What’s the difference between your ideal rate and the minimum you’ll accept?

Slide1In the last post on the subject of how you price time, we looked at what your ideal daily rate would be.

In this post we’ll look at how you might actually offer a range of rates (you might not publish this but you might negotiate it) depending on what the work is and how busy you are. We’ll also look at how you move this range upwards over a period of years.

Using the same example as before, where you want to:

  • to charge £750 per day
  • to sell 100 days of time in a year
  • therefore to turn over £75,000
  • assuming £25,000 of costs achieve a taxable income of some £50,000

In reality you may not be able to charge this top rate for every job. There are a number of reasons for this:

  • the market rate for your skills and your level of experience may not be as high as this so if you charged it you’d price yourself out of the market
  • you may take on work for which you are over-qualified, particularly if you’re not as busy as you’d like to be and need the income … but you may therefore not be able to charge top rate for the work
  • you may choose to over-deliver. .. spending more days on a project than actually budgeted for
  • you may have some clients whose budgets are simply smaller, yet they offer exciting work so you drop your rate in order for them to be able to afford you (in these cases the work had better be exciting!).

In practice you may well need to have a range of daily rates, and the rate you quote to the client depends on what the work is, what sector they are in, how much you need to the income etc.

So if £750 is at the top of your range what is at the bottom? Only you can answer this – what fee is so low that you’d rather spend that day having a lie-in or a holiday?

For the purposes of this post let’s say that the minimum rate you’ll accept is £250/day.

Now your range is from £250-750 per day.

How can you move this range upwards over time?

Well for a start always quote your top rate when you’re busy. If you’re not really earning enough consider what projects you might take on at lower rates … one of the keys here is not to burn your bridges with cheaper clients when you’re busy and to be humble enough to go asking for work when you need it 🙂

Over the years move the range upwards so that both your top and bottom rates go up! This may require you to drop some of your least well paid work and perhaps the clients that offer it simply because they may not be prepared to pay more for that work and may prefer to hire someone else without changing the rate. Such is the price of success!

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