On pricing your services confidently & how we transformed our business
Happy Monday! How are we all? Feels like a while since we last caught up.
Yesterday I had the pleasure of attending the Grounded Creatives meetup, hosted by the gorgeous Nancy Straughan at Inside Store in London. This was Nancy’s second event of its kind and a roaring success! When Nancy asked me if I’d be willing to speak at her second meetup, I leapt at the chance - but hadn’t realised quite what a talented bunch I’d be in the company of. I’ll be honest - the nerves kicked in while I was sipping a cup of tea in the Costa around the corner from the venue, when several very prominent instagrammers walked past me….
Anyway, the event itself was absolutely gorgeous with stunning styling from Nancy, breathtaking florals from Bloom & Burn, incredible catering from The Banqueteers, and delicious cake by Sugar Plum Bakes. The unfortunate timing of the power cut made for a rather cosy atmosphere once the candles were lit, and makes Tia Talula’s beautiful photography even more admirable! Nancy had asked me if I’d speak about pricing your services as a creative, and I really hadn’t anticipated what a strong response I’d get from those in the room. Pricing, it seems, is something that a great many of us struggle with - particularly in a service based business. We’ve trodden quite a unique path when it comes to pricing within our business; having evolved from a fast-and-cheap print shop to an international branding agency, we’ve felt the pain of pricing at both ends of the scale - but have proved that it’s entirely possible to break out of undervaluing your services and into a space that makes so much more sense for both you and your business. You might want to get comfy for this; it’s a bit of a story…
As some of you may know by now, we began our journey at Ditto as a high street print shop where people would come for their flyers and business cards. They’d want to sit next to us whilst we designed their cards, and would argue over the £30 we charged them for the hour or more we’d spend trying to create something they liked. Obviously not a sustainable way of working - much less one which is a fast-track to insanity.
We didn’t want to be doing that kind of work any more, and knew we were capable of so, so much more. Our first challenge on the step away from the work we didn’t want was to address our own confidence. We had started to do more logo design work, charging a few hundred pounds for it – which still wasn’t enough to actually make us any money. We decided to invest in working with a consultant to sharpen up our process and give us the structure we needed to know how much time our process required to do a project really well.
Once we knew how much time each project would need, we could go about figuring out how many projects we were capable of doing within a week, a month and so on, and what our rate would need to be. The formula went something like this: we started with looking at our fixed costs: rent, rates, insurances, salaries, accountancy fees, software and so on, and the number of billable hours we had between all of us. This is a bit more complex and slightly movable – but essentially you need to allow for weekends, bank holidays, time off and then remember that not all of your hours are 100% chargeable – in everyone’s day there’s an element of admin, marketing and so on that is essential but not chargeable. So you might work out that from an 8 hour day you can actually bill 4 hours per day. You then multiply the number of hours per day by the number of days per month that you intend to work, and that gives you a rough figure of billable hours. Divide your fixed costs figure by the number of hours you can charge for, and you have an hourly rate on top of which you add your profit margin.
I know that financial formulas are enough to make most of us run to the hills or dive under our desks, but its honestly the best way to reach a number that actually means something rather than just plucking a figure out of the air and hoping it works! And knowing that it’s a ‘real’ figure will give you confidence too – you’ll know you can’t drop below it or you’ll be running at a loss – and that’s actually quite empowering. The number of our clients (photographers, I’m looking at you) who base their fees on little more than what their nearest competitor is charging never fails to astonish me - you have to have more control over your pricing than that.
The next thing we did was create a price menu: a pdf outlining our services and how much we charged for each service. We made it look beautiful and included plenty of testimonials and so on to underline our credibility. The great thing about this was that when people enquired, we no longer had to have that awkward moment of actually saying a figure – we could send over a beautiful pdf that’d do it for us. And while there’s often the worry of ‘what if I’m too expensive?’, ultimately if someone comes to you and they don’t have enough budget, then they’re not your client. They can either afford you or they can’t!
I suppose the only caveat there is that if you really really want to work with someone, you can make an informed decision on whether you’re prepared to sacrifice your margin in order to work with them. But be careful on not undervaluing your time – we tend to assign value to what we pay for, so if you’re too cheap you might find that clients actually don’t value or appreciate your time which can get really frustrating, really fast. I also remember someone saying to me that as a creative business, each project should do two things for you: it should pay your fee now and should also help you attract more work in the future by raising your profile or enriching your profile. We all have limited time so its important that each project we take on helps us to further ourselves and our businesses.
Tied in very directly with money management is time management, something I’ve personally had to watch as our fee levels increase. Every time we increase our fees I have a tendency to want to deliver a bit more – and as my accountant reminds me, that just means I’m working harder for the same or less money, not that I’m making more money. There are all sorts of time trackers out there – we use toggl – which I know can feel quite counter intuitive when you’re creative, but you really do need to have a proper sense of how much time you’re spending on various activities throughout your day. They also help you to manage creep, which is the word we give to that scenario when a client just keeps asking you to do things that you’re not really being paid for… (sound familiar?!). We set out a fixed number of hours in each project contract, and a combination of being clear about how much time we’re allowing a project and tracking how much time we’ve actually used can help keep on top of things if a client is being a bit more demanding of our time. It also makes it much easier to have an honest conversation with them; “I’d love to help with the copywriting for your website! You’ll know from our proposal and contract that we hadn’t allowed for the time to take care of that, so let’s have a chat about what you need and I’ll provide an estimate for that extra work”. Remember: more work should always equal more money.
Of course, along the way we needed to take a good look at the way we were presenting our business, which involved a rebrand. Our previous brand looked a bit too playful, a bit too… well, cheap. And this is where branding can come into its own: paying attention to the words, design, images and so on that you use to communicate can have a huge impact on peoples’ perception of your business and therefore what they’re prepared to pay. These days we find that we look premium enough that we generally don’t get enquiries from those who can’t afford us.
The key takeaways from this?
1/ Know your figures. Know what you need to charge in order to live comfortably, and how many projects you’re capable of delivering within a month.
2/ Be confident in asking for your fee. If you charge a premium, that’s absolutely fine! But make sure that every message you communicate reinforces that you’re worth that money. Have a gorgeous brand identity, make sure your website is on point, think about the client journey and consider how you’ll deliver value at every turn.
3/ Be clear about what you’re delivering, and for how much money. Our terms of business were pivotal in this.
4/ Consider creating a service menu or even an email template that you can send in response to enquiries. I don’t struggle telling people our rates these days. but in those transitioning days I would nervously mumble a figure, sounding very unsure of myself in the process. Having an email that sets out your rates, and what clients will get for that, can remove the pain of that conversation if nerves get the better of you!
5/ Track your time! Know how much time your work actually takes, and adjust your rates upwards if you find that you’re spending more time than you’re charging for.
So there you go! I hope this is helpful? If you have any specific questions or challenges around your pricing, pop me a note in the comments section below!
All photos used with much thanks to the creative force that is Tia Talula