more flexibility in my time.
So I want to work less hours, but I want to be able to make the same or more as my previous salary, but now I'm capped out.
Okay, I need to make more so what's the first plan of action raise my rates by 10 20 percent.
Now I can make 10 20 percent more money.
Guess what your client does cries like a baby, some of them cry like a baby.
They whine they go.
Why are you charging more, of course, their strategies to get around this and to actually raise your rates without making them cry like a baby and having them complain or feel like you're cheeping, or you know, cheating them? We talked about it in the launc course join at freelancing freedom to accomplish launched all right, I'm gon na shameless plug all throughout this okay happy.
You were in the course anyway, so okay, these are.
This is the hourly rate.
Now, let's go okay, let's jump in to a real-world application.
How do you apply your hourly rate in the real world? Well, your rate depends on a lot of things.
A lot of us here told told everybody publicly that the way that we decided on hourly rate, was by just choosing a number willy nilly guessing I don't know, I just went with a number and I just ran with it.
That'S what I did guess.
Oh, my first hourly rate was 20 no 35 dollars an hour.
I think might have been 25, but I don't know why I chose that number.
I just chose the number because I was like I don't know.
When I worked at the grocery store.
I made 12 bucks an hour, so if I made double that that'd be amazing from home dream job right, so so yeah we don't know.
So it depends on a lot of things, though, like there's a science behind your hourly rate experience.
Okay, how good you are at something your location, you know, maybe, if you're in San Francisco and your cost of living is really high versus.
Like you know, somewhere in, like the country middle of the country got low out, you got low cost of living.
You live in the country, life and you got like a nice low cost of living and things are easy.
Breezy, probably don't need to charge those City rates right charges am country rates goals.
What'S your goals? If you have a modest goal, you have a high goal.
It'S going to affect your rate, you're not going to be able to reach your high goals with your high cost of living, with your measly hourly rate right competition, a lot of competition in the area, a lot of people charging 40 bucks an hour if you're swimming In that pool and you're the guy charging 60 bucks an hour, it's gon na look weird you're gon na have to answer.
For that rate level of pain, meaning how painful is the problem you're solving? If, if my you know like my finger is sore, and I need you to solve it - okay it'd be weird metaphor: stick with me, but it's just sore.
I could still use it and you're like you know what Brad I can help you with that sore finger.
Just 50 bucks I'll go, no thanks, I'll go and get like some cream and a band-aid I'll be fine.
Now, let's say I dislocated my entire wrist and I need to use the computer.
That'S that's a painful problem that needs to be solved and I'm willing to pay in time money.
You know and and well time and money.
You know if you're in the state's you're paying for it out of pocket, if you're in Canada, maybe not so much depending on where you go and but you'll pay in time or money to solve that problem.
So in Canada, you'll pay in time in the United States.
You'Re paying money doesn't matter for make sense.
Okay in business, if your clients, like I'd like a pretty website, um, that that's not that painful of a problem.
But if your clients, like I'm about to go to business, unless I really grow up with my marketing strategy, I need your help and you go okay.
Now we can talk.
This is what I need from you.
This is what we can expect, and this is what I'd like to get for.
You they'll pay for that.
That'S not you holding them ransom or in a weird position.
That'S you helping and that's just business.
Okay, if you can solve my problem and help, make my life better in some way shape or form, I'm willing to pay for that in some way, I will trade you my time, my energy, my money, whatever it is, that's how this that's, how it works.
Okay, that's a good thing: okay, Mary Jo says pop-up BBB reals mm-hmm yep, I'm gon na gon na use that as a testimonial by the way, I'm just kidding okay, so we're gon na figure out.
I'M gon na give you a formula right now and then gon na go into that formula and show you in my calculator how it works.
So we got a veteran freelancers.
Nudging me says Mike to get my price prices on paper.
She suggested that I start using a tool like ours tracker to get an idea how much time jobs are taking me.
Yes, so you need to know how much time your jobs take you and as it as you get experience, you start to know what that number is.
But yes, you should be knowing how much time am i spending on this thing use rescue time, rescuetime, calm, Brad, Hussey dossier, slash rescue time.
If you want to use my affiliate link, it's free.
If you sign up for the paid version you never will have to by the way I do, but you don't have to then I'll get a commission.
It'S how affiliate links work, you get it it'll track automatically.
What you do on your computer, okay, everything and then you can know this is how many hours I spend on designs so many hours I spend doing a mid work.
This is how many hours I spend on YouTube so on and so forth.
Okay, Kanban or Kanban kanbalan konban.
However, you wan na pronounce that to track time, says Monique totally totally great technique for tracking time and knowing how long something takes okay.
So, let's jump in here I'm going to give you the formula.
This is the hourly rate formula, the basics, or it's something you can find online.
I kind of tweaked it to custom.
I think this is a better, more accurate formula, but it's a surface level for me.
There'S a lot that goes into this.
So in this formula is looks as it looks like this: you take your revenue goal, plus your expenses, so you add those together.
You multiply it by your desired profit margin.
A lot of freelancers think that well, why would I have a profit margin? I'M getting paid 50 bucks an hour like okay; no, no, that's how much it costs you to do something.
So if it costs you an hour, if it's one hour to do a task in your rate, is fifty dollars an hour you're just covering your costs to provide the service you actually have given no room for profit.
Does that make sense because you were you're, are gon na have expenses and such that you don't have to take care of, but it costs somebody $ 50 to give them an hour you're, giving yourself no room for contingency profit, growth, wiggle, room flexibility, you're, just saying.
Alright, here's I'll give you my time for 50 bucks.
That'S just how that's your base rate.
So you take your revenue goal plus your expenses, you multiply it by your profit margin, yeah.
10.
20 percent.
It'S up to you! You can! You can go higher if you want, if you want more contingency and flexibility, but a good rule of thumb, 1020 percent somewhere around there divide it by your billable hours, so the billable hours that you have in the year finding out what those billable hours is also A science so 2080 hours working hours in the year.
If you go eight hours a day, nobody does that if you're a normal person and want flexibility, so what you want is to find out.
Okay, what are your holidays? What are your days off? How many weeks vacation you want we get into this business, we can have flexibility.
I don't want two weeks vacation in my.
I didn't retire from full normal employment, so I can have two weeks vacation and two sick days.
No thanks! I want the holidays off.
I want days off to go to my children's school and be with them and take them to school.
I want to have long weekends every now and then I want to have a few vacations in the year, whether they're, just small little road trip, camping trips or big trips out to Hawaii, or something like that.
I want to have the flexibility.
So that's time I'm not working! So you add all this up.
You find out what how many hours that are coming out of the year now you're down to, like I don't know 1,300 1600 hours working hours, okay, but wait, there's more we're gon na eat into that.
Even more, are you billing eight hours a day for that? Many weeks, nope you're, maybe billing, four five, six of those hours, okay, which means now we're down to like 1200 1300 working hours.
Now you take that you take your revenue goal, plus expenses multiply by the profit margin divided by the billable hours.
There'S your hourly rate.
Okay, now, let's let's go into my other screen here and I'm going to show you what that looks like okay, here's, my hourly rate calculator that I'm going to give you for free.
It'S part of the launch course, and it's gon na be flushed out and made even better, but this is what goes into hourly rates.
Okay - and it's you can description of this video also Alejo will link it up.
It'S uh you'll find the link okay.
So here we go: let's do this, okay, we're going to play with, like a, I, don't know an average above average scenario here and we're gon na in these green boxes, we're going to add some numbers and we're gon na play: okay, some fun personal salary.
This is how much you want to pay yourself, how much you want to quite literally be your income, okay, so your annual income requirements.
This is the first part of the formula, so we're gon na, say personal salary.
Let'S change it up and let's go I.
Seventy-Five thousand okay, now retirement and investment savings.
This is annually per year.
So let's say I don't know you want to put away a thousand bucks a month.
That'S twelve thousand dollars.
Okay, now I know it's the generous savings, but if you're prioritizing, then you can fast track your your retirement savings and miscellaneous miscellaneous savings and investments.
Whatever that wants to be and just giving you some flex.
Let'S just say a thousand bucks, maybe you're doing some something.
You know you have different investment vehicles or whatever, okay, so there we go so now.
Your annual income requirement is actually eighty, eight thousand.
That'S your annual income requirement based on your savings and your salary.
Okay, now we need to find out what your cost of businesses your annual cost of business.
So, let's go in here office, rent co-working space.
Let'S say that you're renting a co-working space.
You know you have a membership or you rent, an office or something like that.
You rented a bigger house that had an extra room for an office.
This is where this goes.
Okay, so let's um, let's put in let's put in on eight hundred bucks again.
These are fictional numbers, but you can.
This is where you can use the tool to find it out so fine internet.
For me, I'm paying way too much because that's how it works up here.
