This guest post was contributed by Ed Deason, a business coach who helps freelancers and small business founders with their business strategy, growth, pricing, and lead generation — leaving them free to focus on their specialty. He has 15+ years of experience in corporate mentoring and coaching, and an MBA from a top UK university. Connect with him at deasoncoaching.com.
As a business coach, one of the most important conversations I have with my clients is about getting their pricing right. Nine out of every ten freelancers I talk to could be charging more for their services.
The problem? It’s not a lack of belief in the value they offer or a mismatch with their niche. It’s their mindset that’s holding them back.
What is scarcity mindset?
If you have a steady client list but you’re not making enough money, it might be a scarcity mindset that’s stopping you from earning good money.
Think back to your last few sales conversations. Did your thoughts sound something like this?
“I NEED this client.”
“If I charge too much, they’ll say no.”
“I can afford to accept X for this job.”
These are classic examples of scarcity mindset at work. It’s the mistaken belief that resources (in this case, clients) are limited. And because of that perceived limitation, you ask for less than you want or accept lower-paying work when you know you shouldn’t.
Think about it objectively for a moment.
There are more potential clients out there than you could ever hope to serve.
What’s the problem with scarcity thinking?
When you’re in this mode, it’s hard to make good decisions. It adds a sense of urgency and short-term thinking that can get you in a bind later on.
And when you’re focused on meeting your immediate needs, you’ll find it harder to picture yourself getting paid a solid rate down the line. So, you do everything you can to keep that client who’s sitting in front of you right now. Or you desperately advertise your services to anyone and everyone, even if that means accepting less than you’d like.
The Solution
To break free from scarcity mindset, you need to approach pricing logically. When emotional thoughts like “I NEED this client” creep in, take a moment to pause. Here are three tips to help you stay strong when setting your rates:
Tip 1. Work out an internal hourly rate
When you’re not sure if you’re charging enough, but you have an annual income goal in mind, use this process to set your prices. Remember, this is a rate you use internally — don’t share this with clients.
First, you need to know three things:
- How many billable hours you aim to work each week (not including admin, business development, or anything that doesn’t directly earn money)
- How many weeks you want to work each year
- How much you want to earn annually
Let’s say you want to spend 20 hours a week on client work, earn $100k a year and work 48 weeks (four for holiday).
Divide your annual earnings (100k) by the weeks worked (48) then divide again by the number of hours you want to work (20).
That gives you around $105 per hour.
So, when you’re next quoting a client, and you think the work will take 10 hours, then provide a minimum package price of $1,050 for the work.
If you use this tip to set your package pricing, and you consistently hit your hours, you’ll achieve your income goal.
Tip 2. Always prepare in advance
Never go into a client call without a firm idea of what you want to charge. Make sure you have a target rate in mind, and you’re prepared to field pricing objections. This will help prevent the panic-and-cave response if you’re asked to go lower than you’re willing to.
If they do ask for a break on pricing, I’d suggest saying, “I can certainly look at my prices. What would you be comfortable removing from the scope to bring the price down?” This prevents you from delivering the same amount of work for less money.
Tip 3. Think ‘value’
Instead of basing your rates purely on time or effort, consider the value you’re delivering to your client. Think about the outcomes your work creates, whether it’s increased revenue, saved time, or enhanced brand reputation.
For example, if your work helps a client generate $50,000 in new business, then your $5,000 retainer is only a fraction of the value you’re providing. This mindset helps you avoid undervaluing yourself and ensures clients see your services as an investment rather than a cost.
Foster an abundance mindset
On top of the strategies above, the most powerful thing you can do is shift your mindset when it comes to pricing.
The opposite of a scarcity mindset is an abundance mindset. It’s the belief that there are more than enough resources to go around, that you are capable, and that clients need you as much as you need them.
Remind yourself of the following before any pricing conversations:
- There are more potential clients out there than you can ever hope to serve.
- You offer a service that your clients need and want.
- You’re experienced, capable, and highly skilled, and you’ve (probably) got the testimonials to prove it.
Why it’s worth it
Still wondering if all this effort is worth it?
One of my freelance clients revisited their pricing strategy as part of our coaching program and added $10K per month to their income. Seems worth it to me.
By making adjustments to your pricing and mindset, you can create a freelance business that supports your goals and your worth.
