Estimated reading time: 2 minutes

Pricing is not magic, but it is not easy either

kevytyrittäjät_tuulettaa_iloisia_hinnoittelu (1)

Pricing your work is a perennial problem for self-employed people and freelancers.

Pricing is not easy, but there are many ways to make it easier. The same principles apply in many different fields, and they can be a good starting point for many self-employed people and entrepreneurs when thinking about how to price products and services.

We have just released an updated version of our popular pricing guide, so to celebrate, I decided to share a few basic, proven tips for budding self-employed people, freelancers, light entrepreneurs and just plain entrepreneurs.

An invoiced sum and earned income are two different things

Many people who have only worked traditional jobs might have difficulties understanding all the expenses that they should take into account when pricing their service. Even though an employer will pay for different social security costs, they are often not visible to the employee. In addition to gross wage, the employer often pays for different types of pension and social security contributions.

When pricing, a light entrepreneur should be aware that their invoiced sum is not the same as the amount of money they will get on their bank account. Besides potential pension contributions, UKKO.fi will also deduct the invoicing service’s commission fee, social security contributions and an accident insurance premium from a light entrepreneur’s wages.

In addition to these costs, there are many other costs that you should consider when pricing your service.

Your invoiced sum should also take into account

  • VAT,
  • social security costs,
  • materials and supplies,
  • travel costs,
  • equipment,
  • workspace,
  • phone and internet bills,
  • marketing costs,
  • the costs of professional training,
  • vacations and sick leave,
  • other possible costs.

It is also important to note that traditional jobs pay a monthly salary regardless of how productive some working hours have been. As a light entrepreneur, you should account for this, because you will not be able to monetize every hour you put into your work, especially in the beginning.

Set a goal for your income and calculate how to achieve it

A good way to price your service or product is to think about how much you would like to earn to be satisfied with your income. Think about the amount on a monthly and annual level. After this, you can calculate how much you have to bill for your service or product within a certain timeframe to achieve your desired level of income even after accounting for all costs.

Next, remember that you cannot bill your first client for the entire year’s or month’s pay. In other words, you should calculate how many clients you would need to have in, say, a day or month. Once you have an idea of how many clients you need, you can start thinking about how much time you have for each client or task.

Moreover, make sure to have time for sales and marketing, because clients rarely drop into your lap!

You should also remember to account for different seasons, since almost no field has a steady flow of clients. You might even have no clients during the slowest seasons.

Do you want to know more about light entrepreneurship, being self-employed or UKKO.fi´s invoice service for freelancers? Then click on the word you want to read more about.

Muita artikkeleita aiheesta In English:

  • In English Contract Template for Light Entrepreneurs!

    Are you about to make a deal with a client but unsure on how to draw up a contract? We hear you! And we agree – making a contract is challenging and takes up a lot of your valuable time. That is why we have now made a contract template, which you can use as a basis for your future…

    Read more
  • In English Get Money Back from Your Hotel Booking

      As an UKKO.fi-user you can now get 10€ back of your next booking with Hotels.com when you make your reservation through Bonusway. In order to get the benefit, you need to register here and click to Hotels.com through the Bonusway-page. After this you can make your reservation. The offer is only available for those UKKO.fi-users that are new to the Bonusway-service. The…

    Read more
  • In English Be Productive: Play Rugby, and some other stuff

    Here are six techniques for increasing your productivity as an entrepreneur or freelancer. Some you’ve read before, some may be more novel. Medium has hundreds if not thousands of articles about productivity. But it wouldn’t be very productive to try and read them all. What follows is a collection of techniques you can use to focus and increase your productivity…

    Read more