So that's literally my number for my just having an internet per year, mobile phone and data - I'm going my numbers here, folks, okay, for this, I'm paying again way too much for my phone, the data plan.
Okay, so there's my data plan accountant, you guys should have an accountant once we get you and launch and you start growing, you shouldn't be doing your taxes in accounting.
You should be having somebody do it for you.
There'S your first team member, okay, you're just paying them on a contract project basis to handle important things like taxes, okay, so I'm gon na say because I have a corporation and business taxes and personal taxes.
It'S gon na be a higher fee.
But let's say for you: it's 500 bucks in a year play with the numbers: okay, folks, legal fees.
This is, if you know, if you're incorporated and things like that, you know it.
Llc partnerships, those costs more money.
Let'S say your legal fees, you're, just starting out! You don't have any legal fees boom.
Actually, let's change that and let's say that you actually have like you signed it for like legalzoom.
com or something and you're having membership of 50 bucks a year or something just kind of making that up their marketing promotion, promotion and advertising.
Let'S say you dedicate 200 bucks a month to that, so we got what twenty four hundred bucks a year in promotion and advertising business insurance for protection.
This is, you know annual.
So, let's just say: fifteen hundred lots of different insurances that you could do flex and contingency okay.
This is different from profit margins.
This is just more so unpaid invoices unforeseen costs repairs.
Your computer breaks you, your desk falls down.
I have a stand up desk, a sit-stand desk.
That'S adjustable like this see that isn't that cool and the motor broke on it.
So I had to tell Ikea to send me a new one, then that costs money right so flexsim contingency.
Let'S just give yourself a thousand bucks: okay, so now folks we're now we're getting into business software.
That'S just essentials! Oh it cost money to run a business okay, web hosting.
I don't know hundred fifty bucks.
How much is web hosting cost folks fade? Put it in put your number in accounting and invoicing software.
So for me I have a little deal with my accountant.
She just takes it into her annual fee, but I don't know could be like 200 bucks a year.
Maybe less, let's say not: 20 bucks times so yeah, I'm gon na, say: 200 bucks a year project management so like base camp or something like that.
If you're at, like 50 bucks a month times 12, that's 600 bucks, my goodness gracious or Trello like Trello, gold or Trello, let's say you're using Trello free in freelancing freedom launch.
We talk about all the free tools that you can use, so you don't have to pay lots of money until you're ready to so, let's just say: zero.
Okay, you joined launch and you went.
You know what thanks Brad for saving me.
Lots of money join, launch freelancing freedom, rock on slash, launch; okay, now subscriptions and memberships.
I don't know.
Let'S just say you got like Spotify and things like that and you're charging it to your business account because you can hundred bucks making these numbers up right now.
Okay, for me, email marketing costs a lot of money.
The more that you grow your list, the more you have to pay, and it is a painful, but it's a lifeblood of your business.
If you have lots of leads coming, okay, don't complain.
Let'S just say that you have like, like 50 bucks a month, let's say that your email marketing CRM costs you 600 bucks a year productivity tools, Trello Basecamp, rescue time things like that.
Let'S just go for one twenty: a year miscellaneous software.
If I missed something: okay, now we're talking business hardware and tools, computer every three years so take.
I said three years because replace a computer every three years, four years, whatever I said three years: okay, so annually.
What that turns out to be, if you spend $ 2,000 on a computer duh divided by three, that's what 667 you know or like a cheaper laptop or if you got like a really bad non Mac computer.
I see you guys razzing me for my using my Mac since when was Mac, not cool guys, Mac is the coolest.
Okay, it's got iMovie and it also is a great computer.
So has never given me problems anyway.
That'S another chat for another day.
So let's say five hundred bucks a year is your cost for replacing your computer every three years or so? Okay office supplies miscellaneous.
You know, pens things, you know papers, notebooks, stationery stamps envelopes, and this is such ok, health care and taxes.
So in the States you got like your small business tax rate.
This is approximate, this is in Canada and the United States.
You'Ve got like a you know: scalable, it's like it depends on which tax rate you're in and if you make this much or at this tax rate, and then this one, then you add a little bit more.
So it's a complicated number, but just like give yourself an average just to give some padding a lot of people don't take into account that they're gon na have to shell out a whole crapload of money come tax time so give yourself some padding for that.
Ok! So I just put fifteen percent there.
You could put twenty, you could put ten, maybe if you're in, like a really super socialist country, put like ninety eight percent or like, if you're in, like a really opposite put like something really low.
I don't know this.
Is your assist your place to put that number? Okay? Let'S see health, insurance and expenses, so you know if you have health insurance, if you are paying for you, know out-of-pocket, for the dentist, take that into a consideration forgiving yourself, five hundred bucks a month for that two hundred bucks a month or whatever your insurance says, Put put this in so I just put that for an annual expense.
Okay, so now look at this.
This is your required annual revenue.
So your goal of like a hundred what seventy five thousand actually turned into eighty eight thousand and actually turned into one hundred and seven thousand okay.
So now we've got a required annual business revenue.
This is how much that you'd, like for your business, to earn in order for you to make your salary okay, now uh, a Mary, Jo, if only it was five K - yeah put your own number in there now we have to figure out our annual working hours.
So available work hours in the air is twenty.
Eighty, if you're working eight hours a day, if you're crazy, you can change that number.
But I suggest it you don't it's up to you it's up to you weeks of vacation.
Let'S say you want to give yourself four weeks of vacation in the year, how many holidays so stat holidays, u.
s.
holidays, Canada.
Whatever you know, religious holidays, any of the things that you want to take off put it right, there could be.
Five could be two could be 12.
Whatever you want sick days, you get sick a lot but 15 days.
You don't get sick, very much you're like super healthy but 3, whatever you want.
I'M gon na put 8 ok miscellaneous days off.
I don't know couple days you're, just like I'm not working today Papa be ain't showing up to work today % spent on non-billable work, so you can change this number.
I'M thinking it's about.
25 % could be 10 % if you're, like your non-stop billing hours all day long.
You change that if you're like a lawyer and you're just like you, show up and you're like I'm on billable time baby, then you put you put you put 0.
Ok, but if you're or like 1, you know, but if you're like normal people, 25 % ok.
So this is your non-billable work hours out of that available time, hours off.
Here'S your actual billable hours in the year, estimated.
Ok, Mary, Jo! Oh you retracted your message.
You changed your mind.
Oh here we go so folks.
Here'S our number, ok break-even rate.
So I give you a range okay.
I don't want to give you a number.
It'S a range, so your break-even rate is 85 bucks an hour.
If any of you want to go into the math there's the formula right there of where I got to that number, it's a it's, not a perfect science, but it's a good.
It'S a good starting place.
Ok, better than most of us and how we calculate our rates, which is just guessing.
So we take all this into consideration and we come up with our breakeven rate 85 bucks an hour to get you the minimum of what you're looking for here.
Ok, not much profit going on here, you're kind of going low.
You know maybe you're going to give like an introductory rate, or you want to give a discount.
This is the bottom range.
Ok recommended rate 95 bucks an hour.
Ok, that's what I'm saying based on this: that's what you should be charging if this is your billable hours and how much you're working and all these factors high profit rate 105.
So there we go between 85 and a hundred five dollars an hour is what you should be looking at based on this, but it really depends what, if your personal salary watch this, this is where it's fun is going to be hundred twenty thousand now: look how The rates change now you're looking at 120 to 150 landing somewhere at 135.
Okay.
What? If you um, you know what, if it costs you a lot for health insurance, like I don't know, $ 14,000.
Okay, so now we're looking at you know 125 to 160.
What if you got our office? That'S 1,800 bucks a month.
Okay, things are gon.
Na change looks like that number didn't change too much if at all, what, if you're hustling hard and you most of your hours are spent on billable hours.
So now you don't have to charge as much money okay.
So this is where your hourly rate comes in.
Okay.
Now I've got more.
I'Ve got more, don't you worry, let's jump back to our other screen and I'm gon na show you the next part of our little workshop.
Okay.
So that's our hourly rate.
How does that sound? Okay, that's that's the math! That goes into your hourly rate.
That'S how you know what I like to call your base rate okay.
So now, let's jump into that's, not necessarily me saying you should just charge hourly.
This is me saying you should know what you're, what you're, what you should be charging as a base rate, something to anchor it on, because every project pricing model that comes after that, your base rate that we just figured out comes into play.
Here'S how okay, the fixed rate, here's another pricing model, a lot of people brought charges, also known as pricing per project, the flat fee, fixed rate, fixed fee lots of different phrases: lots of different names for the same thing; okay, but what this is is basically, you Charge based on the project and the variables that come with the project, and it it depends because you can't just go off of hourly, and sometimes it's just easier to give them a customized flat fee.
