Hourly rates or fixed prices have been the only available pricing options when setting freelance rates for services — but they don’t have to be.
At Wethos, we work to demystify pricing in the marketing industry to build a necessary structure backed up by more than just the hours you put in, or the fixed rate your gut thought would get you the job.
Should you be paid for 10 minutes of work if it took you 10 years of experience to execute something efficiently? Does Kelly Blue Book recommend car prices based on an arbitrary number? Of course not — so we created a system around value-based pricing.
What is value-based pricing?
It’s a recommendations system that puts the work first. Take a specific service you offer — whether a workshop you’re leading, a website you’re designing, or a blog piece you’re writing — and price it objectively on how much work you’ll need to do in order to complete it. We define that through four key areas:
- Expertise: accounting for the proficiency needed to be able to tackle this work
- Complexity: adjusting for the difficulty in this specific task
- Time: assuming how long this will take to accomplish
- Uncertainty: including buffer for services that are vague or have a lot of unknowns upfront
The four areas above are equally weighted and given a recommended point-value from 1 [very low], 2 [low], 3 [medium], 5 [high], or 8 [very high]. With the pricing levers, it’s simple to calculate the overall value of the service. The higher the rating the further you move the lever line. In the example below, the average value of the service is 4 points.
- Rounding, we get 4
But we understand pricing doesn’t just stop at the tangible service you provide, it could also vary by client type.
You might be inclined to give nonprofits or even startups a lower rate than a large enterprise client like Pepsi. We get that! We would have done the same back in our agency days. So the system also takes client type into account:
- Nonprofit clients have a multiple of $150 per point
- Startup clients have a multiple of $300 per point
- Enterprise clients have a multiple of $450 per point
Coming back to that example, if you were pricing for a nonprofit, the cost would be $600 (4x$150). But for an enterprise client, it would be $1,800 (4x$450). Need to change a price half way through a project? No sweat, our platform can easily handle that for you too.
At the end of the day, these are all just recommendations.
We not only allow for changes to the service or project price, but we encourage them. You’ll notice we don’t change prices based on location, as we believe you shouldn’t get paid more or less based on where you live, but we would love your thoughts on it.
The system we’ve created only gets smarter the larger our community gets, and as more people adjust prices, we can begin to provide real-time, peer-sourced data on pricing. Our recommendations aren’t perfect, and that’s okay; we have decades of experience in the freelance and independent market to know that pricing can’t be right or wrong, but that it should be more thoughtfully examined.
Want to contribute to demystifying pricing for the creative world with our community? Come to teams.wethos.co, set up your studio, and join thousands of other creative entrepreneurs by adding the specific services you offer with your regular prices to improve our value-based pricing system. Your custom contributions will make our system smarter.
Today our database of ~400 services and 40+ templates is only the beginning, and we’re setting up for the revolution of a new pricing system made for creators, by creators.
Psst! Even if your client insists on hourly rates, you can still use Wethos for your pricing. Just set your hourly rate at $75 or $150, and multiply the amount of hours assumed from there to get a rate per service. Feel free to ping us at [email protected] to let us know your thoughts for improvements!