How to price your work without undervaluing your worth

Sometimes in life it pays to act like a cowboy.

I have a mixed history when it comes to setting my rates. By ‘mixed’ I mean I’ve massively undercharged and lost out on thousands, if not tens of thousands of dollary-doos. Like that time I charged $80/hr when I should have charged $280, or that other time I quoted a “quick project” for $5k which scope-crept out to 4 months and 4000 headaches.

Whoopsie, I have made many a pricing oopsie.

To be fair I’ve also had some pricing wins. One time I embodied my inner gunslinger and doubled my rates before pressing send on a proposal just to see what happened. I fully expected a “thanks, but no thanks” but instead got a “sounds good, when can you start?”, and it was in this moment that all my pricing assumptions were vaporised and I realised that, in fact, it’s the Wild Wild West out there and you can charge whatever you damn well please as long as you have the skills to deliver (this is of upmost importance), the confidence to back yourself and the rationale to justify your rates if someone asks.

All that being said, here are a few ways to come up with your number whether you’re quoting a day rate, fixed fee or retainer.

1. Price for your time

Welcome to pricing for beginners! This is when you charge based on how much time it takes to complete a task. This methodology has its roots in the capitalist system where labour (quantified by hours per week) is exchanged for a fixed salary.

Many people carry this line of thinking into client work too - you set an hourly or day rate, estimate the time spent and multiply the two. The more time you spend, the more money you earn. Bingo, bango, bongo.

Time is an ok pricing proxy if it’s your first rodeo and have no clue how to value your skillset, but this model is inherently flawed because it punishes you for being a gun (pun intended). The more capable you are, the faster you are, the less you earn. It simply doesn’t add up.

2. Price for your speed

This flips time-based pricing on its head and instead involves charging based on how quickly you can deliver. There’s a real commercial advantage to speed, particularly if your work means that a brand can get a product to market 3 months earlier or implement a strategy that keeps them two steps ahead of the competition. In scenarios like this, the faster you are, the more valuable you are and the more money you should earn.

I price on speed when someone needs a quick turnaround or wants to engage me for a project on an accelerated timeline. I estimate how much time it’ll take, multiply that by my day rate and add a speed premium of 50% (sometimes more depending on the circumstances). I don’t communicate this fee breakdown but justify my rate by emphasising the value of getting faster results. Giddy up!

3. Price for your impact

The best but hardest way to price! This involves setting your fee based on the estimated value your work delivers, with value being defined as revenue generation, costs saved, risks reduction, brand building, customer acquisition…the list goes on.

I’ve tried this a few times in my advisory work with ecomm brands who want my help expanding their distribution into new channels or markets. If we’re successful the impact of my work could be hundreds of thousands or millions of dollars - a value that far exceeds what I’d charge if I quoted a day rate. Instead I estimate the potential upside of my work (let’s say $500k over 3 years) and quote my fee as a % of that total. It’s tricky and I’m still learning, but so far overall I’m up.

Final thoughts

Pricing is a little art, a little science and a lot subjective. There’s no right or wrong way, only your way, which is a rather frustrating thing for me to tell you, I’m well aware. I’m still figuring out the best pricing method for me too - sometimes it’s speed, sometimes it’s value, sometimes it’s time, and sometimes it’s deep conviction of what I bring to the table.

And on the odd occasion if I’ve had a little whiskey and am feeling a little frisky, I’ll simply double it, press send and yell YEEHAW!

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🎙️Some more thoughts on rates, knowing your worth and why it’s important to price too high and get rejected (sometimes)

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