Now a lot of freelancers at the beginning will will take a new project, they'll analyze, something and guess how many hours it's gon na, take them and then they'll say: okay hundred hours, it's gon na cost this much based on my hourly rate, but now what you're Doing is you're, giving your client line items and they can go through and go, and I want to see 100 bucks, so I don't need hosting whatever most things called.
That sounds stupid, no hosting.
For me, I'm gon na again that I'm gon na see.
I don't like that.
Little like design tweaks yeah, I'm going to just take design tweaks out.
Save me 80 bucks their revisions.
I'M perfect! I don't need revisions.
Okay, so I'm gon na take that out now.
You'Re there just hacking away at your price, okay, and we don't want that.
This is why I like the fixed rate, because you give them a flat fee.
They say here's my project, that's what I need and you behind the scenes with your with your base rate.
Go okay: how long is it gon na take me? How long is this going to require of my time? Okay, here are some ideas that I should be taking into consideration and and then give them a flat feet.
Gon na be five grand and then they don't get to look at line items and just hack away or price okay.
So I'm gon na go into that.
Joel, hey, Joel good! To see you here, buddy pricing calculator link doesn't seem to be working uh-oh.
I don't want that.
No uh! Let me let me just see.
I want to make sure that pricing calculator - oh I'm gon na fix that I'm gon na fix that link there.
Joel is just typo little typo.
Okay, in the description that should be.
It should be good now Joel, try that out now just want to make sure I'm still alive.
Here too sorry, I got sidetracked olya sidetracked me, man, okay, we're good okey-dokey.
There we go so the links fixed.
I have another link coming up in the end of this workshop.
Just you know just so, you don't miss out on it, but I fixed it.
The link should be there.
Anyone who tried it the link didn't work.
It'S there now: okay, um back to the workshop.
Okay, the fixed rate: why is it good? Why is it bad, okay, it's good, because you're rewarded for efficiency and speed.
So if, if you think it's going to take you ten hours, then then you can bank on it being ten hours.
But what, if you finish it in five hours, you are you and your client are rewarded for efficiency and speed.
So this is good think about this.
This is why it's good, if you think, okay, it's gon na, take me ten hours or let's say one week of my time: a block off a week, then the person, the client will go.
Okay, I can expect it in a week.
I guess and here's your thousand bucks okay, let's just say that now what if you finish it in two days, the client still pays a thousand bucks but they're happy with that, because they didn't have to wait a week.
They waited 48 hours, so they win, because you are good at what you do.
They'Ll pay for it.
They get the end result: okay and you're rewarded because, instead of taking a week to do a thousand dollars of work, it took you 48 hours.
That means that your value that the rate actually was much higher, okay, now versus hourly rate, if you finish a project really fast like if you say it's gon na, take me 10 hours, hey Bob, it's gon na take me 10 hours and it takes you two Hours and your hourly rates like hundred bucks, okay, you just literally shot yourself in the foot and made way less money.
Your clients happy because it was fast and cheap, but then now you're setting yourself as a commodity.
They want stuff fast and cheap.
Okay, fixed-rate solves that problem.
So that's why it's good predictable project price, the clients happy because you can.
They know what they're getting they know.
What'S good they're going to pay, you know that you're gon na get paid X for the deliverable you get paid for the deliverable, not the time, okay and increased earning potential so now, because you're not tied to that hours in the day anymore.
If you get like three projects that you can complete in a week and you charge a flat fee of two grand per project, that's six thousand dollars you just made in a week.
Okay, why is it bad scope? Creep loves fixed fees, because now your client goes well, I'm giving a thousand bucks.
I'Ve got your time and your attention.
Here'S here are here's my laundry list of things.
I also want you to throw in there, because you could just do that right.
It'S really easy for you to just add this in now that I've got your attention right, so scope creep can really really eat into this.
If you're not careful about contracting setting boundaries and defining your scope, all things we talked about in the launch course - and you will I guarantee you underestimate your time and your effort, I guarantee you, you will underestimate it because you're afraid, because you don't know because it's You'Re, unsure about what it's going to what it will actually take the more experience you get with this, the better you will be at accurately pricing it, but those are some reason why it's bad.
So, let's real we're real world application.
Okay, your rate depends on the same factors as your hourly rate, plus the type of the solution, the going rate level of urgency pain, the value, you're, providing and return on investment.
All factors you might want to include.
So what are you charge? It depends, let's figure it out, for real in the real world flipping my screen here back to the calculator.
Not only do you get hourly rate calculator, you get the fixed rate, calculator watch.
What is so cool about this? It already knows you're a break-even recommended and high profit rate based on what you put in here.
This is why everything hinges upon your base rate, not necessarily because you're going to be charging hourly all the time, but you need to know what's my time and energy worth what goes into this, what do we need to take into consideration? So now I'm using these as my guide to know what I should be charging so factors that affect pricing.
This is where the fixed fee comes in.
These are the factors you want to consider so the typical price of a similar product or service.
So right now I have this on a scale from zero to ten, and this changes, what the mark-up percentage would be to consider.
Okay, so, let's say typical price for a similar product and service.
So this is where you can go off with a going rate.
If it's usually a really expensive service or product, okay, Brett now we're at nine - you know, let's say nine so boom you just you can take that into consideration size of the client.
Are they like your buddy, okay, zero, okay or maybe they're like a really high-profile corporate client who who works with huge clients? And if you said that your project was gon na be a thousand dollars? They would laugh you out of the room because they knew you weren't qualified enough, so you need to be charging higher rates commanding higher rates because you're a premium consultant.
So, let's say the size of your client is like a excuse me, a seven, the consultants, level of expertise and experience.
That'S you! So are you like a newbie, okay, zero? Or are you like boss, lady? You got this dialed in ten, so let's say the experience within the given field and meesh I'm going with.
Let'S go eight: okay, the clients, level of pain and urgency.
Are they like I'd like a really pretty sight, and just you know, kind of what the cool kids are doing nowadays, all right, not a lot of urgency or pain going on there, probably a one or zero about if they're like my website was hacked, or you Know I'm getting staff members quitting left right and center because of something that's going on internally and I need someone to investigate.
I need some human resources, expertise or you know I'm a financial planner and I'm getting older, and I need to be able to create an investment strategy.
That'S gon na protect me as I get into my golden years.
All right level of pain, high right urgency, high.
So we're going, you know we're going nine here.
This is a painful one, folks, okay, how beneficial to you is this a project that you're gon na hate? That'S a zero.
You know you don't like it, it's not beneficial, it has no return for you.
It'S just like a throwaway project.
Keep that in mind.
Okay, so or is it something that's really beneficial for you then? Maybe we're looking for.
Like I don't know six, it's not life-changing, but it's nice was it a referral.
Why do I add this? Because if it's a referral, there's a level of trust there, new client there's they came from somebody, so they come in with a level of trust.
So you can charge a bit more because their buddy said, I trust Mary, Jo she's amazing does great work.
Okay, there's value in that so you're allowed to give a little bit more buffer in that price, because there's a trust factor and you want to slowly start increasing your rates.
As you know, as you get more clients so that you can go into a new premium.
Positioning so was it a referral? Zero is no five is yes.
I did that because I use calculations based on numbers, so I'm gon na say was it a referral? It wasn't a referral, it was just like an organic thing or something I did myself.
Okay, so zero, so the market percentage 30 % the numbers they're based on these numbers here and okay, so now project specific expenses.
So these are expenses based on your fixed fee.
Did you hire a staff team or virtual assistant? How much does it cost you for that project? So maybe you have a VA and web developer and a designer on the team and it's gon na cost.
You like eighteen hundred bucks to pay them for their contribution.
All right, you got it.
You got to take that into consideration software licenses materials.
Maybe you upgraded your project management.
Maybe you bought a tool or something to help.
You finish the project and it cost you like.
You know: 75 bucks.
There we go travel expenses, you met with them a few times.
You took them out for lunch and you paid you know $ 45.
There we go total project expenses plus the markup and your estimated time to complete it, based on your base rate, breakeven recommended a high profit.
Alright folks, look at this.
Your breakeven fixed fee for that project is sixteen thousand two hundred or recommended rate eighteen, nine or high profit rate.
Twenty three and you can.
You can move those numbers around again.
These aren't gospel to just hard and fast its guideline, but it's a scientific guideline.
Okay Terrell says thanks, but I'm gon na position myself as the ugly website guy okay.
So let's jump back into our workshop here and we're gon na round it off round off the hour and round off the workshop with our last little bit here.
So that's uh! That'S the formula for the fixed rate.
You know base rate times time to complete, multiply it by the mark-up factors and the project expenses there's your fixed rate, all right.
Okay! So now we're gon na jump into the final most commonly used pricing model.
Again, there's a lot more in terms of pricing models that we talked about in the launch course at freelancing freedom, comm, slash launch, but I'm giving you the three most common that you need to dial in first before we get fancy value based fee.
