You decided the online gig economy is your new way of working. But what now? If you come from a 9-to-5, a sporadic raise negotiation might be the closest experience you have with pricing your work. If you’ve been freelancing already, you are more familiar with how to put a price tag on your time, skills, knowledge and services.
Pricing strategies for online gigs (products and services) do vary, depending on what niche you’re in. However, there are 3 universal things to keep in mind when deciding on your (hourly) rate and product- or service pricing.
Whether you are a nutrition coach, app coder, cam girl, marketing consultant or interior designer, these 3 things apply to you:
1. Your hour is worth more than 60 minutes of your time
Whereas employees are living in a cycle of exchanging a set amount of time for a set amount of money, you as an online gig worker need to reassess the worth of your time. Running your gig business, there will be many non-billable hours of administration, job related traveling, strategizing, fixing technical problems, emailing, networking and learning.
Some of these investments are easier to calculate than others. Eg. let’s say you own a laptop and a camera for your business, and you know they need to be replaced every 3 years, then you can actually calculate the amount of money you need to make per month to be able to cover those costs.
Easy to calculate as well is the amount of money you need to earn to cover the cost of business expenses like subscription services: accounting software, design software, cloud storage space and an internet connection, to name a few.
Other circumstances that significantly add on to the value of your billable time, are your experience, skill level and resume. Ask yourself the following questions:
- Did you invest time and money in studying and graduate, obtain a certification or accredited diploma?
- Did you follow an internship, or were you a former employee with a well-known established brand?
- Do you have a mentor who’s a renowned leader in your field to associate yourself with?
All of these are variables, their worth can be interpreted in different ways, but make sure not to sell yourself short. Each of these investments justifies adding some dollars to your hourly rate. You become a high value competitor for a gig when being an invested specialist in your field, for the network you have, and for the experience under your belt.
2. Know your worth, but be flexible
We recommend you to be very clear with yourself and your clients on the worth of your work. You should have fixed pricing for your products, projects and an hourly rate ready at all times, upon which you can base your proposals or package-pricing.
This is where the saying ‘learn the rules and then break them’ comes in. Now that you know what you want to earn, you can learn to recognize the exceptions to the rule:
- If a potential client can offer you a recurring amount of work for a longer period of time, you might want to lower your rate just enough to be an attractive partner to them, and to secure yourself an income for the upcoming months.
- If your potential client is well-connected, fast-growing and/or the exact addition to your resume you’ve been waiting for, you might want to be a bit more flexible with your initial negotiations to make sure you’re the best competitor for the gig.
- If your potential client doesn’t have the budget for your hourly rate, but offers you a chance for commissions on future deals coming forth out of your work, this is an alternative route to earnings worth looking into as well.
- Be ready to go above your hourly rate when it’s clear that your clients’ expectations are extremely high, when there will be an excessive amount of non-billable hours, or when the geographical location of your client is a place with much higher going rates.
3. You are the catch
You need to realize that by hiring you, companies save themselves a lot of hassle. No payroll, no insurances, no retirement, no contracts to take care of. You on the other hand, have to take care of all of this yourself. When corporate clients inquire, they know very well that it’s their best option to work with you, instead of hiring an employee. Now, you have to remember this too! You are the catch here. Make sure your rates will keep you happy after paying your own insurances, putting aside (retirement) savings, and covering your cost of living. If your gig doesn’t allow you to do this, reconsider if it’s serving your purpose on the long run, before you agree on taking it on.