Coming up for a base price for your services is tough. It’s tempting to look at what your competitors are charging. It’s even more tempting to charge extremely cheap when your starting off. But like anything in the finance area for personal or business: Each dollar needs to have a name. If you’re charging X amount. Where is X amount going? How is it being distributed?
When I started my video-photography business, I had a hard time charging people. I was terrible in negotiating. I end up losing and I charged too little. At the end of the day, I ended up with an overload of work getting paid beans. I sucked at business.
Towards the end, I kind of figured it out. And these simple questions help set a price to either go up, but never down.
- How much would I pay myself?
- How much would I pay an employee? How many woud be involved?
- how much would I pay the business?
- How much are in expenses? (the client will cover this too)
- Remember to seperate for taxes.
The prices for each is completely up to you. If you want to keep expenses down, then you need to define how large you can go with your services without breaking the bank. The key to this, when starting a business, is keeping it simple. Be proud of your humble services. Know when to say yes or no. Not every client is for you.
If you’re starting off in a similar business and have some basic equipment, I went about like this more or less.
- I paid myself: $300
- I paid an extra Camera Person: $250
- I paid the Editor Person: $250
- I paid the business as an extra person: $250
- The client paid rental expenses depending what the project demanded: Lets say $300
- Seperate 25% for taxes.
For some reason, seperating for taxes is a constant reminder that I have a business to run and that what I do is not a favor but a service.
I can’t afford to bargain any lower than that. If the project was complex, then I included an hourly or daily fee. If it was a wedding, then I’ll slap on some package deals (more money). And obviously, this is something all the workers can reap from. You get paid for what you work, you know.
When friends approached me for a video/photography favor (looking for a discount of some kind). The only thing I could afford was to not pay myself. So, friends get a $300 discount.
We can go on and on in how this system works. Granted, you’ll get a bunch of nos. But the yeses will make up for it.
If you want to stay home and have your employees handle the work, then take the $300 and watch a movie.
When your going hard at it for a couple months or years, raising prices is as easy as adding $50-200 to each question. And if you have loyal employees, they get a raise too. We all grow together.
Sadly, not really, I’m not doing this business anymore. But leaving it help me realized that I didn’t suck at business anymore.