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A simple formula for pricing

Posted by Ilise Benun on

Here’s how Luke Mysse, Founder of CROSSGRAIN and speaker at this year’s Creative Freelancer Conference, comes up with prices. He shared this in his week-long series (about a nightmare project he was involved in) on the CFC blog.

My effective hourly rate is based on a simple equation of Expenses (including my salary) + Profit (every hourly rate should include it) divided by the number hours I want to work each month. Mine happens to be about 20 hours a week billable.

The above equation gives me my hourly rate. From there I figure out my job costs: __ hours X my rate + Job Costs (anything outsourced) = Basement price (meaning I can’t go any lower than this price without losing money). Once I have that basement price I price the project out based on the value of what I’m doing which could change depending on client, project type, my mood (ha).

See Luke’s latest post, Lesson 2: One Point of Contact.

If you want to get down and dirty with money, check out my new book, The Creative Professional’s Guide to Money. (There’s a free sample chapter.)

How does this compare to your pricing?

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