EPISODE 77: How to Set Your Prices

Jessi:
Welcome to the Brand Your Voice Podcast, where we’re digging into how you can create personality-driven content that connects and converts. I’m Jessi…

Marie:
…and I’m Marie. We’re the co-founders of North Star Messaging + Strategy, where we support business owners in outsourcing content without sacrificing authenticity.

Jessi:
Every brand has a unique voice that sets it apart. We're digging into how to capture the way your brand communicates from the words you use to the stories you tell. So you can create more compelling content that strategically helps you meet your business goals.

Marie:
And if you choose to outsource that content, you'll be able to do so with confidence, knowing your brand voice is in good hands and you can reclaim your time. We're so glad you're here and hope you enjoy this episode.
Hello, and welcome to another episode about money.

Jessi:
I mean a series.

Marie:
Apparently. So the last episode we did was all about how to make sure you get paid. And so this an episode stepping backwards a little bit from that of how do you actually set your prices so that when you get paid, it's sufficient.

Jessi:
Yeah. Getting paid doesn't help you much. If you're not getting paid enough to continue the work you're doing and support the lifestyle that you want and the lifestyle that you need.

Marie:
Yeah. Ask us how we know, because when we first started, I remember there was a particular website we were looking at and it was like industry averages for, I guess it was like freelance writing.

Jessi:
It was like everything there. It was just, I remember a PDF file that just had so many different possible ways in which you could create content, edit content, revise content, and the industry average for either that year or the year before, as far as pricing was concerned.

Marie:
Right. And so we took those and we put ourselves at the bottom of that range because we were new to business. And we were generally, I think, pricing ourselves at X number of cents per word. And as a result, I remember that we decided, I think at one point we had decided to do kind of like flat rate prices for things. So we had like, here's our price table for whatever blog posts. I remember the blog post line, we found it a few years ago and we were charging $35 per blog post. And yeah, that was under minimum wage at the time.

Jessi:
Yeah. It, it was not sustainable. And I think there were a few things going on there. One was, we didn't have a lot of confidence in ourselves and our skills and our ability to market and our own expertise. Yes, we were new business owners, but we weren't new to writing and we weren't new to editing. We were just new to doing it in this way. And so that meant we didn't have a lot of confidence. We had never priced ourselves before. So we went and found this document on the internet that said, these are the average prices. I don't even know like where they got those numbers from, like-

Marie:
It got those numbers from 1964.

Jessi:
Okay. Yeah, sure.

Marie:
I'm kidding.

Jessi:
But we didn't necessarily do our due diligence to even know if those averages made sense in the work market that we were, you know, marketing ourselves in. And it was based off of one of many, many, many different ways to price yourselves. You know, it was based as Marie said on like a number of sense per word, whereas other people charge hourly. Other people have package prices. It just was a situation where we were not confident in setting our prices. And so we went out into the world of the internet and we're like, Hey, can someone else tell us how to do this so that we don't have to think about it in a really strategic way, because it's hard and scary to think about it in a strategic way. We just want someone else to tell us what to do. And unfortunately, as you might be familiar with, as a writer, a lot of times what people tell you your worth or your content is worth, your service is worth, is not actually in line with what you could be charging, should be charging what you need to charge in order to support your business and your life.

Marie:
Yeah. There's a lot of great content and advice out there on the internet. But also as a writer, you probably, we know that whenever you're using your Google food and you're trying to look up something like this, you're just getting the stuff that performs well in terms of SEO. Right? So it may not always be the best advice for you. There's nothing wrong with charging cents per word or dollars per word or whatever the type of of content is. There's also nothing wrong with hourly pricing. There's nothing wrong with package rates. There's nothing wrong with a la carte types of content, project rates. There's nothing wrong with any model inherently. But I think the big problem that I wanna address first in this episode is the second you start to become competitive in your pricing, that's like, it's the death nail of your own financial wellbeing and-

Jessi:
And-

Marie:
And, so many ands. Well, the and that I was gonna say is, and it means that you're a true clients who just wanna pay bottom dollar. What was your and gonna be Jessi?

