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Week 18: How should freelancers price their services?

I’ve heard these pricing principles repeated many times over the years. Maybe you have, too.

• If you’re always filling up your schedule with clients (or selling out your classes), you’re pricing too low.
• It’s easier to lower prices than to raise them. That’s because raising prices creates customer resistance and lowering prices will be welcomed. Also: You should start higher if you will offer discounts.
• When something costs more, people tend to assume better quality, exclusivity or prestige, or better outcomes.
• Setting your prices too low will attract more difficult or demanding clients.

There’s some truth in all of these, but they are not sacrosanct rules. And they don’t tell you much about where to start your own pricing for your unique situation.

The most accurate guidance I can offer about pricing is that it all depends on context. You have to honestly assess your current position in the market (unknowns have a tough time charging a premium), the particulars of the market you’re serving (professionals may be willing to pay more than hobbyists), and your competition (lots of competition drives pricing down, especially if there’s little to differentiate service providers from one another).

You also have to consider your overall strategy, existing demand for you or what you offer, and who you wish to attract.

Let’s look at a couple examples from my own business over the years.

When high pricing may not benefit you (or even leads to stasis)

For many years I offered hourly publishing consults that booked up weeks in advance. So I kept raising my prices, until I was charging $350 for an hour of my time—just for a conversation, nothing else.

As the price increased, I attracted primarily business people and entrepreneurs; doctors, lawyers, and others interested in writing and publishing a book (almost always unconnected to their profession); and other people of significant means. I almost never talked with people who considered themselves writers first and foremost. Instead, my clients were looking for a business advantage or fast track to achieving their goals, hoping I might provide one.

These conversations earned me money, but they didn’t further my career or build relationships. Increasing my price wasn’t going to change that. This is part of why I stopped consulting. I decided to invest more time into my own creative work and making that work pay better, and to serve the communities I care about most.

When low pricing can serve your goals

Since 2019, I’ve been hosting online classes that are short, self-contained, and affordable, usually $25 per class. Few organizations offer classes at this price point with the same quality and service. There is no question I could charge more. So why don’t I?

The people I want to serve are those likely struggling to make their writing pay or who may never make their writing pay. They might have limited means, and I want to offer high-quality education that inspires and keeps them on the path to achieving their goals. I believe in offering classes that don’t break the bank and are accessible to a large community.

The $25 price point works in my case because of the volume of students I can attract. (I have a significant email list.) If only a few dozen people were registering for the classes, it would not be sustainable. But hundreds are registering, making it a good financial outcome for everyone.

That said, I haven’t raised prices on these classes since they began, and it is probably time to consider it. My costs have certainly increased—every platform I use for online education has raised pricing in the past year or two.

So what do you do when you decide to raise prices?

How to raise prices respectfully

Do it with transparency and open communication. Tell people when the pricing change will happen and why it will happen, and be clear about how much the pricing will increase. Recently, IngramSpark announced a pricing increase, but they disguised how much. That is not a good practice—they are purposefully hiding information from their customers—and it sows distrust. Here’s what to do instead.

• Explain why the pricing will increase: How long has it been since you last raised your prices? If it’s been a long time, that may be part of the reason. (Inflation is a thing.) If your costs have increased, that’s a reason. If the quality or value of the service has increased, that’s a reason. Or, sometimes your pricing increases because you were undervaluing yourself and not pricing according to the market. You can say that, if it’s true. (Of course, your clients should realize for themselves that it’s true if they go shopping around and realize they can’t find anyone at the same price for the same level of quality or service.)
• When the pricing will increase: The more time you can give people to prepare, the better. No one likes to be caught off guard or feel like you’re only increasing the pricing for them at that moment in time. (Of course, that can be a tactic to relieve yourself of clients you don’t wish to serve any more!)
• Pay attention to timing. The price increase should not be announced at the same time you’ve suffered a decline in quality or offered a subpar experience—or if you’ve had any PR problems.
• Show grace when possible; value your loyal people. Sometimes it can be desirable to grandfather in existing customers at old pricing and only charge more to new customers. Only you can decide if this makes sense for your business.
• Consider alternatives. Perhaps you can preserve the same pricing for some people if the amount of work or service is reduced. They might still get most or all of what they want.

When I instituted a higher price for my paid newsletter, it was when I rolled out a searchable archive of all past content, which did not exist before. Existing subscribers were allowed to lock in the lower pricing for as long as they remained a subscriber. New subscribers could still come in at the original price, but without access to the searchable archive.

A word about discounts

As a general rule, I don’t like offering them, but they do work. Just be wary of running discounts constantly to meet your goals. This only trains people to wait for the discount. I would also avoid granting discounts to anyone who asks for one. Discounts should be your idea first.

Exercise

A common fear among freelancers is that higher pricing will drive away clients. But if you’re already attracting more clients than you need or can handle, this is usually an irrational fear. Plus, if you’re balancing client work with your own creative work, it’s important to free up time and energy for yourself.

If you currently offer a service at a specific price, then calculate what might happen if you increased the price and suffered some drop off in business. Would you still be making a comparable amount of money? Consider:

• $150 service with 12 clients = $1,800
• $200 service with 8 clients = $1,600

In this scenario, you’d be earning about 10% less, but serving 30% fewer clients, freeing up your time for other things.

Explore further

• The Editorial Freelancers Association annually updates its editorial rates chart, if you’re not sure what’s typically charged for freelance editing and related services.
• Before you rush to use EFA figures, see why experienced editors like Josh Bernoff avoid charging by the word. Instead, he thinks—as do I—that you should charge based on value. Also, Bernoff prices his services based on milestones.
• One of my favorite experts on money and pricing for creative people is Ilise Benun. I highly recommend her resources and services.
• For the pricing nerds out there, check out the newsletter Good Better Best, which analyzes pricing from SaaS companies. (“Good Better Best” refers to another well-regarded pricing principle: you should price in tiers.) While writers don’t have much in common with SaaS companies, reading the analysis can help fine-tune your business thinking and assumptions about pricing.

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