Pricing for profit and pricing creative services can feel extra challenging because we are selling an invisible promise whose value comes from the perception of the client. Add that to lack of quality training on how to price for profitability and growth, and it is no wonder that so many creatives struggle with this critical aspect of running a successful creative business.
Most of the time it is because of two things.
- Lack of clarity in what you actually are selling (hint, it’s not what you do or deliver)
- Only looking at one piece of the pricing pie
Before you dive into this article, let me remind you that not all of your services and products need to be priced for profit all of the time. I mean, obviously we need to price for long term sustainability and growth if we are going to have a successful business, but there are all kinds of different pricing strategies.
When Pricing for Profit Begins with Alternative Pricing Strategies
Micro Offers & Trip Wires
These are low priced service offers that allow your potential clients to try you out before they make a bigger investment. Different from a free sample or free trial, they are a key step in the Buyer Journey. The goal is to move from prospect to paying client.
Typically these are able to be consumed or used immediately, give a good representation of your brand promise, and are priced at less than $100 (some less than $20). These offers should be designed with the intention of leading clients to a specific next higher level of service from you.
Remember, spending money with creatives means a HUGE amount of trust – we are after all selling an invisible promise. A micro offer or trip wire eases them into spending money with you in a gentle, not so risky way.
Fact Action Incentive Offers
These are usually time limited bonuses (or limited quantities at a discount) to encourage people to spend their money with you RIGHT NOW, even if they don’t actually use the services until a later date. Think BOGO events or Gift With Purchase offers.
As an entrepreneur, this can be a great way to even out some of the revenue highs and lows of a gig economy. Always have a reason for doing this that separates it from your usual pricing OR create a distinct offer.
TIP: Adding in value is always a better strategy than offering a discount.
Market Penetration
When you are new to an industry (or to serving a new kind of client) it can be tempting to feel like you need to charge ‘newbie’ prices regardless of your skill level and experience. Part of this is good ol’ imposter syndrome / self-doubt and part of this is because we have been indoctrinated with hourly and day rates. And that the value of services is somehow related to the creatives’ number of years of experience or case studies.
The real value is the difference your services make to the business (or consumer) and the individual that hires you, regardless of the time it takes to deliver. In fact, if you think about it, charging your clients by the hour means that you get paid less if you are fast and efficient and they pay more for work that takes longer to deliver. How does that make sense?
And yes, skill and experience still matter.
Slashing prices to get attention and undercut any other providers is a strategy. It is not a sustainable or profit generating strategy but rather a ‘try before you buy’ strategy similar to fast action incentives. However this is without the clear separation of time or quantities.
The creatives who use this strategy successfully often leverage the ‘beta’ aspect of their offer. Be very careful with ‘market penetration’ pricing. It is much harder to raise your rates to a profitable level after you’ve already established yourself as the ‘discount’ service.
What Are You Actually Selling
Before you can price anything, you need to know exactly what it is that you are selling. You may think you are selling photographs, or videos, or copy, or logos, or websites or… but that is only one part of the solutions you provide to your clients. Those are their external needs. You provide so much more than JUST your deliverables.
Just like how HoneyBook doesn’t just sell a business organization / client workflow automation software.
They are selling business confidence, free time with your family, happy clients who love how easy it is to hire and work with you, no ‘dropped balls’ in your communications, easy budget conversations, energy and focus to be creative and stay in the flow, access to community and so much more.
So how do you figure out what you are really selling? You start with the external deliverables and then work on discovering their value to your clients.
Discovering the Value Of Your Creative Services
Step One: Organize Your Services into 3 to 5 Categories
I get it, we are multi-passionate creatives. We all have a lot of different things we can do for our clients and may have a dozen different packages or services we provide. And that’s great for our creative fulfilment… but not so great when we are trying to create clear pricing and offers that sell. So, do your best to organize all your services into categories.
For example:
– Headshots, Business Branding, Product Photography
– Logos, Brand Strategy, Web Design
– Blogs & Articles, Social Media, Sales Pages, Course Content
Step Two: Choose an Average or Target Project Size for Each Category
Yes, every job is different. The project size depends on…x, y, z. Every quote is custom. There are a lot of reasons to resist simplifying your offers. Simplifying and focusing on an ideal size of project for your offers gives you:
- Less overwhelm
- More clarity and confidence
- Quicker aha’s around your pricing
Step Three: Describe the Target Project for Each Offer Category in Detail
Deliverables: WHAT
Number of files, type of files, number of meetings, number of revisions, pages, words, images, etc.