Jessi:
My and was going to be, it's not just the death nail of your financial security, but also your energy. Cause if you are constantly trying to be competitive in your pricing, and when we say competitive in this sense, what we're saying is you want someone to look at what you offer next to what someone else is offering. And the offerings themselves are similar, but yours is more affordable. So therefore in this sort of scenario, you're thinking that the potential client would probably go with you because you have the more affordable pricing. That's not necessarily true. And we'll talk about why in a minute, but I also wanna point out that if you're always the most affordable option and you are getting people who are like, oh, I want the most affordable option. You may end up with a lot of clients and that not always a good thing, because you may end up with too many clients because you need more clients in order to actually hit your revenue goals.

Marie:
Right. So there's sort of two parts of this equation that we're gonna be talking about in this is like, just keep in mind sort of a few things, right? But part of it is like, what do you need financially? But what do you also need in terms of energy? So we're gonna circle back to that, but we ultimately believe that there's sort of four things that are reflected in your price.
One of those is your financial needs and your business' financial needs because you have an amount of money that you personally, as the CEO of your writing business would like to make. You also have a number that you need to run your business, which includes the amount of money you wanna make, but also other things, right? Like software or a team member or whatever it is. So that's your bottom line. Like that's the revenue amount that you have to cross to be a profitable business, because those are your sort of set expenses. So at a minimum, that should be part of your equation when setting your prices.

Jessi:
Yep. Absolutely. You need to bring in the amount that it makes sense to run your business and also take home enough money to run your life. The next thing that comes into play here when you're are considering setting your prices is the training and practice you've had. And this is one of the crucial mistakes that we made early on. We didn't consider the training and practice we'd had because it didn't look like the business we were creating. We thought of ourselves as brand new writers, which wasn't true. We were brand new business owners, but both Marie and I in separate ways had spent years up until that point in writing, Marie had been a grant writer, I had been a marketing writer. We had been working for other people, but we still had that experience and expertise that we were bringing to the table. And we ended up not recognizing that when we set our prices, we felt like, oh, we're going back to square one when we worked.

Marie:
Yeah. So what is the worth of your experience, your training, all those things. The next is the work that you're doing. Content takes time, expertise, and energy to create. And yeah, there's some clients out there who are gonna be like, oh, it's just, it's just a blog post. And I will reiterate what I said in I think the previous episode, whenever you hear the word, just come outta somebody's mouth, like put your little antenna up your little red flag into, cause it means that they're devaluing you. But here's the flip side of that. Right. They would not be looking to hire you if this stuff was easy. And if this stuff didn't take any time at all, if they're saying, oh, it just takes this. And it's like, well then why don't you do it, Mr. Smarty pants? Right? Like, well, because they have other things to do. Yeah. Because this takes time and energy and I wanna get it right. But they also don't wanna have to take all the time and energy and expertise it takes to do it. That's why they're hiring you the expert. Right. So there's inherent value in the amount of effort and energy, expertise and time it requires a view to do this job.

Jessi:
Yeah. And then the last piece that comes into the price, as far as just, you know, the bottom considerations is the long term ROI. If you write a email sequence for someone, and this is the email sequence that is attached to their lead magnet or their opt-in, you're not just putting in the time, expertise and energy of actually creating that email sequence. You're also giving them something that has long term benefit to their business. They're going to use that sequence, hopefully, and they're going to see long term results from people that go through that email sequence, hopefully buy things from it. They get garner the new relationships through it and all of that. And so your expertise is not just the expertise you're providing when you do the work, it's the expertise that happens afterwards. It's that long term benefit that your client gets from having work that has been completed by an expert.

Marie:
Yeah. I mean, what if your client makes a hundred thousand dollars off of that email list in the next three years? I mean, and you're sitting over here charging a hundred dollars or a thousand dollars, like, you know, you can charge whatever you wanna charge, but if somebody's starting to hymn and ha and you can whip that out, the ROI out, Right, and talk about, and in fact, I suggest you lead with it, make it part of that lead conversation about pricing that like, what is possible right now. Obviously you don't wanna promise any results because like Jessi said, there's no guarantee they're gonna use it. They may just say, oh yeah, this is great. But you know, I don't have anybody who can like implement this. So it's just gonna sit in a drawer forever. Don't wanna guarantee results, but you know, you can say, this is the type of thing, like you can even ask them, like, what, what will having this do for your business? Let them tell you what they think the ROI is, right? That's when you turn it to strategy.
So when you are setting your prices, consider all of those components, your financial needs, your businesses, financial needs. Number one, not necessarily in order, that's just, I'm separating it for the other things. The training and practice and experience you bring to the tables and experts, the, the work. The actual labor that you're doing, the time and energy that it takes and the ROI that could be generated from that work. Bring all of those components to the table when you are setting your prices, because that's going to allow you to have pricing that allows you to flourish and have, and feel really good about the work that you're doing.

