After taking a few courses last year to better serve my clients & improve my workflow, I realized I was underpricing my services. Here are 5 expenses that I now take into consideration when sending out proposals.
Grab a sheet of paper and write down every single app, membership, or subscription that you have for your business. Now add up all of the costs and see what that number is—are you surprised? Because I sure was!
Here’s a list of my software costs for the year:
- Squarespace Subscription
- Cellphone Bill
- Domain Name
- Freelancing Females
Yearly total = $2,233.74 CAD
This is different depending on where you live, but in Ontario, our tax is 13% so this is a fee that I charge all of my clients. However, if I have a client outside of Ontario, I don’t charge this on top of the price, but I include it in the price—because I’m still going to have to pay taxes on that income. Let’s say the project is $1000, I would charge $1000 + tax for an Ontario resident, and $1130 for others. Another tip—make sure you are putting that tax into a separate account so that you have it come tax time. Trust me, I’ve made this mistake before…
3. Font Licenses
I have a Google Sheet that I track all of my expenses on for each project, and also just general purchases I make throughout the year. Sometimes I purchase fonts for a specific client project, but other times I purchase them because I like them and might use them down the line.
For client projects, this is a cost I work into the proposal. Let’s say I expect to spend $50-$100 on a new font, I will add this into the price, so $1000+$100=$1,100 that way, if I do need to purchase a font, it’s already covered!
I have had my iMac for over 4 years now, so I no longer add this fee into my proposals, but if you spent $4,000 on a new computer, camera, lens or other gear for your business, this is something you should consider when pricing a project.
If you take on 10 clients a year and you want to pay off the tech purchase in 2 years, divide that number by 20 and add the fee to each proposal.
Example: $4,000 / 20 = $200 so the project would be $1,000 + $200 = $1,200
I was always nervous about taking courses because I was worried on the ROI and making my money back. I was lucky that both courses I took last year I immediately paid off with client projects (thanks to you, Morgan Rapp). Again, this is a cost that you should add into your pricing.
Example: If you took a $3,000 course to learn to code, that’s $250/month so consider that cost. As well, if you’re taking a course to better serve your clients or up your offerings, RAISE YOUR RATES.
Want to get the template I use to track all of my expenses?
Well, lucky for you I’ve created one just for you!
Now, based on the above info let’s calculate the project total after taking our expenses into consideration!
- Project = $1000
- Software = $186.145/month
- Font Licenses = $100/project
- Tech = $200/project
- Education = $250/month
- Taxes = Above x 13%
TOTAL = $1961.84
This calculation is just how I do it, but feel free to adjust according to your expenses, how many clients you have each month, etc. Without charging your expenses, you would have only made $38.16 on a $1000 project.
I hope this was helpful to you and makes you realize that you should be charging more for your services moving forward. Of course, this is just MY way of pricing projects, but there are other ways of doing this as well. I’m curious to know how you figure out your costs!