How To Determine Your Day Rate
From RyanWalters.com: One of the most challenging aspects with any creative endeavor is trying to figure out how to price and charge for your services. This is especially true when you are first starting out. Price yourself too low and you will not have a sustainable business model, and price yourself too high and people may laugh at the rate you are charging in comparison to your experience level and skill. The good news is that as you progress in your experience, you will get a more accurate sense of what it takes to render your services, and how to charge for them. But where and how do you begin? That’s what I want to help you figure out…
Regardless of service, product, or industry, I think that all pricing strategies can be grouped into one of two categories: they are either reactive or proactive. Reactive pricing takes a look at the market, figures out where current pricing is, and then sets a price accordingly. Proactive pricing figures out how much time, energy, and resources something takes, then adds a value added cost and sets the price based off of those numbers. Reactive pricing is the quickest way to devalue your services and/or product as you race to cut costs to be the lowest game in town. The race to the bottom is the best way to ensure that you do not get the opportunity to grow and stretch your skills as an artist. Proactive pricing, on the other hand, will ensure that you are able to not only keep a roof over your head, but it will give you the ability to develop your craft so that your work stands out from the competition. So let’s take a look at how to determine your day rate proactively.
Steps To Proactive Pricing:
1. Calculate The Hard Expenses.
The first thing you need to do is to itemize every singe expense that it takes to support yourself and the work that you do. The more detailed and specific you are, the better equipped you will be to set your pricing, as well as knowing where and when you can cut costs. This is not a complete list but it does show some of the items you will want to take into account:
- Rent (Office/Studio Space)
- Utilities (Phone, Water, Electricity, Internet, etc.)
- Automotive Expenses (Repairs, maintenance, gas, insurance, etc.)
- Continuing Education (Classes, books, seminars, etc.)
- Insurance (Business, Equipment, etc.)
- Professional Services (CPA’s, Attorney’s, etc.)
2. Calculate Your Equipment Costs.
Equipment costs include not only the original purchase price, but also the the maintenance, repairs, and servicing of gear. The depreciation of the equipment is also a part of this calculation. (Talking with a CPA about that depreciation is a good way to get a grasp on these numbers). The equipment you have will be dependent on the specific work you do, and the services you provide. Some of the items you will want to consider are:
- Camera Equipment
- Lighting Equipment
- Audio Equipment
- Computer Equipment
- Transportation (Car, Van, etc.)