Jessi:
Yeah. I wanna dig a little bit deeper into one component of those four, which is within that, the work you're doing and considering that we mentioned time, expertise and energy. And I wanna talk a little bit about that energy piece because it's kind of buried in there, but it's super important. Because if you go through this and you say, okay, well, based on my financial needs, based on my training, based on long term ROI, I feel like I'm going to charge a hundred dollars for a sales page. And then you sit down and you say, okay, well, my business needs to make a hundred thousand dollars. You're going to be making a lot of sales pages within that year, like a lot, a lot. And so something is off there because your energy is probably not going to support writing as many sales pages as you would need to write in order to hit your financial goals, which means maybe you're not considering your training as much as you should be, or maybe you're not considering the long term ROI as much as you should be, or the time that it takes to do these things.
So paying attention to the time and the energy, even though those may feel a little more abstract are actually super important components to pricing yourself, because they're going to be the things that determine based on your prices, how much work you actually need to do, how many clients you need to get in the door, how many projects you need to have throughout a certain period of time.

Marie:
Okay. So if you are in a place where you're sitting down and you can grab like a piece of paper or something like that, get ready because we're gonna do some math. Oh yeah! Don't worry, this is math that is not gonna, you know, make your head explode. I promise. And I say that because a lot of math makes my head explode. So, I want you just start with that question of what do you need to have a business that feels good to you financially and time wise. So what do I mean by that? First of all, how much do you wanna bring in in your business? Now, in your homework, we're gonna give you specific instructions on how you figure that out, so stay tuned.
So first of all, yeah, just dollar amount, how much you want to, you want to bring in, in terms of revenue, you can go ahead and write something down. We may tweak that a little bit as we give you the homework, but go ahead and start something right now. Right. And then also how much time do you wanna be spending on this business? So for instance, we have a friend who's a writer who is part-time a writer and they're, part-time have another job. And so if she said, I wanna do 40 hours a week writing, she'd be really putting in a lot of hours, right. Not to mention 40 hours of straight up writing is like a lot of time. So when we talk about how much time do you wanna be writing, kind of split it into two areas. One is how much time do you wanna actually be doing client work? And it may be that you have less capacity than you think do, but like in a perfect world, taking money out of it in a perfect world, how many hours would you be writing for clients in a given week or a month?
And secondly, you need to also set aside some time for the business side of things. So marketing, networking, sales, follow up, customer support, just, you know, getting your own website in order, like whatever your projects are right now, make sure that you give yourself time and space for that time and space for sort of, as clockwork would put it design time. So that sort of CEO day with yourself or things like that, or, you know, make sure you have time to pay off your business credit card or like, you know, there's just a lot of little things that go into running a business. So make sure you have that time set aside as well. So those are the first two components that I want you to think about. And you can go ahead and scribble that down on your piece of paper.

Jessi:
And if you are like, I have no idea how much time I need to spend on all of these things. That, that sounds like a lot of things. And I usually consider- I haven't considered it in this way. That's totally fine. My challenge to you is to, if you're not already start tracking your time and not just your client time, because if you bill hourly, you're probably already in the habit of tracking the time you work on your clients.

Marie:
Hopefully.

Jessi:
Yeah. Hopefully. But are you tracking the time that you spend writing your own emails, or your own social media posts? Are you tracking the time you're spending, looking at your business budget, paying your business credit card? Are you tracking the time that you're developing a new program or, you know, answering your emails, even going through your inbox in the morning takes time. You'd be shocked by how much time it takes. If you're not tracking that we've been tracking our like every second for years now, and the amount of time that we have spent just checking our notifications, it adds up and all of that is time that's going into your business as opposed to anything else you could be doing. And so if you're not sure what that looks like with the breakdown of time and client work versus not client work looks like, start tracking it, start tracking everything you do around your business. Use Toggle, it's great.

