Are you finding gigs where you can be your boss? Are you also looking for places where you can make some good use of your skills, talent or profession? Sometimes we may be very interested in a gig but may simply not know what price we should be quoting? Here’s a shortlist of things you may need to be aware of before you commit to a price.
Is the rate below your calculated rate?
Is the client asking for a rate that is below your own calculated rate? If you don’t have a rate calculated, that may be the first step you will need to take so you have a point of reference. Calculating your rate as a freelancer is a topic for another article but you can ask around, look at reports and publications to find out the industry standard to provide some guidance.
If the proposed rate is considerably below this calculated (or researched) rate, ask yourself if you should probe further to help you decide.
How well do you know your client?
If you know your client well, it may help you in deciding a suitable price for the gig. For example, if you know your client drives a hard bargain, you may start with a slightly higher price. On the other hand, if the client compensates fairly, you may want to provide a fair price.
If you do not know your client, you may have to review the answers to some of the other questions to perform some level of risk management, before you commit to the price on the gig.
Is this an hourly or fixed-price gig?
An hourly priced gig implies you get paid for the number of hours you put into the gig. This is typically done if the nature of the job is unclear or if it is difficult to estimate how long a job may take. For example, providing consultation to a client on starting a business may be difficult to estimate as a fixed-price gig because there may be a lot of unknowns.
A fixed price gig, on the other hand, may be easier to estimate for certain jobs (for example, painting a room).
So, why does this matter? It matters because if the project is a fixed-price gig but you simply don’t have clarity on the scope of work, it may highlight the fact that you may need to talk with the client. It matters because if the price is an hourly gig but the number of hours is set up along with expectations on what you will deliver for those hours (for example: build a deck in five hours in my backyard), you may need to talk with the client.
How clear is the scope defined for the gig?
Scope, in a loose sense, defines what you will deliver in a gig. Scope is important because it will give you a fair idea on how you will approach on delivering the stated scope. A good scope will help you determine and estimate the time and cost for delivery.
If scope is not clearly defined, you may fall to the common problem of scope creep. Where your client will “add” more features to the already-defined scope. This is frequently done with no change to time or cost. Ensure you fully understand the scope before committing to your price.
How knowledgeable is the client?
This becomes important if you are pricing for a gig where you are not the expert. This would imply the client (or a representative of the client) needs to be involved to provide information, direction, or guidance as you work on the delivery.
Consider the price if the client is not very knowledgeable and leaves the research and analysis to you. Will this add to your time that you may not have considered earlier?
Is project delivery and completion totally up to you or will the client be involved?
Similar to the above point, if the client intends to completely outsource the gig to you, you may have to spend time communicating your progress, ensuring you are on the right track for delivery. You may have to set up special meetings to go over progress or define milestones. All of these activities take time and should be considered when deciding a price for a gig.
What is the industry standard for a similar gig?
Does the industry quote a standard price for a gig of this nature? If so, it may be easy to compare the asking price and decide. If there is no industry standard, you may want to research and/or ask around to ensure you fully understand the basis for the asking price.
How many other gigs do you have in the pipeline?
If you have other gigs in the pipeline, you may be able to better decide on a suitable price for the gig. Having other gigs ensures you have other future work and may not put pressure on trying to “win” this gig on the basis of undercutting your price or providing a deep discount.
What are the payment terms for the gig?
Will the gig only pay you after all the work is done and delivered? If so, it may be a while before you have any cash flow. What would this mean for you, especially if this is the only gig you will be working on? This may influence the rate you may want to set. If, on the other hand, the gig pays regularly based on pre-defined milestones, it may help you with cash flow. You may want to take this into account when determining your price.
Do you have all the skills needed for successful delivery?
Finally, do you have the skills to successfully deliver the gig? Or do you have to learn some new skills? On one side, learning a new skill during a project allows you to grow incrementally. However, if your rate sets the expectation that you are a professional with the right skill, it may backfire, especially if it takes time to deliver (as you learn the new skill) or the quality of your deliverable does not meet acceptable standards. In such cases, it may be prudent to have a discussion with the client and provide a suitable price.
Pricing a Gig is a key component for effective service delivery. The above points should provide good guidance into ensuring you are able to price a gig appropriately and are not selling yourself too short.