Contract Work – Setting your price
As a freelancer, you are commissioned to do a specific job, rather than hired as a captured employee.
How do you go about setting your pricing?
Ideally you will want to compare what you can offer for services and level of expertise, and compare that to the market to set your prices.
Naturally, there is a wide window between what you think you are worth vs. what a client is willing to pay. Happiness is negotiating a contract that is mutually beneficial for both parties.
When considering your pricing, examine the amount of time it will require you to provide your products and/or services.
Consultants often receive a per diem or per day rate as well as reimbursements for expenses. Keep in mind that if you have to shell out money on your personal credit card for travel expenses, you will be holding those costs and absorbing those interest fees into your profit.
If a customer has a 90 day payment arrangement with you, this could mean you are holding the costs of that travel expense for up to 4 months.
Cash flow is one consideration when setting your pricing. The other is market value. If you go out of business because no one is paying you, you have lost market value. The ideal position to be in is to have more work than you can handle, and having a way to offload that work to someone else in a way that you can make a profit on their efforts as well as your own.
Financial independence is a dream for many. If this is something that you dream about too, there are a few books I would recommend that you read to help you move further along in your journey.
Pick up the Cashflow Quadrant, Rich Dad's Guide to Financial Success. You may not like everything you read in this book, but it will open your eyes to new ways of looking at things. http://www.amazon.com/Cashflow-Quadra...
Another book that I have found extremely helpfulu is Napoleon Hill's Book called Think and Grow Rich. http://www.amazon.com/Think-Grow-Rich...
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