Setting prices for social media management can be tricky, and often people will ask how much they should charge in our communities.
So often, this strategy means you're basing your pricing on someone else's opinion or experience, which is a dangerous strategy and can often lead to freelance social media managers undercharging. Often the people responding will be relying on social media management package prices, but we always recommend providing each lead with a bespoke price to ensure you are charging for the individual client's needs.
That's not to say you can't ask what other people would charge, but you should never base your pricing on that alone. So how do you know if you are charging enough?
There are some key things you'll need to take into account while figuring out your prices, including:
- Both existing and forecasted expenses.
- Your experience, time and knowledge.
- The value and results you're delivering to a client.
In episode 32 of JFDI with The Two Lauras, we share 5 strategic steps you should take when you are figuring out your pricing.
In this episode, we share 5 steps to help you price your services as a freelance social media manager.
Listen now to hear:
➾ What happened when we asked people how much we should charge.
➾ Why you need to forecast when pricing, and what to consider when you do.
➾ How to charge for your brain!
➾ The 5 things you should always include when pricing your services (you won't have considered all of these!)
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Have you ever asked someone how much they would charge for a service that you are planning on offering? If you have, then this episode might shock you because we are about to reveal why this is the worst thing you can do when it comes to your business.
Since we joined forces in 2019, I don't think there's been a topic that we've answered more questions about than pricing.
Looking back, we always used to ask for people's opinions on how much we should charge. We would look at the elements of the job; maybe we would consider how much time it would take. Then we would wonder if we were being really over generous with the price or actually were we really expensive? And then imposter syndrome would sit in, and we'd start panicking, and we'd think that we were gonna lose the client before we'd even won them.
So we'd go and ask other people what they would charge, but what we would do is we would position the question based on the elements of the job. So, for example, how much would you charge to post four times a week on Instagram? And looking back now, it baffles us that we thought that this was a good strategy.
We've all made those mistakes, and we often see people asking how much they should charge for a certain number of posts. For example, “How much would you charge for four posts on Facebook? Or three posts on LinkedIn?”
Each time we see posts like that, we are reminded of how badly this strategy worked for us in the past. We are all for giving people a steer, but in reality, pricing for your business should be unique to your business. And if you are basing your pricing on someone else's business, you are gonna end up running into all kinds of issues.
We all have different outgoings and different expenses; we have different amounts that we need to pay ourselves to cover our household bills and our different budgets for our extravagant lifestyles. So when we were asking someone what they would charge, it is largely irrelevant because we don't know how much their mortgage costs and whether it was the same as ours, or maybe if they'd had a secret lottery win that was actually funding their lifestyle!
And all of those things would have a massive impact on what they were going to be charging. Plus, if we asked the wrong person, then that person might be massively undercharging. Their opinion would then impact us, which would lead to us massively undercharging as well. There's people out there who are charging anywhere from like as low as 50 pound a month to as high as five grand a month or even more.
But that doesn't mean that the five grand-a-month people are actually making loads more money than you because they might actually be making a loss if there are outgoings and more than five grand.
And when there's this huge difference in what people are charging, you can be fairly confident that you're not going to be the lowest. And you're probably not going to be the highest either.
So if you are just looking for opinions to give you confidence in your pricing, it's almost like it's a pointless exercise, isn't it?
Laura Davis charged appallingly in the past. Her very first ever client used to pay £144 a month. Because someone told her that social media managers should be charging 10 to 15 pounds per hour. It was a long time ago, but she very quickly realized that that wasn't enough.
Social media managers shouldn't be charging by the hour.
That low fee left Laura with hardly any money to actually pay herself. She couldn't afford to invest in the tools that would make it easier to do the job and couldn't even afford a scheduler.
There were courses and memberships she wanted to join, but she couldn't afford those either and felt like she was stuck not being able to learn more to enable her to charge more because she couldn't afford to learn more.