Why is it good? Well the value based fee? Let'S talk about what it is, it's it's charging based on the value you provide, so you're, no longer charging and trading your time for money and you're, no longer just charging a flat fee based on a bunch of factors and variables and components, you're charging based on How valuable it is for the client, if it's not valuable, then you can't charge very much.
You'Re gon na have to revert to one of the previous pricing models, but if it's very valuable, then you get to price based on the value that the client gets out of it.
Okay, so why is it good? You can command really high rates.
You can position yourself as an investment person is versus an expense.
In fact, you cannot charge value based if you can't get a return or define clear value for the client.
How much time are they saving how much money are they saving or growing? You know how much pain are is being relieved, stress, lots of factors for what value is okay, so your an investment? Okay, not an expense.
The client will pay higher rates for higher ROI.
So if I can get a higher return on investment, I'll pay, a high rate, that's how it works and huge earning potential, so sky's the limit here.
If you get a big project that has high value potential, that's a huge earning potential has nothing to do with your time or your availability.
Now.
Why is it bad? Because beginners cannot do this? You can't use this as a beginner you're, not proven you don't have experience.
You have no idea what you're doing you're just guessing you're gon na make yourself look like a fool really fast.
This is an advanced tactic that you can't really use until you're.
Let me just switch my camera to the better one, because I can there we go love it how's it already doing.
Welcome to office hours live name is Brad husky from freelancing freedom.
Calm always excited to.
Have you here pleasure to have you here excited to see some familiar faces and some new faces in the live chat? Hey Kenny, how's it going James is here motivated and ready to go.
Focus now is the time.
Aleja is always pleasure to have you here.
Thank you for helping AMD, don't know what your name is, but how's it going good to see you here Mike writing, good to see you here, um Monique, awesome, good, say hi, everybody, whoever is here, say hi.
Let me know if you can see and hear me make make sure that our video and audio was good to go and we'll just jump right in this is great.
I'M excited about this, for those of you who are new to office.
Hours live every single week on Thursdays at 4 p.
m.
mountain time, 6:00 Eastern, unless otherwise scheduled and stated.
I go live right here on my YouTube channel to answer questions about freelancing, consulting starting a business growing your business scaling your business and all the nitty gritty.
That is involved with that whole business, I'm very passionate about helping people, discover their potential and their purpose and to create a business that they love using the skills that they have, and it's just something I love doing.
I'M always I'm always excited to get messages from you guys telling me that you've leveled up you've, you know changed your life in some way.
You'Ve started a business you've booked a client, I'm equally excited as excited.
When I get a message of someone who says, I saw your video and it inspired me to start my business as I am when someone says I quit my job and now I make six figures in a year.
I just love getting these messages, and these are messages that I just get me fired up to get to work and to serve you guys.
So that's what I'm here to do today is to serve you and to teach you a little bit about pricing, as you probably got.
If you got an email from me too, inviting you to the office hours, I was mentioning in pricing how today's the theme is about pricing.
It'S a very hot and common topic amongst three answers and consultants.
Regardless of your your stage, a lot of beginners have no idea about pricing thumbs up or high-fives plus ones in the live chat.
If you're in that, if you're in that area, no idea about pricing, no shame in that and experienced freelancers consultants and business owners alike.
I still struggle with pricing.
I mean I'm launching a course right now and I'm still like is this.
How did I get to this price and I'll go and make sure that all the math is right and there's so many factors? It'S just it's easy to forget.
You know or not know be in the dark to compare yourself and your price to others.
You know to worry if you're charging too much too little, it's it's hard.
It'S a difficult topic, so, thankfully it actually can be distilled down into a bit of a science and that's.
What today is about I'm going to show you that science, so that you know where, where your price comes from, and how to confidently charge, what you're, charging and you're probably going to find out really quickly here that what you are charging you you're under charging.
Now we're gon na get into that too.
Just wan na, say hi to the folks here looks like ok.
Monique'S is loud and clear, plus one we're good mary, jo hola, como estas good to see you here, Rebecca hi.
Everyone looks like yeah totally.
We got some.
We'Ve got some beginners for sure yeah, I'm gon na start with the question.
I'M gon na start with a question here.
What do you charge in your business? What do you charge? Is it you know? Is it an hourly rate? Is it something else you know, is it a monthly fee? What what is it? What do you charge? What'S your current, I charge my clients X.
So let's just pretend you and I forget everyone else is here: it's just you and me: okay, got it.
Okay, perfect! Very very awkward, intimate view here.
Just tell me: what's your price, okay, that go weird fast, because what we're gon na do here is we're gon na find out.
I want to ask you, you know now: you're sharing that you're, pretty you're gon na start sharing the price.
How did you decide that number I want to know? Where did that number come from? How did you land on that number? I'M willing to to guess that it's that you'd land on that number because of randomness, you threw a dart on the wall and just said: okay, there was my price.
You compared it to somebody else.
You said well, the going rate is, you know fifty bucks an hour, so I'm charging fifty bucks an hour.
I guess in all honesty you probably just landed on it randomly right, and this isn't me judging you or anything.
I'Ve goodness sake.
My pricing strategy, when I started, I was just goofy comical.
Let'S see Larry says right now: it's a bit willy nilly.
I like that willy nilly price, like it Alea, I'm in the process of transitioning from hourly to another cool, would love to know more about that.
Evan package pricing, mm-hmm great James by the job using hours, jobs take times the rate.
Okay, Mary, Jo, just talk to someone about reselling hosting totally under charging.
Disa says that question makes me nauseous.
Yep Monique per project, okay, packaging and monthly upkeep, keep says AMD Evan between two and four K and do 200 monthly retainers cool Dale, hourly 24 hour 24 dollars an hour content $ 40.
An hour dev Mary, Jo, worked up to 1800 for a three page site.
Not finding those who are willing to pay for it, as well as any copywriting Recio on top 65 bucks, an hour Roth, ah yo, how's it going Kevin clueless all over the place.
I don't even know, don't even know, love it.
These are the answers that I really enjoy because it's honest, it's real Rebekah's is still figuring it out, probably either a package or by our okay.
I love this.
This is so great.
Keep it coming.
I would love to see what you guys are charging and we can address these things as well.
At any point, during this office hours live, you have my attention to answer your questions.
Throw the questions up.
There aleja my business manager, an assistant, will grab your question.
Throw it up on my Trello board that I have right here.
I don't know if you could see it, no camera is locked whatever I have it on my screen and I'll see your question I'll be able to answer it.
Okay, that's what this is about.
Answering your questions, whether you're student or you're - not if I see a student answers, a question, I'm going to prioritize them over just the general public but I'll get to all of them.
Hopefully, usually I do okay, so yeah throw your questions at me at any point, because today I'm actually gon na dive into a little.
I created a little micro workshop for you, because the topic of pricing is Dyke antic in the new launch course at freelancing freedom.
Calm, slash launch, which is open right now, totally shameless plug.
We go really deep into pricing, I'm actually.
The reason why I'm talking about pricing is because it's hot on my mind, I I sent out a message to all the students asking.
What do you want to know about pricing just to make sure that I'm getting everything in there that I need to know that? I need to share that.
I need to teach and I have an amazing pricing module within the course.
So I it's a huge topic.
I'M not gon na be able to go as deep as I would like to into all the aspects of pricing in a 30-minute.
You know free workshop, but I'm gon na give you something really great to work with.
I don't want to overwhelm you and then there's obviously some next steps in action steps if you want to go further and go deeper into pricing and in addition to launching your business in a sustainable and profitable way.
So I'm gon na, be I'm gon na, be answering your questions, throw them there.
We got them the Trello board, starting to grow already, and I'm gon na be doing a little workshop here for you live in real time.
This is content directly cherry-picked from the launch course, and only maybe 10 % of what is in the pricing module, because I could spend hours on this.
In fact, the pricing module will probably be hours of learning, so plus I'm gon na be demoing a little tool.
A calculator I created it's in its early Minimum, Viable version stage, but I'm going to be flushing it out as I grow it and tweak it and fine-tune it based on you using it.
I want you to use it and break it.
I'M gon na be giving it to for free, I'm gon na be demoing it today.
I'M gon na be building it out and I think I'm gon na build it out into something really great but right now it's a nice calculator in Google sheets and it's gon na, be it's you're gon na see what goes into determining your price.
Okay.
So, let's see some more, we got some stuff happen in here, but that's some stuff happening in the chat chat, um, okay, people still telling me about their pricing.
You know no plans, no ideas, just throwing it up on the wall.
Mary Jo says I just heard from another who is getting 10k for simple, not mind-blowing.
Website designs, yes, Monique kind of difficult to compete with some people who want to charge pennies to the hour ooh.
Yes, that's another thing positioning AMD.