Marie:
Yeah, Toggle's. Great. It's free. I used it for a long time. You can even like have different projects, right? You could say like, this is client A, this is client B, this is internal. Right. You can break it down as much as you want, but like be honest with yourself too. You know, sometimes if you're the kind of a client who, or you, you have clients, you're the kind of worker who is like, well, I'm just gonna give them this extra thing in the house. I'm just not gonna track my time right now. Right. Like, don't do that. Don't first of all, don't do that. But second of all, don't do that here, because this is just data for you. It's just internal. This is not gonna go in an invoice anywhere. This is not like, you know, no one's gonna come breathing down your neck and scrutinizing you about it. It's just for you to have honest to goodness data on how you're spending your time in your business right now. And just know that like, as your business may scale up, all of these may scale up. Like it's not just gonna be that you spend more time at climate work. You're probably also gonna be spending more time on the business itself.

Jessi:
Yeah. So if you do that and at the end of the day, you realize, okay, I have 40 hours a week to spend on my business and you break that down after some time tracking, you might realize, oh, I have 40 hours a week, but once I get all of the other business stuff out of the way, I actually only have 25 hours for clients. The rest of it's going into other things. And so that means that only 25 hours a week is billable hours. And so that goes into my consideration of how much I'm going to charge. Because the math isn't going to work out if I'm trying to bill 40 hours a week with pay, gain clients, working billable hours for them, if that's the case, then I'm gonna end up working something like 65 hours a week and it quickly becomes unsustainable.

Marie:
Right? Exactly. So, so now that you've thought about how much money you wanna bring in and how much time you have to give. And again, you may not know that answer yet, but you can go ahead and put us guests down right now until you get that data, think about your energy, right? That you can make a hundred thousand dollars, any number of ways, right? You could make a hundred thousand dollars working with a hundred clients at a thousand dollars each, or, you know, you could make a hundred thousand dollars working with 10 clients at thousand dollars each and anything in between and on either side of it. Right. So what is more draining for you? Don't again, don't think about, oh my gosh, $10,000 client. I can't even imagine what that would look like. Right, like take the money out of it for a second and think about like, how many clients do you actually wanna work with? Like, what is ideal for you for say a given month? And so that will help, you know, you can start to see now that if your pricing is out of line, you're gonna see, you know, this stuff doesn't add up. Like, if I, if I feel like I can only take five clients on and, but I would need 50 clients to be able to hit my goal, but like I only have 25 hours a week and I'm only charging, you know, $500 per client. Like I'm not gonna be able to hit my financial goal. Right. So you can start to see, okay, you just have to, you do just have to like, look at the data at some point. This is again, just for you. No, one's gonna come breathing down your neck around it. Like, you can just use scratch paper to figure this out.

Jessi:
Yeah. And I think too, we'll go into this more in the next episode that we record, but it's also important to note that the answer doesn't have to be, oh, well, a hundred clients feels unsustainable. So therefore I need to find 10 clients willing to pay $10,000. Because maybe working with 10 clients that are that high touch is actually worse for you and your energy in the way that you like to work with people. Maybe you do work better with a hundred clients, a thousand dollars a each, but that means that maybe your packages look different. Maybe you have a membership program, or maybe you have a course, or maybe you have some other way of communicating your expertise that's not, I'm sitting down and writing all of the copy for you. And so the answer isn't always raise my prices and have fewer clients some times that is the answer. And often I would say most of the time writers have a tendency to undervalue their services. And so often there is an opportunity to raise the prices, which means you need fewer clients overall, but that doesn't necessarily mean that your business and your own, you know, preferences are aligned with, you know, the fewest clients possible. There's a range there and you need to find what works for you.

Marie:
Yeah. You know, and I'm sitting here like having to check my own stories. Right. Because at first I was thinking like, oh yeah, back when Jessi and I were doing resumes, you know, gosh, I can't have, imagine charging $10,000 for a resume. I have no idea what people charge for resumes at this point. But like, I could also see if you were like working with an executive who stands to gain millions of dollars in their new job, like it would be worth it for them to spend $10,000 on all of those, you know, their presentation in essentially to the way they present themselves for the job as a candidate. So maybe there is even a scenario. So it's really, it's not about what you do. It's about what works for you and what works for the type of clients you wanna be working with. So consider the value that you're able to provide to your clients. Like Jessi was saying, you probably will undervalue yourself. So like, listen to the benefits that they're, they're telling you. And at the end of the day, like, yeah, you can get all the data you want from them, but you're gonna have to be person who says, this is why it's worth this price.

