How Do I Determine How Much to Charge?           

You've decided you want to work at home. You know what service or product you want to sell. You know how you are going to provide that service or sell that product---and now you have to decide how much to charge for it. So, you ask the question, "How do I figure out how much to charge? What should I charge? What will people pay for it?"

There really are no easy answers for these questions. This isn't a matter of pulling a number, any number, out of the air. The best way to begin to determine how much to charge for the service/product you want to provide/sell to research what at-home workers in your geographic area are charging for services/products similar to what you intend on offering, and then determine what pricing strategy works best for you.

Don’t Underprice Yourself!

Consumers today generally equate price with quality; that is, the more you pay for something, the better the quality is expected to be. If you think that a strategy of underpricing your services will be a sure way of bringing in more business than you can handle, think again. Consumers are likely to consider that a service/product that is priced well below the average for the same thing is an indication that your service/product in inferior to that of your peers.

On the other hand, don’t adopt a policy of charging the highest rate you find when you do your research. You must definitely consider your geographic location, who is likely to contract with you to provide your services, and generally “what the market will bear” in your area.

Set your rates somewhere comfortably in the mid-range of what you find being charged for the services you are going to offer. If you find that work is coming in, and keeps coming in, then you can post a rate increase at some reasonable time interval. If no work comes in at all, you can offer reduced rates for a limited time to attract business.

By setting your rates mid-range, you have some negotiation room for contracting with a client who wants to hire you, but hesitates because of the price. You can be a hero and offer a one-time reduction of your rates in order to accommodate your client’s budget. You might be able to get the job, and then convince the client to continue to use your services at your regular rates.

Review Your Rates on a Regular Basis

Don’t make the mistake of never raising your rates! At some regular interval, you should review your rates and increase one or all of your rates, according to the current economy.

If you allow yourself to get into a situation with any client for whom you’ve worked for more than two years and have never raised your rates, you might find it very hard to explain to that client why you are suddenly raising your rates by 30 percent. Better to raise your rates some small percentage (or nominal dollar amount) every year and keep pace with the economy than to risk losing the client because suddenly you find yourself working at a loss (or at no profit) and need a drastic rate hike to compensate.

Should I Require a Deposit or a Down Payment?

Generally, if you are contracting with a known business entity that has been in business and has an established history (either in the community, the state, or nation), then a deposit probably is not required (and may be a deal breaker when it comes to landing the client).

If you are contracting with an individual (that is, providing a service to a non-business entity), and getting paid is going to be a matter of getting a personal check, then you might want to request a small deposit and explain that you will not commence providing the service until the deposit has been received. Even if you ask for $10, you are getting your prospective client to commit to paying you. (My personal rule of thumb is that if an individual balks at sending a minimal deposit, then this is someone who might just end up not paying me at all.) However, this is strictly a matter of personal preference and judgment. It is your business, you must run it as you see fit.

How Will I Know When I Will Get Paid?

Being paid, how and when, should be something that is addressed in your first contact with the client. Get a clear explanation of how payment is going to be made, make note of it in your records, and then ask your client to confirm the process.

If you are working for a large company, you will likely have to wait out their normal accounts payable processing cycle. If you are working for an individual, especially if another at-home worker has subcontracted work to you, you might have to wait for your client to be paid by the end client before you can be paid.

These scenarios should be addressed during your first conversations with a prospective client. Don’t be shy about having the “How will I get paid?” discussion! Handle it in a business-like manner, and before you accept the job, be sure both you and the client have a clear understanding about when the work will be done, how much it will cost, and when you will be paid. I prefer to tell a prospective client what my expectations are for being paid, rather than to ask them how they plan on paying me. The discussion continues on until I have a clear outlook on how and when payment will be made.

Things to Remember When Deciding How Much to Charge

• Research the market. What are your peers charging for the same or similar services?
• Set your prices at mid-range, and then adjust them accordingly.
• Review your rates on a regular basis, and increase your rates regularly, as supported by the economy.
• Have the “How will I get paid?” discussion with every prospective client prior to agreeing to do the work.

Jan K., The Proofer is a freelance copyeditor and proofreader. Visit Jan’s Portal (http://www.jansportal.com) for more information about Jan's free crafts, recipes, tutorials, other resource sites, and free content articles, as well as Jan’s business services. Be sure to visit Mom's Break (http://www.momsbreak.com/) for free printable crafts and projects. © Copyright 2005 to present. All rights reserved.