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Tom Hirst
Pricing freelancing projects. Everything I've learned. A thread.
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Tom Hirst Jun 30
Replying to @tom_hirst
Having one pricing strategy that you can apply to every real-world engagement is often a fallacy.
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Tom Hirst Jun 30
Replying to @tom_hirst
Learn these pricing methodologies: - Hourly billing - Daily billing - Retainers - Fixed-pricing - Value-based pricing Understand their pros and cons. Understand your circumstances. Understand the project. Choose appropriately.
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Tom Hirst Jun 30
Replying to @tom_hirst
Charging by the hour doesn't work in favour of freelancers. If you need to use it to get started, Stop using it as soon as you can.
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Tom Hirst Jun 30
Replying to @tom_hirst
Hourly billing is by far the worst pricing methodology to use for profit.
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Tom Hirst Jun 30
Replying to @tom_hirst
Hourly billing is by far the worst pricing methodology to use for efficiency.
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Tom Hirst Jun 30
Replying to @tom_hirst
Do you want to avoid: - Estimating every small task? - Filling out timesheets? - Sending tons of invoices? - Having to justify every time you go "over"? Avoid hourly billing.
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Tom Hirst Jun 30
Replying to @tom_hirst
If you're instantly available, expect to be asked to lower your price.
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Tom Hirst Jun 30
Replying to @tom_hirst
There are two ways to bill daily: 1 day = 8 hours Or 1 day = 1 day Always use the latter. The former robs you of your autonomy.
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Tom Hirst Jun 30
Replying to @tom_hirst
If you want to raise your rates in future, When billing by the day, Max out at selling 4 days per week to clients. Give yourself time to grow your own business.
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Tom Hirst Jun 30
Replying to @tom_hirst
If you bill your client daily, you're giving them a day's work. Nothing else. It's a rolling engagement for a reason. Day rate can't come with a guarantee of completion.
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Tom Hirst Jun 30
Replying to @tom_hirst
You can't charge a premium if your individual value isn't obvious.
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Tom Hirst Jun 30
Replying to @tom_hirst
Things that increase perceived value and thus project price: - The scarcity of your time (availability) - What you've done before (credibility) - The project price itself
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Tom Hirst Jun 30
Replying to @tom_hirst
Proposals > estimates
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Tom Hirst Jun 30
Replying to @tom_hirst
Don't get tricked into sharing tons of project specific information in a proposal. If you can't write a proposal without research then you need a pre-project. Discovery work has value and should come at a price.
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Tom Hirst Jun 30
Replying to @tom_hirst
You don't have to use the same pricing methodology for every engagement. Client 1: Day rate Client 2: Fixed priced project Client 3: Ongoing retainer Use the strategy that fits the work best.
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Tom Hirst Jun 30
Replying to @tom_hirst
Sometimes pricing a freelancing project can be as simple as : Freelancer: "I'm happy to do the work for this price". Client: "I'm happy to pay this price for the work completing".
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Tom Hirst Jun 30
Replying to @tom_hirst
Rules for fixed-price projects: 1. Get a deposit 2. Get a fixed scope 3. To reduce the price you must reduce the scope 4. Don't use estimated days x day rate = price 5. Add a minimum 20% contingency 6. Price high enough to make a profit after you've paid yourself
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Tom Hirst Jun 30
Replying to @tom_hirst
Get. A. Deposit.
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Tom Hirst Jun 30
Replying to @tom_hirst
Remember that when you give a fixed-price for a scope of work, You are guaranteeing completion. Going back to the table for more money at this stage leaves a bad taste.
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Tom Hirst Jun 30
Replying to @tom_hirst
Fixed-price projects are highly beneficial to efficient freelancers. *If* quality is retained.
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Tom Hirst Jun 30
Replying to @tom_hirst
Some people will pick the cheapest price because it's the cheapest.
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Tom Hirst Jun 30
Replying to @tom_hirst
Some people will pick the most expensive price because it's the most expensive.
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Tom Hirst Jun 30
Replying to @tom_hirst
If you're the most expensive option, And a prospect who cares can't understand why, Your positioning is off. Price tells it's own story, but it needs back up from credibility.
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Tom Hirst Jun 30
Replying to @tom_hirst
The way that pricing methodologies are received differs from country to country. Be aware of this when making offers.
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Tom Hirst Jun 30
Replying to @tom_hirst
Value-based pricing requires the most effort when making offers. But you should still research your client when using other strategies. How valuable will you be to them?
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Tom Hirst Jun 30
Replying to @tom_hirst
Value-based pricing TLDR version: Your client's average lead value = £500 You estimate that your work will get them 100 leads in year 1. That's £50,00 of value. You give a price for your work based on a % of that figure. If you can show the value, you can justify the price.
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Tom Hirst Jun 30
Replying to @tom_hirst
"Day rate" where you guarantee a set amount of logged hours is worse than billing hourly. It's billing hourly for less money.
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Tom Hirst Jun 30
Replying to @tom_hirst
Retainer agreements are a useful safety strategy.
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Tom Hirst Jun 30
Replying to @tom_hirst
Give preference to retainer engagements that sell your availability to deliver knowledge, not your labour.
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Tom Hirst Jun 30
Replying to @tom_hirst
Estimates are never accurate.
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