Jessi:
Yeah. I have sort of a little mental check that I run through when we price something. I haven't used it as much in the last few years because we've kind of settled into a pricing model that really works for us. And also these days, Marie and I aren't writing actively as much as we used to our writing team is. But for a while I had this litmus test of, okay, I set this price for a service. Let's say writing a homepage. If I sell a certain number of those and the response I'm getting, when I offer it to people who are looking is oh, really? Oh, okay. Or, you know, there's no pushback. There's never anyone. Who's like, oh, that's outside of my budget. There's never anyone who feels like it's a bit of an edge and, and that's fine. You know, you want clients also who are like very much willing to pay your or prices and things like that. And if it feels like the feedback you're getting is, oh, that's a great deal. If that happens enough times, that's like, okay, well maybe I'll raise the price a little bit and see what happens. And eventually you'll kind of reach a happy medium where you're at a place where are still people who are more than happy to pay your rates. And there's not these people who are looking for the bottom dollar. They're people who are really gratified to have the access to your expertise and whatnot. And so knowing that I have a tendency to undervalue myself, I kind of use that as a litmus test. Is listening, how people were reacting when I told them my prices and just kind of paying attention to trends and over a period of, you know, selling, trying to sell five of them or so being like, okay, well what have I heard? Okay, well, does that mean an adjustment needs to happen?

Marie:
Yeah. And I guess the caveat I would give to that, I think that's great. And the caveat I would give to that, like I would consider that feedback from the people who you think are a good fit for you in terms of what you want to be moving towards. So if you have a bunch of people who are like $35 for a blog post, my dog could step on the computer and type faster than you, you know, then like just to ignore them. Like, that's not, that's not feedback that's useful for you.

Jessi:
Yeah.

Marie:
But if you have somebody who, and this happened, pays your rate and then sends you more money that did happen to us once we've also done it to people before when we've hired people, I can think of one editor in particular we did that too. We're like, this is so much more worth, so much more than I paid. And like, I'm literally gonna your invoice twice and it still feels like a bargain. If you have somebody who's, that's like an extreme case that has only happened to us. Like once I think, but if you have people who, like Jessi said are just saying like, okay, if that keeps happening, those are the people to listen to. And if you like working with them, those are the people listen to you. There is a run like clockwork exercise you can run through with your clients. It's like, do you crush on them? Like, do you wish you could just clone them, a clonable clients? Right. Or do you cringe when you think about them? You're just like, oh, do not wanna work on that project right now. And you just like are starting to kick and scream, like the people who you crush on, how are they reacting when you give the prices? Those are the only people who you really need to concern yourself with their opinion on.

Jessi:
Yep, absolutely. Yeah. I think that's an opportunity for you to do a gut check on things, but at the end of the day, data is your best friend. So, you know, you can also look, you know, what is the lifetime value of these clients? What is the amount of time I've spent on these projects over, you know, the period of time that we've worked together and things like that. So there are a lot of different ways in which you can reassess your pricing. And one of the things that I really recommend is just putting a little calendar reminder every three months. So like once a quarter or so to just check in on your prices and see if they still feel good, see if still hit your goals. If they're still aligned with your goals, how far you've gotten towards hitting those revenue goals and just do a quick, you know, Marie and I have a monthly budget meeting, but we also have a quarterly check-in, that's sort of like a bigger picture budget meeting around like is our pricing where it needs to be. And I really recommend and doing that, even if it's just, you, you have no team, it's just, you know, you're creating this business on your own, have a meeting with yourself, sit down, look at your actual numbers and see if your pricing model makes sense.

Marie:
Yeah. In fact, I'm gonna challenge you right now, pick up your phone and go to your calendar app and like, or whatever you use to stay on top of things, I'm like really calendar driven. If there's something on my calendar, I will do it. But like, whatever that thing is for you put it on your sticky note, put it on your, whatever, like put it on now. Like it can sometime within the next three months, just find a relatively empty day and just like carve out that half of that day, or maybe the full day to go through this process of assessing your pricing, because the longer you wait to do it, the more money you're leaving on the table and the less you're able to serve your clients to the full extent of your ability.

Jessi:
Yeah, absolutely. All right, so, math.

