As a business owner, I get to make a lot of decisions: what jobs to take and what jobs to pass on, what types of marketing I should do, which contract workers to hire, and when to take lunch.
I also get to set rates for the jobs I complete.
The latter can be the toughest part of owning your own business. You want to be competitive, you want to make money, you want to prove your worth. Go too high and you are cutting out potential customers, go too low and you are basically telling people you aren’t as good as the rest of the companies out there (most people will not hire those who are very underpriced because they are concerned about their abilities – keep this in mind if you are pricing out your work).
Hitting around the middle is often a good strategy and puts you on fair playing ground with others in the bunch.
This is what I have done with my company – priced out around the competition’s prices for jobs. I know what I charge to write copy, complete an easy web design job, do some hourly work, or design a site from scratch. These prices vary little, and only if extras are added to the job that aren’t normally done.
How did I set the prices? By determining the amount of time they will take and multiplying that by my hourly rate.
A regular client of mine contacted me the other day to do some work. He said he wanted something ‘easy’ so to keep this in mind when pricing out the job. A lower rate would be fair, he felt, because the job was not difficult.
Again, I look at the job by number of hours multiplied by hourly rate, not by whether it is easy or not.
For instance, I work for Company X. I make a salary for all jobs I complete, whether they require a lot of thought or none at all. If I design a website I get $Y; if I sweep the floor I get $Y; if I work for 10 hours I get $Y; if I get off early one day I get $Y.
My friend owns his own company. He charges X for one job and Y for another job. How does he come up with the amount? He figures out how long it will take him to do this job and then applies the rate of pay he charges to that equation.
If he believes the job takes 3 hours, he estimates the time it takes to complete and charges for three hours.
If he believes the job takes one hour, he estimates the time it takes to complete and charges for one.
It doesn’t matter if he is sweeping floors or designing a complex website, only how many hours he puts into the job.
Should a business owner charge a client less money per hour because the job is ‘easy’?
My answer is no. I pay my landscaper X amount of money even though he works harder some days and less on others. I feel it evens out (as does he, since he set the price).
If a business owner is spending three hours doing a job, that is three hours he is working on one project and not on another. Three hours is three hours, no matter how you cut it.
But this has had me thinking so much, I thought I’d bring the question to you.
Should a business owner charge less for an easier job and more for a complex task, even if the tasks require the same amount of time to complete? Or should the owner charge the same, basing the amount of money needed to complete the task on the amount of time the task will take and not the complexity of the job?