Do you charge my feature or is it better by the hour? Okay, hey Harold papa, be here? Yes, oh good, and we got closed captioning for Harold.
Oh, I love it.
Thank you.
Youtube amen to that.
We get to serve Harold and the hard of hearing in real time.
Love it just happy about that.
Okay bear my Harry job.
Basically, how do I pop people on the head to realize value? I love it.
Is it better to publish price okay good? These are good questions.
Ask your questions as we go through will will make sure that they go into the Trello board and I'll answer them as we go through and at the end and all the good stuff and happy times here we go.
So let me just jump into my screen here and then we'll jump into a workshop.
My little workshop that I put together for y'all um screen one here we go boom yeah.
Who could see my screen? I know you could say my screen.
I didn't yes.
I know you do okay, Jason says: hey Brad, thanks for the great content, slash poison, you're! Very welcome! I'M glad that you chose your poison wisely.
What'S the best way to handle domain hosting fees, client setup to array for them charge for them love the question Jason.
We'Re gon na answer that question afterwards stick around Kenny.
What should i price my work items or by hourly rate love it? Okay, I'm gon na address probably a lot of these questions in the workshop here.
So keep the questions coming, we'll throw them into the Trello board and I'll address them as we go and at the end - and here we go so here's my here's.
My little workshop, my Minimum Viable workshop about pricing all right pricing workshop charge.
What you're worth as a freelancer and consultant all right? So, let's just dive in what we're gon na do in this little workshop again, it's not an in-depth workshop.
All about all the different nooks and crannies and all the details, there's lots of different models, but I'm gon na give you three of the most common pricing models: how to properly use them where to use them and to help you determine which one you should be Using if you're ready for that one and within these three like I can throw a whole bunch at you and I'm gon na, let you know a bit about a bit more pricing models, but a lot of people get excited about.
Okay, there's a lot there's all these different pricing models, I'm gon na choose which one works for me and all that you know they get excited about all the choices, but the reality is is like.
If you don't actually know your base rate, if you don't know what you're worth and the value you're offering, and how to determine your price in a mathematical scientific, formulaic way, then you're just throwing numbers up on the wall you're just guessing.
You know if someone says: why do you charge that and then you go hmm well, I mean right so, okay, here we go.
I'M gon na give you three of the most common pricing models: how to do them properly.
I'M gon na demo my free calculator for you, which you have access to I'll, give it to you, stick around and and then we'll talk more we'll talk more about pricing.
All right, don't worry about it.
Okay, pricing models number one haha, the hourly rate, hello, hello, normal hourly rate; everybody knows about the hourly rate.
Okay, let's talk a little bit about the hourly rate.
The hourly rate, as we all know, is when you charge an hourly rate for your services.
You work.
Eight hours you charge a hundred dollars an hour.
That'S what eight hundred bucks you just it's! It'S a plain, vanilla, normal way for trading your time and your money.
Okay, it's a one-to-one kind of transaction.
Your client says I need this.
You go it's gon na.
Take me ten hours, here's my rate boom, pretty standard service based pricing model right now.
How do we determine that hourly rate? What are the pros and cons? What is the real world application? Let'S talk about it, okay, pros and cons.
Why it's good! Why is the hourly rate good? Well, it's guaranteed income for the hours that you work.
You work eight hours you charge for eight hours boom, you're good to go.
It'S super normal nobody's, gon na, be surprised by your pricing model called the hourly rate right.
Your client goes how much for the project you go 100 hours and this many many hours this much per hour.
They go okay, cool! I get it, I'm not confused.
I'M not skeptical, I'm not wondering where that price came from.
I can see you're pricing, your line items I could see you know yeah.
Okay, that makes sense right.
Why is why else? Is it good? Because it protects you from scope creep chime in folks? Why do you think pricing hourly is good share? Some sure, some of your reasons why you think hourly rate is good the pros of hourly rates.
You know protection from scope creep.
That'S that's a big one, so you work on a project and you quote them ten hours.
You do your 10 hours and you say good the project's done.
The client goes.
Oh, but Mary, Jo I'd like this extra feature, no problem, client Bob, it's gon na be two more hours there.
You go guaranteed income.
Of course, the client can choose not to pay, but you know in launch will deter, will help you figure out how to avoid those clients, so you get only the good ones, but those are some reason why it's good feel free to share your ideas.
Why? You think hourly rates are good.
Okay.
Now, let's talk about why it's bad, okay, you're, a commodity, oopsies, what's a commodity, it's something that can be bought and sold on the cheap.
You know when you we think about.
We talk a lot.
We talk about a lot about the service, the product or sorry, the service commodity continuum in the launch course at freelancing freedom and on one end pure service, is like think, a plumber think an electrician they provide pure one-to-one service now, on the other end, is the Commodity think gold think you know precious metals now in that spectrum, if you are providing a pure one-to-one service, that's that's on one end of the spectrum, but now, where you start to commoditize yourself is when you start turning yourself into something that has no identity.
No personality, and it doesn't matter if it's you, Mary, Jo, if it's you Mike, if it's you James, providing the service, I don't care.
What I'm looking at is your $ 20 an hour.
Is your $ 40 an hour now, I'm gon na find somebody else who charges $ 40 an hour who's better or someone else who charges $ 20 an hour.
This is the commodity game you buy cheap so that you can get as much as possible.
You know you don't want to pay high prices for commodity unless you know you're gon na get more from it.
So you want to stay out of the commodity zone and go into the more of an actual value zone and so you're a commodity.
We don't want to do that.
Okay, you can't scale, because your earning potential is limited by the hours in the day.
Nobody here is gon na work 24 hours in the day you and I only have 24 hours in the day.
That'S it okay and we're not working 24 hours, you're working eight hours, but when you start up your business, the reason why you one of the reasons why you start up a freelance business and go your own way: q, Fleetwood Mac song, you can go yeah! Oh wait: okay, not gon na! Go that we're not gon na go there.
So you do that because you don't want to work yourself like crazy.
You don't to work eight to ten to twelve hours in the day you want to work six hours right some days.
You want to work for other days.
You find working 9:00 cuz.
You got something good going on, but you want that flexibility right.
So, okay, let's say we only got the eight hours in the day.
You are you gon na be billing for all eight of those hours.
No you're gon na be doing work.
That'S unbuild, you're gon na be doing admin.
Work you're gon na be doing marketing research reading you know unforeseen things.
Lots of stuff you're not going to charge for probably twenty to thirty percent of what you do in the day is unbuild time.
Okay, so now you're down to five to six hours of billable hours in the day, if your rate is 50 bucks an hour, some basic grade to math that I have to use my calculator for don't judge me is what fifty bucks an hour five hours there.
You go.
You got a cap of $ 250 a day which is what 7,500 bucks a month.
That'S nice, okay, sure, 7,500.
Bucks a month is great if you're gon na be booking consistent, five billable hours at your 50 out $ 50, an hour rate, but is that it is that it? What if you want to make 10,000 well? Okay, now you got ta raise your rates.
You got to work harder work more, it's not scalable.
Okay, Mary, Jo says yeah definitely scope creep.
Is why it's bad yeah Bob more small projects? Yes Dale was just about to say, scope creep.
It'S a number one reason for hourly rates: yeah.
That'S that's why it's bad James need to make minimum take-home each week for cost of living yeah hosting plans.
Sometimes you need an app or go watch The Avengers during the day, Yeah right.
So these are reasons why it's bad.
Also, here's the here's another final one, why it's bad, raising your rates! Now that you realize, like oh man, I got an earning cap.
I quit my job so that I can have more flexibility in my time.
So I want to work less hours, but I want to be able to make the same or more as my previous salary, but now I'm capped out.
Okay, I need to make more so what's the first plan of action raise my rates by 10 20 percent.
Now I can make 10 20 percent more money.
Guess what your client does cries like a baby, some of them cry like a baby.
They whine they go.
Why are you charging more, of course, their strategies to get around this and to actually raise your rates without making them cry like a baby and having them complain or feel like you're cheeping, or you know, cheating them? We talked about it in the launc course join at freelancing freedom to accomplish launched all right, I'm gon na shameless plug all throughout this okay happy.
You were in the course anyway, so okay, these are.
This is the hourly rate.
Now, let's go okay, let's jump in to a real-world application.
How do you apply your hourly rate in the real world? Well, your rate depends on a lot of things.
A lot of us here told told everybody publicly that the way that we decided on hourly rate, was by just choosing a number willy nilly guessing I don't know, I just went with a number and I just ran with it.
That'S what I did guess.
Oh, my first hourly rate was 20 no 35 dollars an hour.
I think might have been 25, but I don't know why I chose that number.
I just chose the number because I was like I don't know.
When I worked at the grocery store.
I made 12 bucks an hour, so if I made double that that'd be amazing from home dream job right, so so yeah we don't know.