Marie:
Homework time!

Jessi:
We have some homework for you. You already started it. If you jotted down that number of how much you wanna make, this is how much money you want to personally make. How much do you want to bring home in your personal bank account. And a quick side note, for those solopreneurs out there, especially those who are just starting, make sure that you do separate your business and your personal expenses. It can be very tempting.

Marie:
Oh yeah.

Jessi:
When you start a business to just have all that money come into your bank account. And it is an accounting nightmare are so as soon as you can please create a separate business account and then pay yourself personally out of that account. We highly recommend using the profit first formula for all of your more, the more the minutia of your accounting and how you break down money. We're not going into detail you because we're kind of talking high level. But if you're looking for a way to break things down even more, look at profit first.

Marie:
And that link is in the show notes.

Jessi:
Yes. So with that in mind, how much do you want to pay yourself out of your business, knowing that these are separate things, your business account and your personal account. So start with that number, write it down. Maybe a it's 50,000, maybe it's a hundred thousand, maybe it's 500,000, whatever it is, write that number down that you want to bring home every year.

Marie:
Okay. Now that you've gotten that written down, the next thing to do is multiply it times two, this comes from a profit first formula for businesses that are making up to a quarter million a year. So this number will change if you have a business that is larger than that in terms of revenue. But if you are up to a quarter million, which I'm assuming probably most people listening to this are take that number that you personally wanna make. And say, times two, that my friends is what your business revenue should be in order for you to get paid that amount. And you may be like what? That is a ridiculous amount of money to make considering I only wanna bring home half of it! But trust us, and trust Mike Michalowicz, the author of profit first, that you will need that other money for things like your taxes, for things like your software, for things like marketing, for things like having team support. Even if you're just hiring like a virtual assistant to just help make sure you get your invoices out, right? Like as your business grows, so do your expenses.
So, that is the starting place. So again, if you, if you wanna bring home into your own bank account, $50,000 for the year, for example, then in order for you to do that comfortably your business revenue needs to be a hundred thousand. Obviously you can work up to this over time.

Jessi:
Okay. So that's part, one of your homework is figure out what that number is. Part two is to figure out how many clients you need in order to consider yourself full. How many clients will your time and energy allotment allow. If you're not sure this is a great opportunity to start tracking your time. Once you know that you can divide out the total revenue into that many clients, which tells you ideally how much money each client is going to be paying you.

Marie:
Right. So again, for an example, let's say you could handle two clients a month, right? This is just a total random number. You're probably something totally different, but I'm just trying to make things simple here. So two clients a month spread out over the course of the entire year would be 24 clients, right? Because there's 12 months in a year times to clients per month, right? So then you take your a hundred thousand dollars that you need to make, and you have 24 clients going into that that says each client needs to be garnering you 4,200 approximately dollars. So $4,200 per client. So that's just for example, right?

Jessi:
And then you can take a look at your packages. You can take a look at your hourly rate and see, oh, does it make sense? Are my clients reasonably on average going to garner me $4,200 or on average, do they garner me $200 or do they garner me $8,000? So you can see where you are fitting within this ideal. And once you have that ideal, you can start making adjustments to either your packages, your pay rate, the clients you're working, who your audience is, who you're talking to, but you need that data to be able to make those changes.

Marie:
Right. And then the last part of this is just how much do you wanna be working in terms of those hours? So again, tracking your time will help you here. But if you, yeah, if you wanna be doing an hourly rate, this is gonna be crucial for you. It's also gonna be honestly crucial for or packages. So please do look out for future episode on package based pricing. Like you said, there's no wrong way to price yourself in your business. But this is an area where we have very recent experience. So we're happy to talk through that. So that's your homework. And I guess the sort of subtext of the homework, if you do nothing else, it's track your time, track your time, get on a free account for Toggle, get the little like Chrome extension for your browser, whatever it is, whatever browser you're using. I think they all have it probably and start tracking your time.

Jessi:
Right. Good luck everyone.

Marie:
Thanks for joining us for this episode of the Brand Your Voice Podcast. Make sure to visit our website, northstarmessaging.com, where you can subscribe to the show on iTunes, Spotify, and more.

Jessi:
If you found value in this episode, we'd love for you to leave us a review on iTunes and share it with your friends. Thank you, and happy content creating.