Pricing yourself can be difficult at the start. You need a baseline to start from. You could ask people working similar roles with a similar level of experience, or look at job sites and see what the going rate tends to be in your area. In time you’ll get a feel for the market and what fees you can charge.
Some may worry that they are charging too much and can’t fathom why a particular client would pay a certain amount for them. This is due to a lack of understanding about ROI. As an example, early on in my career I worked a contract where the client assembled a team of six to work for six months to build a software system that they could sell to their clients. The budget was around £1M. This seemed crazy and the rates we were being paid were amazing at the time. When the work was completed to the required level of quality within the set timeframe the client sold the service for ten times the budget. To them this was a good ROI. They were happy to pay above the going rate in order to ensure that they got the right people for the job that could complete it on time allowing them to sell it at a large profit.
So knowing what you are worth is all about understanding what your clients are getting out of the deal. See things from their perspective. By paying a higher fee for you they are getting more experience, a wider skill-set. and all the extras that you offer.
A good tip is to never discuss your rate with anyone. No one knows your current rate except you and the client paying your invoices. Clients are not allowed to share that information with each other. If you want to increase your fees with the next client it’s best to start with a figure higher than what you are asking so that you can be negotiated down to what you want and so both sides feel like they are getting a deal.
When using agents you most likely won’t know what the end client is paying for your services as the agent will take a cut so your negotiations will be with the agent. In my experience agents can take anywhere from ten to thirty percent. It takes time and practice but you can usually work out what the agent’s cut is. The skill is in being able to squeeze that down as low as possible.
A good tip when negotiating a new contract is to not play clients off against each other. It is considered bad practice and leaves a bad taste in a client’s mouth. They have long memories and they’ll remember how you played them the next time you come looking for work.
When thinking about your fees it’s worth remembering the effort it took to acquire those skills and experience. The education, qualifications, training and on-the-job experience.
A good example I like to use to help explain ROI is the story of the guy with the piece of chalk:
A factory owner experiences a fault on a production line halting all production. He’s losing money each hour of downtime. He calls in an expert who walks around the factory floor and places a chalk X mark against the side of a machine saying replace the main circuit board in here and your problem will be fixed. The circuit board is replaced and production resumes. A week later the business owner receives an invoice for £10,000. He immediately phones the expert demanding a breakdown of his invoice as he was only there ten minutes! He receives the following:
Piece of chalk: 50p
Knowing where to place chalk mark: £9,999.50