So it depends on a lot of things, though, like there's a science behind your hourly rate experience.
Okay, how good you are at something your location, you know, maybe, if you're in San Francisco and your cost of living is really high versus.
Like you know, somewhere in, like the country middle of the country got low out, you got low cost of living.
You live in the country, life and you got like a nice low cost of living and things are easy.
Breezy, probably don't need to charge those City rates right charges am country rates goals.
What'S your goals? If you have a modest goal, you have a high goal.
It'S going to affect your rate, you're not going to be able to reach your high goals with your high cost of living, with your measly hourly rate right competition, a lot of competition in the area, a lot of people charging 40 bucks an hour if you're swimming In that pool and you're the guy charging 60 bucks an hour, it's gon na look weird you're gon na have to answer.
For that rate level of pain, meaning how painful is the problem you're solving? If, if my you know like my finger is sore, and I need you to solve it - okay it'd be weird metaphor: stick with me, but it's just sore.
I could still use it and you're like you know what Brad I can help you with that sore finger.
Just 50 bucks I'll go, no thanks, I'll go and get like some cream and a band-aid I'll be fine.
Now, let's say I dislocated my entire wrist and I need to use the computer.
That'S that's a painful problem that needs to be solved and I'm willing to pay in time money.
You know and and well time and money.
You know if you're in the state's you're paying for it out of pocket, if you're in Canada, maybe not so much depending on where you go and but you'll pay in time or money to solve that problem.
So in Canada, you'll pay in time in the United States.
You'Re paying money doesn't matter for make sense.
Okay in business, if your clients, like I'd like a pretty website, um, that that's not that painful of a problem.
But if your clients, like I'm about to go to business, unless I really grow up with my marketing strategy, I need your help and you go okay.
Now we can talk.
This is what I need from you.
This is what we can expect, and this is what I'd like to get for.
You they'll pay for that.
That'S not you holding them ransom or in a weird position.
That'S you helping and that's just business.
Okay, if you can solve my problem and help, make my life better in some way shape or form, I'm willing to pay for that in some way, I will trade you my time, my energy, my money, whatever it is, that's how this that's, how it works.
Okay, that's a good thing: okay, Mary Jo says pop-up BBB reals mm-hmm yep, I'm gon na gon na use that as a testimonial by the way, I'm just kidding okay, so we're gon na figure out.
I'M gon na give you a formula right now and then gon na go into that formula and show you in my calculator how it works.
So we got a veteran freelancers.
Nudging me says Mike to get my price prices on paper.
She suggested that I start using a tool like ours tracker to get an idea how much time jobs are taking me.
Yes, so you need to know how much time your jobs take you and as it as you get experience, you start to know what that number is.
But yes, you should be knowing how much time am i spending on this thing use rescue time, rescuetime, calm, Brad, Hussey dossier, slash rescue time.
If you want to use my affiliate link, it's free.
If you sign up for the paid version you never will have to by the way I do, but you don't have to then I'll get a commission.
It'S how affiliate links work, you get it it'll track automatically.
What you do on your computer, okay, everything and then you can know this is how many hours I spend on designs so many hours I spend doing a mid work.
This is how many hours I spend on YouTube so on and so forth.
Okay, Kanban or Kanban kanbalan konban.
However, you wan na pronounce that to track time, says Monique totally totally great technique for tracking time and knowing how long something takes okay.
So, let's jump in here I'm going to give you the formula.
This is the hourly rate formula, the basics, or it's something you can find online.
I kind of tweaked it to custom.
I think this is a better, more accurate formula, but it's a surface level for me.
There'S a lot that goes into this.
So in this formula is looks as it looks like this: you take your revenue goal, plus your expenses, so you add those together.
You multiply it by your desired profit margin.
A lot of freelancers think that well, why would I have a profit margin? I'M getting paid 50 bucks an hour like okay; no, no, that's how much it costs you to do something.
So if it costs you an hour, if it's one hour to do a task in your rate, is fifty dollars an hour you're just covering your costs to provide the service you actually have given no room for profit.
Does that make sense because you were you're, are gon na have expenses and such that you don't have to take care of, but it costs somebody $ 50 to give them an hour you're, giving yourself no room for contingency profit, growth, wiggle, room flexibility, you're, just saying.
Alright, here's I'll give you my time for 50 bucks.
That'S just how that's your base rate.
So you take your revenue goal plus your expenses, you multiply it by your profit margin, yeah.
10.
20 percent.
It'S up to you! You can! You can go higher if you want, if you want more contingency and flexibility, but a good rule of thumb, 1020 percent somewhere around there divide it by your billable hours, so the billable hours that you have in the year finding out what those billable hours is also A science so 2080 hours working hours in the year.
If you go eight hours a day, nobody does that if you're a normal person and want flexibility, so what you want is to find out.
Okay, what are your holidays? What are your days off? How many weeks vacation you want we get into this business, we can have flexibility.
I don't want two weeks vacation in my.
I didn't retire from full normal employment, so I can have two weeks vacation and two sick days.
No thanks! I want the holidays off.
I want days off to go to my children's school and be with them and take them to school.
I want to have long weekends every now and then I want to have a few vacations in the year, whether they're, just small little road trip, camping trips or big trips out to Hawaii, or something like that.
I want to have the flexibility.
So that's time I'm not working! So you add all this up.
You find out what how many hours that are coming out of the year now you're down to, like I don't know 1,300 1600 hours working hours, okay, but wait, there's more we're gon na eat into that.
Even more, are you billing eight hours a day for that? Many weeks, nope you're, maybe billing, four five, six of those hours, okay, which means now we're down to like 1200 1300 working hours.
Now you take that you take your revenue goal, plus expenses multiply by the profit margin divided by the billable hours.
There'S your hourly rate.
Okay, now, let's let's go into my other screen here and I'm going to show you what that looks like okay, here's, my hourly rate calculator that I'm going to give you for free.
It'S part of the launch course, and it's gon na be flushed out and made even better, but this is what goes into hourly rates.
Okay - and it's you can description of this video also Alejo will link it up.
It'S uh you'll find the link okay.
So here we go: let's do this, okay, we're going to play with, like a, I, don't know an average above average scenario here and we're gon na in these green boxes, we're going to add some numbers and we're gon na play: okay, some fun personal salary.
This is how much you want to pay yourself, how much you want to quite literally be your income, okay, so your annual income requirements.
This is the first part of the formula, so we're gon na, say personal salary.
Let'S change it up and let's go I.
Seventy-Five thousand okay, now retirement and investment savings.
This is annually per year.
So let's say I don't know you want to put away a thousand bucks a month.
That'S twelve thousand dollars.
Okay, now I know it's the generous savings, but if you're prioritizing, then you can fast track your your retirement savings and miscellaneous miscellaneous savings and investments.
Whatever that wants to be and just giving you some flex.
Let'S just say a thousand bucks, maybe you're doing some something.
You know you have different investment vehicles or whatever, okay, so there we go so now.
Your annual income requirement is actually eighty, eight thousand.
That'S your annual income requirement based on your savings and your salary.
Okay, now we need to find out what your cost of businesses your annual cost of business.
So, let's go in here office, rent co-working space.
Let'S say that you're renting a co-working space.
You know you have a membership or you rent, an office or something like that.
You rented a bigger house that had an extra room for an office.
This is where this goes.
Okay, so let's um, let's put in let's put in on eight hundred bucks again.
These are fictional numbers, but you can.
This is where you can use the tool to find it out so fine internet.
For me, I'm paying way too much because that's how it works up here.
So that's literally my number for my just having an internet per year, mobile phone and data - I'm going my numbers here, folks, okay, for this, I'm paying again way too much for my phone, the data plan.
Okay, so there's my data plan accountant, you guys should have an accountant once we get you and launch and you start growing, you shouldn't be doing your taxes in accounting.
You should be having somebody do it for you.
There'S your first team member, okay, you're just paying them on a contract project basis to handle important things like taxes, okay, so I'm gon na say because I have a corporation and business taxes and personal taxes.
It'S gon na be a higher fee.
But let's say for you: it's 500 bucks in a year play with the numbers: okay, folks, legal fees.
This is, if you know, if you're incorporated and things like that, you know it.
Llc partnerships, those costs more money.
Let'S say your legal fees, you're, just starting out! You don't have any legal fees boom.
Actually, let's change that and let's say that you actually have like you signed it for like legalzoom.
com or something and you're having membership of 50 bucks a year or something just kind of making that up their marketing promotion, promotion and advertising.
Let'S say you dedicate 200 bucks a month to that, so we got what twenty four hundred bucks a year in promotion and advertising business insurance for protection.
This is, you know annual.
So, let's just say: fifteen hundred lots of different insurances that you could do flex and contingency okay.
This is different from profit margins.
This is just more so unpaid invoices unforeseen costs repairs.