Being paid £144 a month only did one good thing for Laura Davis's business. It made her treble my prices for the next lead,
When we are so desperate for work, we sometimes snap people's hands off without actually doing the maths or by basing our prices solely on someone else's opinion.
Laura Moore has done this too and dropped her original price when she asked other people's opinions on how much she should charge!
It's imposter syndrome, isn't it? It beats us down, and for some reason, we feel like we need somebody else to justify our prices for us before we have to justify them to a potential client. But that is not a way to strategically price your work or make sure that you can make a profit in your business because we do need to remember that this is a business.
Yes, we're freelancers, but we are business owners.
Laura Davis's husband is an accountant, and he created a spreadsheet for her to use to record all of her expenses and to do her forecasting. It's the spreadsheet that she still uses religiously and is available in the Social Media Manager's Toolkit.
Five things you need to consider when you are pricing.
#1. First focus on what you need to charge to ensure that you are making your business a financial success. How much do you actually want to earn?
Some people just want a small amount of money, like pocket money for want of a better phrase, but other people need to earn thousands of pounds a month to be able to pay their bills, feed their kids, and cover their mortgage. What is the absolute minimum you need to pay yourself each month? Anything over that is a bonus.
Doing this means you can stop paying yourself based on the money coming into your business and price more strategically, so you have enough money in the business to pay yourself what you actually want to earn.
That figure needs to be recorded somewhere. So get it out of your head, go and find a pen and actually write it on a piece of paper.
#2. Next up are your business outgoings. The beauty of having an online business is that you don't need to have huge outgoings, but you will have the very minimum insurance and obviously wifi. You'll also be paying tax if you are earning over the threshold.
Then, of course, you have things like schedulers, tech requirements, conferences or courses. What you earn needs to cover these outgoings and also account for your future outgoings too.
#3. Forecasting. Keeping money in your business bank account is essential, and you shouldn't be emptying your business to zero at the end of every month. You need to have some basic forecasting in your business and ask yourself, how much you will spend on things like memberships, courses etc. As well as on things like your Canva subscription, schedulers, pension contributions etc.
Add all those values up and divide by 12. Now you can start putting aside that amount each month.
We use Starling Bank because it has Spaces in the account to move the money over into so we can't spend it by accident! We also have a figure in our business that we treat as our zero. And we don't let our balance go below that. (The figure here isn't zero! We always have money in the bank in case we need it.)
#4. Next on the list is an important one, which many people don't consider. Thinking time.
Client work doesn't just happen on it's own. We don't just wake up on a Monday morning and have all those content ideas queuing up ready for us to do something with it. You have to research, create content, look at analytics etc and you spend time reviewing and learning from all your previous content, and you probably spend a lot of time thinking.
And even when you're not meant to be working, you're probably thinking about work.
If you allow yourself to be paid thinking time, you'll be more creative and do a better job for your client. Knowing that you are charging enough to pay for that time means you will make sure you do it well. It means you are allowing yourself time to think and create.
#5. The final thing to include in your pricing to take into account the results you are going to be providing. If the result you are delivering makes the business money, then that needs to be taken into consideration in your pricing.
Your clients are not paying you for your time. They're paying for your knowledge and expertise and they want some sort of result. And that's where the value is. And that's also where the profit lies which is why they want to invest in the first place.
That's why some agencies charge absolutely sky-high rates because they have taken into account to ensure that they cover all of their outgoings, that they're making a profit, that they get paid for the expertise that their team have and the results that they are confident that they can deliver.
An agency making a ton of money won't be asking another agency how much they should charge!
It is totally okay to get a steer from your peers when it comes to pricing, and we highly welcomed that kind of conversation in our communities. But it's more important that you understand that the end price, the price that you actually give to the client, the price that's on your proposal, needs to be the price that you've strategically worked out based on your business needs.
Don't base your fees on somebody else's opinion or solely on the client's budget. Your prices should be based on your own business needs.