With this guide, learn how to calculate a price that would allow you to earn a living off of your DIY projects and quit your job.
Grow (Cantankerous Titles, 2013) by Eleanor Whitney is a practical field guide for creative people with home business projects who want to achieve success and sustainability. Whether their projects are based in independent publishing, music, food, art, craft, activism or community work, Eleanor Whitney enables readers to clarify their project vision, get organized, set goals, create a plan, raise funds for, market, and manage their do-it-yourself project. The following excerpt from Chapter 2, “Be A Creative Money Maker: Find and Create the Resources You Need,” shows you how to calculate a fair price to be compensated for your work.
Paying yourself fairly for your work is an important step in building a sustainable, creative life. When you pay yourself you recognize the time and effort that goes into your work and acknowledge that your skills and expertise have value. Your craft’s value is based on offering up your time, talents, or service—such as writing grant proposals, event planning, designing a website, or composing songs—rather than just producing a final product. Build confidence in yourself so that you can be compensated fairly.
• Have the confidence to know that your time is worth money
• Set a clear goal of what you want to achieve with your project
• Clarify what you are selling. What is the exact service that you offer?
• Consider your experience and expertise. Do you have a perspective or level of experience that is not common for your field?
• What is the reward for the customer? How much value does what you’re offering bring to your customers’ lives?
Jessica Hopper, who ran a business as a music publicist, explains in an article in Rookie magazine that when she valued herself, others valued her as well. “I worked at cut-rate prices for years, despite being great at what I did, because I thought it was the punk thing to do and would instill loyalty. Neither of those things is true. At one point I found out what our competitors were charging and doubled my rates for all new business—and no one batted an eye.”
Personally, learning to value my skills and myself enough to ask to be paid fairly has not been an easy process. I am lucky to do work I love such as teaching, writing, community organizing, and creative project management. Because I feel so passionate about these activities it was very easy for me to tell those interested in working with me, “Don’t worry about the money. I just enjoy doing the work.” When my to do list became too long and my calendar was full of other peoples’ projects, I could not see a tangible benefit for me personally and realized that my commitments to other people took away from my time, energy, and enjoyment of my own projects. When I became confident enough to ask to be compensated for my time I was better able to judge what projects were worth it for me to take on. While it’s great to contribute your time and energy to projects and initiatives you care deeply about, budget both of these carefully. When you take on new projects, whether paid or volunteer, be very clear about what benefit you are offering and what benefit you will receive.
There are no hard and fast formulas for determining how much to charge hourly or for project-based prices. However, there are strategies you can use to make an estimate and refine your prices from there. Musician Greta Gertler, who started Goldfish Prize PR to make an official business out of the networking, connecting, and outreach she was doing for musicians she loved, shared a simple strategy for pricing your time based on overhead costs and the amount of time you want to work.
Greta Gertler of Goldfish Prize PR’s Pricing Strategy:
• Determine your overhead costs such as tools, software, studio rent, insurance, as well as living expenses for the year, month, and week • Determine how many hours a week you want to work
• Divide these two numbers to determine your starting number for an hourly rate
$2,000 ÷ 4 = $500
$500 ÷ 30 = $17 basic hourly rate to cover expenses
Monthly Expenses: $2000
Hours a Week: 30
Weeks in Month: 4
Billable Hours in a Week: 15
However, you cannot bill your clients for every hour your spend working—they won’t pay for you checking your email, networking, learning new skills, and everything else you do that is related to your project, but not the specific job they hired you to do. Thus your “billable” time should cover your expenses incurred during “non-billable” hours. Therefore, I may determine that I will work about 15 hours a week on my clients’ specific projects, so I could raise my rate to $30 an hour to cover those expenses, so my calculations would look like this:
$2,000 ÷ 4 = $500
$500 ÷ 15 = $33 hourly rate to cover expenses for billable and non-billable time (I could raise or lower this rate to make a rounder number)
Once you have an idea of how much you need to charge to cover your expenses find out the going rate for your field. Talk to other professionals in your field about how they determine their prices. While it can feel awkward at first to talk about money, this is especially important when you are starting out. Build solidarity with those doing similar work to you. If you all are clear about what you charge there’s a greater chance of being paid and treated fairly. Use general search terms on the Internet and check websites where freelancers advertise services or companies post ads looking for freelancers. Base your prices on these as a starting point.
These terms will enable you to discuss prices easily with those who are hiring you. Pricing your services can be done on a time basis, a project basis, or a package basis.
Time-based is how much you charge per hour for your services. When you have an idea of your hourly rate you can determine the basis of what to charge for a specific project. Hourly rates are good for projects that take a fixed amount of time to accomplish, such as administrative support, installing an art piece, or outreach.
Project-based is a price for an entire project that has a concrete end point, such as designing a brochure. When pricing based on a project, calculate how many hours it should take, as well as your overhead such as the tools and space you use to create it.
Package-based puts more conditions around a project, in the event that you manage additional consultations, revisions, or questions than you originally agreed upon. You offer a certain amount of time or number of consultations for a flat-fee and, if your client wants more changes or additional services, you can charge by the hour or an agreed-upon flat fee.
The key to pricing your services is to trust that your time is valuable and to communicate that value to others. You have skills, creativity, and expertise to offer to potential clients. If you are part of a community that is based on a barter economy be sure you explain clearly the time that it takes for you to make your product and make the expertise you bring to the service that you are offering clear. This will help ensure you get a fair trade. Be upfront about your needs. As a creative person educate yourself and your community members about your worth and do not work for less than you can afford to. You must value yourself before expecting anyone else to do so.
Reprinted with permission from Grow: How to Take Your D.I.Y. Project and Passion to the Next Level and Quit Your Job by Eleanor Whitney and published by Cantankerous Titles, 2013.