Your computer breaks you, your desk falls down.
I have a stand up desk, a sit-stand desk.
That'S adjustable like this see that isn't that cool and the motor broke on it.
So I had to tell Ikea to send me a new one, then that costs money right so flexsim contingency.
Let'S just give yourself a thousand bucks: okay, so now folks we're now we're getting into business software.
That'S just essentials! Oh it cost money to run a business okay, web hosting.
I don't know hundred fifty bucks.
How much is web hosting cost folks fade? Put it in put your number in accounting and invoicing software.
So for me I have a little deal with my accountant.
She just takes it into her annual fee, but I don't know could be like 200 bucks a year.
Maybe less, let's say not: 20 bucks times so yeah, I'm gon na, say: 200 bucks a year project management so like base camp or something like that.
If you're at, like 50 bucks a month times 12, that's 600 bucks, my goodness gracious or Trello like Trello, gold or Trello, let's say you're using Trello free in freelancing freedom launch.
We talk about all the free tools that you can use, so you don't have to pay lots of money until you're ready to so, let's just say: zero.
Okay, you joined launch and you went.
You know what thanks Brad for saving me.
Lots of money join, launch freelancing freedom, rock on slash, launch; okay, now subscriptions and memberships.
I don't know.
Let'S just say you got like Spotify and things like that and you're charging it to your business account because you can hundred bucks making these numbers up right now.
Okay, for me, email marketing costs a lot of money.
The more that you grow your list, the more you have to pay, and it is a painful, but it's a lifeblood of your business.
If you have lots of leads coming, okay, don't complain.
Let'S just say that you have like, like 50 bucks a month, let's say that your email marketing CRM costs you 600 bucks a year productivity tools, Trello Basecamp, rescue time things like that.
Let'S just go for one twenty: a year miscellaneous software.
If I missed something: okay, now we're talking business hardware and tools, computer every three years so take.
I said three years because replace a computer every three years, four years, whatever I said three years: okay, so annually.
What that turns out to be, if you spend $ 2,000 on a computer duh divided by three, that's what 667 you know or like a cheaper laptop or if you got like a really bad non Mac computer.
I see you guys razzing me for my using my Mac since when was Mac, not cool guys, Mac is the coolest.
Okay, it's got iMovie and it also is a great computer.
So has never given me problems anyway.
That'S another chat for another day.
So let's say five hundred bucks a year is your cost for replacing your computer every three years or so? Okay office supplies miscellaneous.
You know, pens things, you know papers, notebooks, stationery stamps envelopes, and this is such ok, health care and taxes.
So in the States you got like your small business tax rate.
This is approximate, this is in Canada and the United States.
You'Ve got like a you know: scalable, it's like it depends on which tax rate you're in and if you make this much or at this tax rate, and then this one, then you add a little bit more.
So it's a complicated number, but just like give yourself an average just to give some padding a lot of people don't take into account that they're gon na have to shell out a whole crapload of money come tax time so give yourself some padding for that.
Ok! So I just put fifteen percent there.
You could put twenty, you could put ten, maybe if you're in, like a really super socialist country, put like ninety eight percent or like, if you're in, like a really opposite put like something really low.
I don't know this.
Is your assist your place to put that number? Okay? Let'S see health, insurance and expenses, so you know if you have health insurance, if you are paying for you, know out-of-pocket, for the dentist, take that into a consideration forgiving yourself, five hundred bucks a month for that two hundred bucks a month or whatever your insurance says, Put put this in so I just put that for an annual expense.
Okay, so now look at this.
This is your required annual revenue.
So your goal of like a hundred what seventy five thousand actually turned into eighty eight thousand and actually turned into one hundred and seven thousand okay.
So now we've got a required annual business revenue.
This is how much that you'd, like for your business, to earn in order for you to make your salary okay, now uh, a Mary, Jo, if only it was five K - yeah put your own number in there now we have to figure out our annual working hours.
So available work hours in the air is twenty.
Eighty, if you're working eight hours a day, if you're crazy, you can change that number.
But I suggest it you don't it's up to you it's up to you weeks of vacation.
Let'S say you want to give yourself four weeks of vacation in the year, how many holidays so stat holidays, u.
s.
holidays, Canada.
Whatever you know, religious holidays, any of the things that you want to take off put it right, there could be.
Five could be two could be 12.
Whatever you want sick days, you get sick a lot but 15 days.
You don't get sick, very much you're like super healthy but 3, whatever you want.
I'M gon na put 8 ok miscellaneous days off.
I don't know couple days you're, just like I'm not working today Papa be ain't showing up to work today % spent on non-billable work, so you can change this number.
I'M thinking it's about.
25 % could be 10 % if you're, like your non-stop billing hours all day long.
You change that if you're like a lawyer and you're just like you, show up and you're like I'm on billable time baby, then you put you put you put 0.
Ok, but if you're or like 1, you know, but if you're like normal people, 25 % ok.
So this is your non-billable work hours out of that available time, hours off.
Here'S your actual billable hours in the year, estimated.
Ok, Mary, Jo! Oh you retracted your message.
You changed your mind.
Oh here we go so folks.
Here'S our number, ok break-even rate.
So I give you a range okay.
I don't want to give you a number.
It'S a range, so your break-even rate is 85 bucks an hour.
If any of you want to go into the math there's the formula right there of where I got to that number, it's a it's, not a perfect science, but it's a good.
It'S a good starting place.
Ok, better than most of us and how we calculate our rates, which is just guessing.
So we take all this into consideration and we come up with our breakeven rate 85 bucks an hour to get you the minimum of what you're looking for here.
Ok, not much profit going on here, you're kind of going low.
You know maybe you're going to give like an introductory rate, or you want to give a discount.
This is the bottom range.
Ok recommended rate 95 bucks an hour.
Ok, that's what I'm saying based on this: that's what you should be charging if this is your billable hours and how much you're working and all these factors high profit rate 105.
So there we go between 85 and a hundred five dollars an hour is what you should be looking at based on this, but it really depends what, if your personal salary watch this, this is where it's fun is going to be hundred twenty thousand now: look how The rates change now you're looking at 120 to 150 landing somewhere at 135.
Okay.
What? If you um, you know what, if it costs you a lot for health insurance, like I don't know, $ 14,000.
Okay, so now we're looking at you know 125 to 160.
What if you got our office? That'S 1,800 bucks a month.
Okay, things are gon.
Na change looks like that number didn't change too much if at all, what, if you're hustling hard and you most of your hours are spent on billable hours.
So now you don't have to charge as much money okay.
So this is where your hourly rate comes in.
Okay.
Now I've got more.
I'Ve got more, don't you worry, let's jump back to our other screen and I'm gon na show you the next part of our little workshop.
Okay.
So that's our hourly rate.
How does that sound? Okay, that's that's the math! That goes into your hourly rate.
That'S how you know what I like to call your base rate okay.
So now, let's jump into that's, not necessarily me saying you should just charge hourly.
This is me saying you should know what you're, what you're, what you should be charging as a base rate, something to anchor it on, because every project pricing model that comes after that, your base rate that we just figured out comes into play.
Here'S how okay, the fixed rate, here's another pricing model, a lot of people brought charges, also known as pricing per project, the flat fee, fixed rate, fixed fee lots of different phrases: lots of different names for the same thing; okay, but what this is is basically, you Charge based on the project and the variables that come with the project, and it it depends because you can't just go off of hourly, and sometimes it's just easier to give them a customized flat fee.
Now a lot of freelancers at the beginning will will take a new project, they'll analyze, something and guess how many hours it's gon na, take them and then they'll say: okay hundred hours, it's gon na cost this much based on my hourly rate, but now what you're Doing is you're, giving your client line items and they can go through and go, and I want to see 100 bucks, so I don't need hosting whatever most things called.
That sounds stupid, no hosting.
For me, I'm gon na again that I'm gon na see.
I don't like that.
Little like design tweaks yeah, I'm going to just take design tweaks out.
Save me 80 bucks their revisions.
I'M perfect! I don't need revisions.
Okay, so I'm gon na take that out now.
You'Re there just hacking away at your price, okay, and we don't want that.
This is why I like the fixed rate, because you give them a flat fee.
They say here's my project, that's what I need and you behind the scenes with your with your base rate.
Go okay: how long is it gon na take me? How long is this going to require of my time? Okay, here are some ideas that I should be taking into consideration and and then give them a flat feet.
Gon na be five grand and then they don't get to look at line items and just hack away or price okay.
So I'm gon na go into that.
Joel, hey, Joel good! To see you here, buddy pricing calculator link doesn't seem to be working uh-oh.
I don't want that.
No uh! Let me let me just see.
I want to make sure that pricing calculator - oh I'm gon na fix that I'm gon na fix that link there.
Joel is just typo little typo.
Okay, in the description that should be.
