Pricing Work Based on Value

reprinted from "Why I Believe in Pricing Work Based on Value"
by Brian Casel | April 21st 2010 | Freelance Switch(1)
This article speaks to web-design freelancers- but is equally relevant to graphic designers

For freelancers, the question of how to price your services is always up for debate. Should you charge by the hour or per project? What should your hourly rate be? What type of payment terms should you require? The answers to these questions will vary based on your industry, your reputation, and your personal preferences for your business. But there is one thing that I believe should factor into every pricing decision you make:
Price your services based on value.
More specifically, base your prices on how valuable your services are to your client. Not how easy or difficult it is for you to perform those services. Sure, time and overall project scope will likely play a role in how your determine your price quote, but before sending off that proposal, take a step back and assess the value from your client’s perspective. Is what you’re delivering worth more to them than it is to you?

Pricing Your Work Based on Time

As you progress in your freelancing career, you inevitably become better and better at what you do. This usually means you get faster and more productive. For me, I can design and code a WordPress theme in half the time it took me to do so one year ago. My skills have become sharpened over time. I’m more experienced using my tools so I know how to get the most out of them.
Does the fact that I work much faster now mean that I should charge less for what I do? No. If anything, I should be charging more (I’m able to meet tighter deadlines than I was before).

Pricing Your Work Based on Difficulty

How many times has a client asked you, “How hard is that?” As a web designer, I get asked this question all the time. Client’s don’t know how to design and build websites. They don’t know about the complications involved in various browsers and whatnot. So they ask me how difficult it is for me to deliver what they need.
I think many of you would agree that most of what we do comes natural to us. That’s why we’re good at what we do. We might not call our work “easy” because it may be very complex, but I wouldn’t necessarily call it “difficult”. There are challenges and we meet them. That’s the nature of Web Design (and likely your industry too).
Does this mean I should undercharge for my work because it comes natural to me? No. I price my work based on the value it brings to my client.

Pricing Your Work Based on Value

Most of the time we’re in the business of serving other businesses. We should always assess the value that our services bring to our client’s business.
For example, a client may want an E-Commerce website to promote and sell their products. With the right design, marketing, and execution, an online store can bring an excellent return on investment for my client.
I have designed and built quite a few shopping cart websites. With each project, the time it takes to complete goes down while the quality goes up (as my design and technical skills improve). Since this work has become more efficient, would you undercharge for this type of project?
Of course not. We deliver quality expertise and provide value for our client’s business. That value should be met equally on both sides.