One of the reasons I started my own business is that I realized my skill set could be valuable outside of the corporate context. I wanted the autonomy of working for myself and designing a business that could work for our family as it grew.
And so, despite hearing wisdom to the contrary, I looked at how much I had been paid in my last job, and I used that number to set my new rates as a freelance Business Manager.
I was making $30/hour in my last job, and that seemed fair enough to me, so I charged my first client $35/hour.
A few months later, this was the result:
~I had to borrow money from our family account to pay my quarterly tax bill.
~I was working harder than I had in my last job, and taking home a third of the salary (hello higher taxes, business expenses, and non-billable work).
~When I got twice as good at something and could complete it in half the time, I got paid half as much for that thing.
Don’t be like me.
My mistake is that I saw my value in relation to my past salary, and didn’t think about the fact that my actual market value in that role was GREATER than my salary + every single one of my benefits + the cost of the office space I occupied + the free sandwiches I got every once in a while. The company was making money off of my work, as they should – that’s how a company stays alive.
If I had been in a client-facing role, I would have been billed to the client at an hourly rate substantially bigger than my cost.
In addition to that, the experience I was gaining as I built my business was worth more than the hours it took to accomplish what I did for my clients.
Time is a terrible measure of value.
What do I do now?
I see A Squared as a company outside of myself…a company that needs to pay me and my team while also having the resources it needs to thrive.
A Squared will only thrive if I price according to my value to my clients. I want my presence in a company to fuel their success so that they’re making far more than they’re paying me – and then we both win.
There are a lot of smart people out there talking about pricing, so I recommend reading them, but I just wanted to share my story as a quick reminder for you: even if you are a solopreneur, you are a company. You might not be a corporation, but it sometimes makes sense to take an idea or two from their playbooks (and as a point of reference, a large consulting firm will charge over $100/hour for a recent college grad they hired the week before).
You can think about your value differently and charge accordingly.