Pricing Strategies for Creative Service Providers
If you’re like many creative service providers, you might feel like you are always chasing new clients in an effort to finally make more money and build a sustainable business. Yet you may already be overworked, even burnt out, perhaps. But you know you need to increase revenue, and you’re nervous about raising your prices. Getting more clients seems like the right approach.
Ask yourself honestly: has seeking more clients, especially when you’re already busy, actually given you consistent income and security? If not, reconsider the core issue—your pricing strategy may need adjustment more than your client list does.
More Clients Doesn’t Mean More Profit
While more clients may seem to mean more profit, they also come with additional costs. This is especially true for creative service providers aiming for quality work or a high level of client experience. Managing several clients at once can result in declining service levels and clients feeling less of a priority. It can also leave you stressed and disorganized as you try to keep up with too many projects.
The Hidden Costs of Too Many Clients
Having too many clients can also be costly because it keeps you from spending time managing and growing your own business. When you run your own service-based business, a common rule of thumb is to designate about one-half of your working hours to client work, and the other half to operating and growing your business. For example, if you work 30 hours a week, expect to spend 10-15 hours on communication (emails, calls, etc.), marketing (social media, content creation, networking), and other operations such as managing VAs, bookkeeping, and website upkeep.
When you take on too many clients, you end up spending valuable time managing your business. This can delay email responses (leading to lost opportunities), hinder marketing efforts (impacting your pipeline), and cause you to fall behind on financial management (making tax season more difficult).
A Value-Based Approach to Pricing
It’s critical to focus on value, not just client numbers, to build a manageable, sustainable business. Start by asking: how many clients can you serve well at once? This number will vary based on your business. If client interactions are infrequent, you may handle multiple clients at once. If your services demand ongoing work and communication, your capacity may only allow for one or two clients at a time.
Consider how your client capacity relates to your overall revenue goals. If, for example, you decide to focus on working with one client at a time, and a typical project takes 1 month, then you know that you have, at most, the capacity to work with 12 clients over the course of one year. This doesn’t include time off for vacations and holidays, of course. Knowing this will not tell you what you should be charging your clients, but it will help you get a basic understanding of a range or minimum to charge for your services.
For example, if you know that you need to generate $160,000 per year to sustain your business, and your capacity is 10 clients per year, then you know that your average project price will need to be at least $16,000. Some clients will be more, and some less, depending on the scope of work. However, this is just the first step. Next, you need to shift your pricing from a volume-based to a value-based approach.
A value-aligned pricing strategy requires a shift in both mindset and practice, from focusing on the cost of doing business and project hours to placing a monetary value on the results you deliver. While consumers and creative service providers have long been conditioned to associate price with time in certain situations, your clients don’t pay you for your time; they pay you for results. As a business owner, you also don’t want to sell your time. In the long run, doing so is a losing strategy.
Your likely goal is to work less and earn more. Achieving this is easier when you recognize your expertise and the value you provide.
Fewer Clients, Better Revenue, Better Results
As you move your business to a “fewer clients” model, you will begin to see the many benefits of it. Working with fewer clients means you can give each of them more focused attention, as previously stated, but you can also set clearer boundaries and ensure the project stays within scope. From a financial perspective, you can generate more predictable income, and it may be easier to wow your clients and get ongoing referrals. From a marketing perspective, you might find it easier to get 10 new clients a year as opposed to, say, 25 or more. Finally, giving you a more manageable client capacity can allow you more space and freedom to create your best work.
Facing Fears When Raising Prices
Making the decision to work with fewer clients and charge more based on value can raise many fears among creative service providers. You might be wondering if people will pay your new, higher prices or if you’ll lose clients. You may even be wondering whether you’re qualified to charge higher prices or whether your industry will support them. While it is worth reflecting on each of these fears, it’s important to follow them up with actual data. In other words, while your fears might feel valid, they may not be grounded in what’s really going on.
In reality, most industries contain a wide range of service providers with varying price points, target audiences, levels and quality of service, and expertise. Some clients may not align with your new rates, but others will. It’s not a question of whether or not you should raise your rates; the question is whether or not you are aligned with the right clients.
Practical Ways to Get Started
If you are ready to start earning more with fewer clients, here are a few practical ways to get started. First, review your current offers and identify which are most profitable and deliver the best client results. This helps you see where your value is highest. Next, group your services to showcase the outcomes clients receive, rather than the individual tasks performed. After that, reflect on what working style with clients helps you perform your best. Identify when you feel most energized and engaged, and use these insights to guide how you present your packages.
Look at your client projects holistically. When you are at your best, and your clients are getting the results they want, what does the relationship and project look like overall? Take this a step further and determine the overall value for this level of service. While the specifics of your pricing are unique to you and your business, the message here is to raise prices strategically, with a focus on value over time, and build pricing that supports your capacity, your life, and your long-term goals. Pricing isn’t just at the project level. Strategic, values-based pricing creates the overall experience for you and your clients. It helps you build sustainability and can bring financial peace of mind.
Business growth doesn’t have to mean more clients or more hours. The real path to a more enjoyable and profitable small business is better pricing, fewer but better-aligned clients, and a focus on value over volume.
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A note on next steps
This article is meant to help you think more strategically about your business. Decisions about pricing, capacity, and growth depend on your goals, industry, and how your business actually operates.
If you’d like support applying these concepts to your specific situation, you can schedule a discovery call to explore whether working together would be a good fit.
