The start of a new year is an especially prime opportunity to reflect on business earnings from the last 12 months. Were you forced to accept low-paying projects or could you hand-pick them?
It’s also a great time to raise your PR rates and think about how you’ll charge clients in 2021 and beyond.
After all, your profit margins should reflect the immense value you provide. Between your experience and expertise, the work and quality of service you offer continue to improve — that means how much you charge should, too.
For that to occur, regularly evaluate your business and pricing strategy to increase your earning potential.
Don’t know where to start? Set your hourly rate
To amplify your income and your business’ profitability, you need to know the fundamental piece of your billing framework: your minimum hourly rate.
Before you charge clients a retainer or project fee, an hourly rate is what helps you create accurate total project pricing for lump sum arrangements. Plus, it ensures you earn a livable wage (or more!).
Whether you’re a new solo PR pro or a seasoned consultant with years of experience, deciding how much to charge for your work can be a tough call to make — here are some variables to consider as you determine the right rates for your business:
- Estimated annual expenses
- What the market can bear
- Specialized offerings (that maximize your PR programs!)
- Years of experience
As you set your hourly rate, fight the knee-jerk urge to discount your work — and think twice about any client who wants to nickel-and-dime you in the fee negotiations before you both sign on the dotted line.
When you confidently value your work, your clients will, too. If you decide to increase your hourly rate by $10, for instance, they won’t bat an eye. That means you can add $10,000 to your revenue in one move if you clocked 1,000 annual billable hours.
That’s how you meet your income goals.
Pro-tip: The next time you quote a client, try to stand firm against the awkward silence that follows. If you’re like most entrepreneurs, it might tempt you to reduce or negotiate your rate. Instead, give clients a moment to think. More often than not, they’ll accept your first offer.
|The six-part Show Me the Money series we created exclusively for our solo PR pros will guide you through increased profitability! Each installment gives you in-depth knowledge and worksheets to help you manage expenses and maximize earnings. Plus. learn what PR pros of various experience levels charge for their services.|
Billing structure approaches for solo PR pros
You can choose from several payment options to bill for your services, including value- and performance-based pricing. Some new clients might favor one method over the other, but it’s a best practice to include your billing structure in your business proposal.
On top of that, always have a signed contract or letter of agreement in place before you break ground on new work. Without it, there’s no guarantee you’ll be paid in a timely fashion — or at all.
Although you need an hourly rate, it’s best to explore other billing structures to maximize your profits. When you agree to hourly work, give your client an estimate of the time required to execute their needs so they can gauge the budget beforehand.
Pro: With more experience, you learn how to do more in less time. You can take that plus your expertise into account as you estimate the time needed to complete assignments.
Con: Since there are only so many hours in the day, you limit your income potential as an hourly worker.
From newsletters to crisis strategies to event management and more, the a la carte services you offer require a definitive cost for however long they take to complete.
The key to setting your project rate is to ensure it meets your hourly minimum plus reflects the market. But to avoid losing money, understand the project and the hours needed to execute.
Pro: Project-based work can fill up the available hours in your schedule on a short-term basis.
Con: It’s easier to deal with “scope creep,” or when a client introduces new projects or assignments not in the initial proposal. (Setting boundaries with PR clients is crucial!)
Whether you call it an allotment or a monthly fee, retainers refer to the equal monthly payment you receive for large scopes of PR work, often over a long period. Retainers typically include a set range of hours and clearly defined roles and deliverables, so everyone agrees on the outlined expectations from the get-go.
Because we often need extra time for additional tasks to support the completion of projects, define your retainer with a minimum and maximum set of hours, all billed at your hourly rate.
Pro: You receive a stable base of income you can count on every month.
Con: Without clear terms, it’ll be easy to over-service a retainer client. For instance, they can slip minor jobs into your to-do list throughout the month. Hello, scope creep!
Working on a major project over a sizable chunk of time? The split payment method is a popular billing structure for this arrangement. Here, payments are spread out equally over a defined timeframe during the project’s life cycle.
Pro: Rather than have to wait until the end of the month or after you complete your job, you get an up-front payment for your work.
Con: Sometimes a split payment request means the client has potential unstable fiscal resources, so carefully assess their ability to pay in full.
You deserve a raise — how (and when!) to increase your rates
If you turn down more work than you accept or you calculated your year-end earnings and you worked more than you profited, we’ve got news for you, solo PR pro: It’s time to give yourself a raise.
Planning for the new year is a natural time to raise your rates, plus shifts in your business practices won’t surprise your clients during this time.
Besides that, consider a rate increase after contract renewals or reviews, where you can prove to your client how your PR expertise and programs successfully delivered on their expectations.
If not then, regular or quarterly business reviews can also lead to raised rates if your financial goals changed, you expanded your skills or your cost of doing business increased.
No matter when you give yourself a raise, the key is to have a pricing strategy that includes regular rate increases — such as including annual or bi-annual increases in your contracts. However, always review your client’s goals to see how a hike increase affects their business.
Now, how do you actually change your rates? There are three clear steps to follow:
- Take an objective review of the present. Analyze the market price for your services, skills you’ve gained over the last year and your profit margins with your workload.
- Choose your new rate. Create a rate that matches your financial goals, plus the value and expertise you bring to your clients’ companies.
- Notify current clients and implement new rates with new clients. Give current clients advance notice so they can budget for your rate increase. If in the same contract, add your rate as an addendum along with an effective date.
Like the age-old adage says, it costs money to make money — to account for increasing expenses like self-employed taxes, benefits, overhead and other business costs, you have to raise your rates to grow your bottom line.
Do you plan to give yourself a raise or change your billing structure in 2021? Tell us in the comments!