Process: HOW
Time invested on all aspects of servicing the project, duration of the project as a whole, onboarding steps and systems, how you work, delivery mechanisms (proof sites, file transfers) timeline, communication, resources used
Skills & Experience: WHO
Your skills, strengths, credibility, team
Step Four: Connect Your Deliverables, Process and Skills to Value
For each and every item you listed as being included in your offer, write down what difference this will make for your client and why they care.
For Example: Headshots Target Package
In Studio Session – so that they feel like they are working with a professional in a controlled environment because they are really concerned about looking corporate and believe only studio shots do this.
Option 1
2 Image Files – so that they have two versions to choose from because they sometimes need corporate and professional and sometimes need friendly and approachable.
OR
Option 2
On Location Session – so that they feel comfortable in an outdoor safe space because they are worried about COVID and looking stiff and too formal.
1 Image File – so that they have the image they need immediately without having to pay for extra images from the shoot up front because they have limited cash flow but still want to leverage their time in the photo shoot to create multiple assets that can be licensed later.
Are you starting to see the value as being more than just needing a headshot (or logo, or blog post, or website)?
Here’s the kicker: value is not something you get to decide. Your clients can tell you what matters to them and why it is important.
Your Clients’ Perspective Determines the Value of Your Services.
Finding out what your clients care about will take research. Ew, the R-word. Okay, think about this more like conversations.
Reach out to your favourite past clients and survey potential new clients. Hang out in social media groups and ask questions and read about the complaints your ideal clients talk about and the dreams they have for solutions.
Most creatives won’t do this. And this may be why you are consistently told that your prices are too high. This is less about pricing for profit and more about how you are positioning your value in the marketplace. Because let’s face it, you can choose any price you want but you also need to be able to sell it in order to see any profit at all.
And…knowing your value is the ONE THING that will make pricing, marketing and selling your creative services so much easier!
The 3 Pieces of The Perfect Pricing for Profit Pie
When we think about pricing our creative services for profit, the first question that often comes to mind is “how do I know that I am charging enough?”
Which leads to the next question… enough for what?
Enough to make a living and have a life doing work you love!
So yes, you do need to know your numbers in order to know that you are ‘charging enough’ to grow your business. But there is more to perfect pricing than being thorough in everything you include when you calculate your minimum prices for profit.
There are three pieces to the perfect pricing pie to consider and bring into alignment.
How to Find Your Perfect Pricing for Profit
You & Your Business –
your lifestyle aspirations and personal income needs, your time available to invest in your business, your business costs, your costs to serve your clients, your operational structure, your revenue collection methods, your offer deliverables, your skills, your experience, your credibility, your pricing strategy.
- Know Your Numbers
- Be Clear On Your Offers
- Choose a Revenue Collection Strategy
- Choose A Pricing Strategy & Model
Your Clients –
their obvious external needs, their internal and philosophical needs, their past experience with other service providers, their desired outcomes, what matters to them, their budgets, the difference your services will make and value it brings.
- Know Your Value
- Price Based on Project or Value
Your Marketplace –
the economy, the time of year, other service providers with similar services, alternatives to your services, other influence on buying behaviors (politics, pandemics, technology), where do your prices position you in the marketplace.
- Know Your Marketplace – Influence, Options, Competitors
- Know Your Brand Promise – High Quality/High Price, High Quality/Low Price, etc.
- Validate Your Price with Position in the Marketplace
And the fun part is…all three of these pieces are dynamic and flexible.
Which means as creative entrepreneurs, freelancers and small business owners, we get to review and adjust to things like major changes in the economy, going after a new-to-you client or designing new offers to showcase new skills you’ve learned or a new team member.
Pricing is not a fixed equation of calculating your costs and dividing by the number of hours you want to work. I mean, you can do that. It is a good starting point. But it likely won’t serve your business for long-term sustainability and growth.
The real money, the big money and the magic is in understanding the value you bring and using that to help with pricing for profit, support you in attracting work you love and closing the sale with ease and confidence. Use HoneyBook’s small business management platform to help you get started.
Ready to use to pricing strategy to create a profitable and sustainable business? Get our Pricing Strategy Ultimate Guide.
Plus, 5 more posts you might like:
Pricing Mindset Shifts (Because You’re Worth It)
How to Raise Your Prices as a Service Provider
How and When to Discount (and Still Profit)
An Inside Look at the Psychology of Pricing
What You Need to Know When Setting Your Prices to Nail Your Pricing Strategy