It should be good now Joel, try that out now just want to make sure I'm still alive.
Here too sorry, I got sidetracked olya sidetracked me, man, okay, we're good okey-dokey.
There we go so the links fixed.
I have another link coming up in the end of this workshop.
Just you know just so, you don't miss out on it, but I fixed it.
The link should be there.
Anyone who tried it the link didn't work.
It'S there now: okay, um back to the workshop.
Okay, the fixed rate: why is it good? Why is it bad, okay, it's good, because you're rewarded for efficiency and speed.
So if, if you think it's going to take you ten hours, then then you can bank on it being ten hours.
But what, if you finish it in five hours, you are you and your client are rewarded for efficiency and speed.
So this is good think about this.
This is why it's good, if you think, okay, it's gon na, take me ten hours or let's say one week of my time: a block off a week, then the person, the client will go.
Okay, I can expect it in a week.
I guess and here's your thousand bucks okay, let's just say that now what if you finish it in two days, the client still pays a thousand bucks but they're happy with that, because they didn't have to wait a week.
They waited 48 hours, so they win, because you are good at what you do.
They'Ll pay for it.
They get the end result: okay and you're rewarded because, instead of taking a week to do a thousand dollars of work, it took you 48 hours.
That means that your value that the rate actually was much higher, okay, now versus hourly rate, if you finish a project really fast like if you say it's gon na, take me 10 hours, hey Bob, it's gon na take me 10 hours and it takes you two Hours and your hourly rates like hundred bucks, okay, you just literally shot yourself in the foot and made way less money.
Your clients happy because it was fast and cheap, but then now you're setting yourself as a commodity.
They want stuff fast and cheap.
Okay, fixed-rate solves that problem.
So that's why it's good predictable project price, the clients happy because you can.
They know what they're getting they know.
What'S good they're going to pay, you know that you're gon na get paid X for the deliverable you get paid for the deliverable, not the time, okay and increased earning potential so now, because you're not tied to that hours in the day anymore.
If you get like three projects that you can complete in a week and you charge a flat fee of two grand per project, that's six thousand dollars you just made in a week.
Okay, why is it bad scope? Creep loves fixed fees, because now your client goes well, I'm giving a thousand bucks.
I'Ve got your time and your attention.
Here'S here are here's my laundry list of things.
I also want you to throw in there, because you could just do that right.
It'S really easy for you to just add this in now that I've got your attention right, so scope creep can really really eat into this.
If you're not careful about contracting setting boundaries and defining your scope, all things we talked about in the launch course - and you will I guarantee you underestimate your time and your effort, I guarantee you, you will underestimate it because you're afraid, because you don't know because it's You'Re, unsure about what it's going to what it will actually take the more experience you get with this, the better you will be at accurately pricing it, but those are some reason why it's bad.
So, let's real we're real world application.
Okay, your rate depends on the same factors as your hourly rate, plus the type of the solution, the going rate level of urgency pain, the value, you're, providing and return on investment.
All factors you might want to include.
So what are you charge? It depends, let's figure it out, for real in the real world flipping my screen here back to the calculator.
Not only do you get hourly rate calculator, you get the fixed rate, calculator watch.
What is so cool about this? It already knows you're a break-even recommended and high profit rate based on what you put in here.
This is why everything hinges upon your base rate, not necessarily because you're going to be charging hourly all the time, but you need to know what's my time and energy worth what goes into this, what do we need to take into consideration? So now I'm using these as my guide to know what I should be charging so factors that affect pricing.
This is where the fixed fee comes in.
These are the factors you want to consider so the typical price of a similar product or service.
So right now I have this on a scale from zero to ten, and this changes, what the mark-up percentage would be to consider.
Okay, so, let's say typical price for a similar product and service.
So this is where you can go off with a going rate.
If it's usually a really expensive service or product, okay, Brett now we're at nine - you know, let's say nine so boom you just you can take that into consideration size of the client.
Are they like your buddy, okay, zero, okay or maybe they're like a really high-profile corporate client who who works with huge clients? And if you said that your project was gon na be a thousand dollars? They would laugh you out of the room because they knew you weren't qualified enough, so you need to be charging higher rates commanding higher rates because you're a premium consultant.
So, let's say the size of your client is like a excuse me, a seven, the consultants, level of expertise and experience.
That'S you! So are you like a newbie, okay, zero? Or are you like boss, lady? You got this dialed in ten, so let's say the experience within the given field and meesh I'm going with.
Let'S go eight: okay, the clients, level of pain and urgency.
Are they like I'd like a really pretty sight, and just you know, kind of what the cool kids are doing nowadays, all right, not a lot of urgency or pain going on there, probably a one or zero about if they're like my website was hacked, or you Know I'm getting staff members quitting left right and center because of something that's going on internally and I need someone to investigate.
I need some human resources, expertise or you know I'm a financial planner and I'm getting older, and I need to be able to create an investment strategy.
That'S gon na protect me as I get into my golden years.
All right level of pain, high right urgency, high.
So we're going, you know we're going nine here.
This is a painful one, folks, okay, how beneficial to you is this a project that you're gon na hate? That'S a zero.
You know you don't like it, it's not beneficial, it has no return for you.
It'S just like a throwaway project.
Keep that in mind.
Okay, so or is it something that's really beneficial for you then? Maybe we're looking for.
Like I don't know six, it's not life-changing, but it's nice was it a referral.
Why do I add this? Because if it's a referral, there's a level of trust there, new client there's they came from somebody, so they come in with a level of trust.
So you can charge a bit more because their buddy said, I trust Mary, Jo she's amazing does great work.
Okay, there's value in that so you're allowed to give a little bit more buffer in that price, because there's a trust factor and you want to slowly start increasing your rates.
As you know, as you get more clients so that you can go into a new premium.
Positioning so was it a referral? Zero is no five is yes.
I did that because I use calculations based on numbers, so I'm gon na say was it a referral? It wasn't a referral, it was just like an organic thing or something I did myself.
Okay, so zero, so the market percentage 30 % the numbers they're based on these numbers here and okay, so now project specific expenses.
So these are expenses based on your fixed fee.
Did you hire a staff team or virtual assistant? How much does it cost you for that project? So maybe you have a VA and web developer and a designer on the team and it's gon na cost.
You like eighteen hundred bucks to pay them for their contribution.
All right, you got it.
You got to take that into consideration software licenses materials.
Maybe you upgraded your project management.
Maybe you bought a tool or something to help.
You finish the project and it cost you like.
You know: 75 bucks.
There we go travel expenses, you met with them a few times.
You took them out for lunch and you paid you know $ 45.
There we go total project expenses plus the markup and your estimated time to complete it, based on your base rate, breakeven recommended a high profit.
Alright folks, look at this.
Your breakeven fixed fee for that project is sixteen thousand two hundred or recommended rate eighteen, nine or high profit rate.
Twenty three and you can.
You can move those numbers around again.
These aren't gospel to just hard and fast its guideline, but it's a scientific guideline.
Okay Terrell says thanks, but I'm gon na position myself as the ugly website guy okay.
So let's jump back into our workshop here and we're gon na round it off round off the hour and round off the workshop with our last little bit here.
So that's uh! That'S the formula for the fixed rate.
You know base rate times time to complete, multiply it by the mark-up factors and the project expenses there's your fixed rate, all right.
Okay! So now we're gon na jump into the final most commonly used pricing model.
Again, there's a lot more in terms of pricing models that we talked about in the launch course at freelancing freedom, comm, slash launch, but I'm giving you the three most common that you need to dial in first before we get fancy value based fee.
Why is it good? Well the value based fee? Let'S talk about what it is, it's it's charging based on the value you provide, so you're, no longer charging and trading your time for money and you're, no longer just charging a flat fee based on a bunch of factors and variables and components, you're charging based on How valuable it is for the client, if it's not valuable, then you can't charge very much.
You'Re gon na have to revert to one of the previous pricing models, but if it's very valuable, then you get to price based on the value that the client gets out of it.
Okay, so why is it good? You can command really high rates.
You can position yourself as an investment person is versus an expense.
In fact, you cannot charge value based if you can't get a return or define clear value for the client.
How much time are they saving how much money are they saving or growing? You know how much pain are is being relieved, stress, lots of factors for what value is okay, so your an investment? Okay, not an expense.
The client will pay higher rates for higher ROI.
So if I can get a higher return on investment, I'll pay, a high rate, that's how it works and huge earning potential, so sky's the limit here.
If you get a big project that has high value potential, that's a huge earning potential has nothing to do with your time or your availability.
Now.
Why is it bad? Because beginners cannot do this? You can't use this as a beginner you're, not proven you don't have experience.
You have no idea what you're doing you're just guessing you're gon na make yourself look like a fool really fast.
This is an advanced tactic that you can't really use until you're.
Comments
Post a Comment