Price Tags: How Much Should I Charge For My Work?

October 30, 2014

Ash Cash (@IamAshCash), personal finance expert, just recently posted something like "Once you know your worth, you'll stop giving out discounts". Rates and fees can be hard to come up with when you don't know the value of what you produce. Here are some methods to putting a price tag on your work.

 

Annual Salary

Depending on the field you are in, a simple method for fees can be based on how much you want to make a year. For example if your financial goal is to make about $100k per year then your monthly pay rate would be around $8k. You can start with how much you made at your last place of employment or with the salaries of those who are currently in the field at other companies.

 

Usually salaries are not based on time; so regardless of the amount of hours you put in, your check is the same. I don't recommend charging by the hour because as an entrepreneur we all know it varies (unless you have a rental service) plus how does your client know the amount of time you put in on a project? They don't and you probably don't know either. Annual salaries work well with long term contracts and monthly payments. 

 

Market Rates

If you are unsure of what to charge on services like writing and graphic design, do a search for going rates both online and at physical companies. The going rate just means the current or usual price of a product or service.

 

Production Costs

If you are actually creating a physical product consider the costs it takes to make it. Profit = Revenue - Costs. Decide how much you want to make after the costs. If it takes $100 to make/purchase a shirt, and you want to make $50 off each shirt you would charge $150 per shirt. You cover the costs of goods and the desired profit. Some companies do 200% markups and then some.

 

As an assistant buyer for a division within a Fortune 500 company, I handled sales and trends. Higher markups left room for discounts and holiday sales. Let's say a pair of jeans costs $20 to purchase wholesale, the least amount we want to make is $20 in profit, and we want the item to sale at 50% off for Christmas. We would initially list the pair of jeans at about a 300% markup; around $82.00. Then once the holidays roll in, we can bring the price down to 50% which will yield about $41.00. $20 covers cost and we made $21 bucks. Pardon me if my math is off, but the point is you still have to make money with discounts. There are some vendors who never have sales at all.

 

Regardless of the method used, you have to be confident in your ability and provide quality work. You must believe in what you offer and deliver the greatest product or service with the means you currently have. People pay for confidence and quality. 

 

Create with TJM or let me know what you want to see next. Email tjm@tashimajones.com or call 678-760-9595. 

 

 

 

 

 

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