How do you price yourself and your work when you’re first starting out as a creative entrepreneur? We’re talking practical math equations to find the minimum amount you need to live, pricing with your gut, and having conversations about money with your friends or fellow trusted creatives.
Kathleen Shannon 0:02
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Emily Thompson 0:29
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Emily Thompson 1:18
All right, today we have a question from marquetta. Hi, Emily and Kathleen love your podcast. It's my absolute favorite thanks.
Kathleen Shannon 1:25
Let us know on iTunes. Yeah, rate I raise rate and review on iTunes, right?
Emily Thompson 1:32
Just go on go do it. Thank you. I recently posted a question on being boss Facebook page that generated a lot of discussion about pricing. I have found that I'm not the only one who struggles with pricing my products, I'm just starting out, which is always challenging. People say just see what others are pricing. But it's difficult to compare yourself to someone who is at a stage or a different stage in their business. My main question is how do you set a value for yourself? To say my time is worth this much? Do you have any tips or techniques for this? How do you price your work? When you first started out? I'm stressing starting out because it gets easier when you gain more experience and confidence to set your value. I know I'm one of many people who are just starting out on their journey and struggle with the same thing. So if you gals want to do a podcast episode about pricing and how to find confidence to find your value when you're starting out, that would be amazing. Thank you for all you do.
Kathleen Shannon 2:33
Well, marquetta, I have a few thoughts about this. But the first one I want to say is pricing comes down to simple math, it really truly does. So the first thing that I would recommend doing is looking at how much money it takes to make a living. And so you need to know the bare minimum of what you can make. And then you can start to factor in lifestyle things on top of that extras that you would like to treat yourself too. But mostly, what I'm trying to get at is you need to know how much money you need to make to live. So from there, you'll take that dollar amount, and you will divide it by 12. So get out your pencil and paper, you're going to take that dollar amount of what you need to make in a year divided by 12. And that's what you need to make every month, then you can take that number and divide it out by how many products you're selling, or how many projects you're selling. So you want to divide it out on how much you want to work. So let's say that you want to make $120,000. And I know that might sound like a lot to some people. But I'm using that number because it's actually pretty simple math, because I enter in $20,000 would divided by 12 is $10,000. So you make $10,000 a month. And let's say you want to take on five projects a month, then each project would need to be priced at $2,000 each. So it really is simple math and just dividing it down. Now, another way that you can price yourself is to really let's say you're offering a service is to create a package around that service and to know that you're going to sell a certain amount of deliverables. And you can start to really breaks the time barrier, as Mike McDermott of freshbooks calls it. He even has a really great ebook on the topic. So be sure to download that. And we'll be sure to include a link in our show notes. But breaking the time barrier is basically where you're not working at an hourly rate, but you're working based on value. So pricing based on value is a little bit more complicated. And I think that this might be what you're asking here, and I like to do that. So I've already done the math, I've crunched it all out. I know what I need to make or the bare minimum of what I need to make. So pricing with your gut is where you start at the minimum. So let's say it's $10 an hour, right? So you say does $10 an hour feel good for the services that I am providing and your gut might say, Wow, that's really low. So then slowly increase the price $20 an hour, how does that feel? $30 an hour, $40 an hour. And you might find yourself between, let's say, $40 an hour and $50 an hour, feeling like 40 is really good and 50 is just a little too much. So then you find your sweet spot based on a gut feeling. And then you can see that $40 an hour is maybe a great place to start out for now. And whenever I first started my business, I was charging half for the braid method of what I'm charging now. So yes, you can totally increase your prices as you go. So that's my two, two ways of going about pricing. One is very simple math. And the other is simple gut feelings. Emily, what about you? What do you think about pricing?
Emily Thompson 5:50
I agree with all of those things. The thing that I would add is really going at it with this sort of test and change mindset that I'm always preaching. Whenever I whenever I sold my first website, like, you just have to start somewhere. Basically, whenever I sold my first website, I sold it for 100 bucks $100. And very quickly realized that I had sincerely undercharged, I just needed to get going. And within a couple of months, I was charging 2000. And now six, little over six, no, is it seven years, I don't know, over half a decade later, it costs no less than $10,000 to engage with me. So what you'll realize is that as you begin gaining your expertise, and slowly raising your prices, that you are adding more value, and sort of building up these packages of services, or even building a better product that allows you to price more and more as you go. So I think that yes, a really great gut check the idea that the first time you charge someone for something will not be the amount that you charge people for the rest of your life, you will can grow from there. But also really just doing your math, knowing how much time you can, how much time it takes to put into a project, what the value is that you are giving all of those things factor into sort of having a starting place and getting going.
Kathleen Shannon 7:12
Yeah, I mean, don't overcomplicate it, and I like what you said, Emily, because you can always change your pricing. It's not set in stone and never is. And so my my usual inclination is to start low. Because whatever you price that will make you feel confident. I mean, there's nothing worse than charging a lot and feeling like oh my gosh, are they getting what they're paying for? You know, are they paying too much, you never want to have that feeling. But eventually, I think that there is some merit to hiring a coach or talking to a trusted friend, or creative comrade, about pricing. And really, that's how our relationship started. Emily or you know, once we took it to the next level is where we started talking numbers. And I feel like we really challenged and encouraged each other to make more money. And I think that not enough women are talking real numbers whenever it comes to pricing, but it has to be with someone you trust, and someone who deserves to have that conversation with you.
Emily Thompson 8:13
Absolutely, it makes all the difference in the world.
Kathleen Shannon 8:18
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Emily Thompson 8:32
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