Business Basics: How Do I Set My Rates?

Money, money, monayyyyy. Money is, in my not-so-humble opinion, freedom and security. Money allows you to make the choices you want to build your business in a way that is aligned with your goals, beliefs and philosophies. Money allows you to help the causes you are passionate about.
Money can change your life.

We spend our lives in the pursuit of dollars and cents through one job (or jobs) or another (or many others) and sometimes, it can seem like a dead end or a round-robin of opportunities that leave us wanting.

So how do you change that?

By claiming and owning your worth — and then, asking for it.

For cubicle warriors venturing out into side hustle land for the first time or for entrepreneurs creating their first rate sheets after their leap, this can be a daunting task. But it doesn’t have to be. This simple formula will help you determine what you should charge for the work you’re doing, what feels good to you AND how to grow your rates over time.

Step 1: What is Your Hourly Rate

If you’re working a salaried job, add up all of your benefits and salary (plus any 401K-matches, etc) and then divide the hours you work each week (all of them). That’s your current hourly rate. When you’re working as a contractor or consultant, your hourly rate should be higher based on the level of service you provide.

Step 2: What’s the Going Rate

This is where my Find Your Five formula comes in handy. Find five people who are doing what you do and see how they list their prices, what they share about their process… get intimately familiar with what the going rate is for the services you profile.

Step 3: What Would YOU Pay

If you needed someone with your skill level, background and knowledge, what would you pay them? Think about all different levels of investments and be truly honest with yourself about your experience and background. This one might take you some time but it is an important step.

Step 4: Ask Your Audience

Your audience will tell you what they’re willing to pay for the services you’re providing — they may not tell you directly, but they will tell you. A big indicator is if no one purchases your packages or services. It could be that your audience is a bit too small for the return you’re looking for, but, more likely and more often than not, it is that the price point is not in line with your location or service area.

Sept 5: Test… and Ask Again  

Try out the prices and packages you’ve created… and then try again. Run a beta, ask people to test the project or program out. Don’t do work for free — that’s never a smart strategy — but find ways to get a test group together to help you move forward.

This is a process that should be repeated time and time again as you move forward in building your business, side hustle, and any entrepreneurial endeavor.

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