This post contributed by Heather Rast, Content and Community Specialist for Solo PR Pro.
In the corporate and agency worlds, there are resources to help career-minded professionals assess their financial place in the talent stream. I remember a rule of thumb I picked up somewhere along the way – the rule was, if you aren’t earning at least twice your age, then you aren’t getting paid enough.
J.O.B. Drones Know Where To Look
Now, I picked up that little jewel a long time ago. And it’s pretty general. Much more statistically reliable cues can be picked up from the Bureau of Labor Statistics, industry and trade groups, professional organizations, talent and recruiting properties (Aquent, Monster, etc.), and some post-secondary schools (those which publish reports and studies covering the earning potential of individuals with varying degrees of experience and skills, often broken down by geography).
Indies May Be Less Certain About Pricing
Resources of these types are a little harder to come by for self-employed private practitioners. Even if you have a solid peer network and friends/acquaintances working in related fields, it can be difficult to determine what the market will bear due to concerns about personal privacy.
2012: Time To Get Your Financial Act Together
The topic of setting fees is such an important one that we’ve approached it from several different angles here on Solo PR Pro. And since 2012 is approaching in just a few short weeks, it seems like a good time to review what we’ve learned so that we can start the New Year off on solid footing.
Expenses. What Expenses?
When thinking about how to set consulting rates, a good place to start is with your expenses. Confused? Well, before you can reasonably determine how much you need (and want) to make, you need to first know the outgo you’ll have to cover just to be in position to do business.
So you say you already own a laptop and printer? Well, what would you do if your hard drive crashed tomorrow? To effectively work with multiple clients, cloud storage, back-up UPS, and even a secondary computer are all necessities. Are you prepared to repair, upgrade, or replace those hard systems? Don’t forget incenditals like printer ink, thumb drives, a supportive chair, a computer case…the list goes on. And oh yeah, you may even need a new supercharged Internet package. Consultant Jenny Schmidt has some valuable things to say about identifying expenses in this video with Kellye as she talks about setting indie fees.
One of the things you learn when you figure out the minimum expenses your business must cover is where you want to fall in the consideration spectrum with clients. Do you want to be the 99designs of the PR or communications world? Do you aspire to have a premium pricing model that ensures you work exclusively with a certain type of client base? There’s a lot of in-between to consider (especially if you don’t have a wad of savings stockpiled when you launch). Greg Brooks had some inspirational thoughts about pricing in his post discussing how to run a solo business instead of simply hold a low-paying job.
In one of our August Twitter chats, we discussed the advantages and disadvantages of publishing your rates online. Our friend Mack Collier had recently posted pricing for select services on his website and shared his reasons for doing so. Other members of the chat offered their opinions for or against.
Making The Job Match The Price
Knowing your ideal billing rate is part of the financial budgeting equation. An often-overlooked factor is the product you deliver for that rate. Like Goldilocks’ search for the right bed, independent consultants have to offer just the right amount of product for the fee. Over deliver and you’ve lost revenue and diminished your profits (perhaps exponentially so, if another project opportunity arises while you’re wrapped up in the never-ending assignment). Under deliver and you risk your professional reputation, a dissatisfied client, and any opportunity for return business. Kellye has some good advice about managing scope creep. It can be hard to discipline yourself and learn how to communicate boundaries to clients, but to build a sustainable business it’s a must.
Documentation: Your Friend
Finally, when you’re comfortable with your fee schedule and have defined service scope for the work you do, the next logical piece of the puzzle is to protect your interests by making things all legal-like. Jenny Schmidt and Kellye teamed up earlier this year to produce the eBook “Get It In Writing,” a great resource designed to identify responsibilities, expectations, and courses of action for both you and your clients. Good consulting contracts can cost money, and poor contracts will most certainly cost you money (and time and aggravation).
As you can see, there’s a lot to think about when planning and growing your indie business. The Solo PR Pro community is here to help with great resources like those mentioned & linked to above. If you’re ready to turn thoughts into action, consider joining the Solo PR PRO membership site for access to resources like our new Show Me The Money! eBook course, time management templates (so you can track time spent on multiple clients), and much more.
Image courtesy Alex Muse on Flickr.