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The price, more, less? how much?


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Ok, this is a difficult topic. I mean, very subjective, probably. The reason is that we deal with digital goods, so, there is not an initial expense to calculate. The initial expense is our time, our efforts and our dedication.

Anyway, while any of us has a different idea of initial expense when producing our products, I think that the best way to calculate the final quote is toward an higher margin, than a lower margin.

The reason is that we need to keep the prices "high" so the importance of our products is high as well. I explain, if you sell for just a few dollars, the word of mouth is that that specific product is worthless, not important, or mediocre.

And we don't want this. Since we all work with digital goods, as example, I work with music, I want that my music is considered important, not just because it's a work of art and talent, but also because it's considered of value from a price perspective.

So, when calculate your prices, consider this, do you want your product to be considered mediocre or important? Choose a balanced price of course, but toward an higher margin. That's all 😀

 

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I can say, even the internet, and the software you pay for in order to deliver quality services are expenses. When you are thinking about your price, you can also set it to cater for your time, your monthly internet bill, and your software subscription. You can't pay $50 monthly for Adobe products just to offer your services for $5. 

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Sometimes I'm amazed about services that has a quite low price according to the services they promised to provide. Someone has to talk about this. This kind activity are enough to waste a marketplace

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On 7/29/2021 at 9:50 AM, manuelmarino said:

Yes, the lower the price, the lower the idea customers have of the importance of the product.

And what is surprising is that there are TRS/Level 2 sellers who have been here for years, have thousands of good reviews, and still remain at $5. Maybe fear, who knows, but it is odd to see people charging far less than they should and could.

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On 7/29/2021 at 1:39 AM, manuelmarino said:

So, when calculate your prices, consider this, do you want your product to be considered mediocre or important? Choose a balanced price of course, but toward an higher margin. That's all 😀

 

Agreed. I pretty regularly have customers tell me they picked me because my price was higher so they believe I know what I am doing.

Also, and I know I'm not the only one that has observed this, but the customers who are willing to pay more tend to be more respectful of your time and expertise. I've learned the hard way that if I customer tries to haggle on price, they are going to be a pain to work with. I never lower my price when asked to now, because I know the ones who would have been a pain will go haggle with someone else.

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Thank you Rachel, for your wonderful reply. Absolutely true! Anyway there is an exception when there are customers haggling for a real reason, as example they really have low resources. Anyway you have to understand which customer you have in front of you with your intuition 🙂 

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I believe pricing is a formula. Entry Price + ( Variable Price * Value)

Entry Price is the cost of the basic stuff that you do with every project, no matter the project is (of course projects under the same category).

For example, if you do logo design, your entry price should cover you going from and to the office, firing up the PC/Mac/Potato, your average* cost for electricity, internet fees, etc.

Variable Price is an hourly based pricing, you can check the universal average hourly rate of logo design and multiply it by your personal rate (For example if you are new designer with a small expertise, your personal rate should be from 0.8 to 1.2, if you are a level 999 designer your rate will be 2.0 or above..). 

Value is a multiplier too (x1, x5, x10,..) based on:

1- The value of the client. Doing a logo for Nike is not the same as doing a logo for your butcher.

2- The value of the product you are making for the client and the risk you are taking. How important is the logo for the client? What if the logo fails? What will your client lose if the logo is failure, and how will it impact you, etc.

So the price is = Entry Price + (Hourly rate * personal rate * value).

* Average: how many projects you can handle a month and how much fees do you have, divide this by that.

 

 

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1 hour ago, rachelbostwick said:

Agreed. I pretty regularly have customers tell me they picked me because my price was higher so they believe I know what I am doing.

Also, and I know I'm not the only one that has observed this, but the customers who are willing to pay more tend to be more respectful of your time and expertise. I've learned the hard way that if I customer tries to haggle on price, they are going to be a pain to work with. I never lower my price when asked to now, because I know the ones who would have been a pain will go haggle with someone else.

$5 client: Wants an update every hour and 20 revision per minute.

$5000 client: This is the brief, see you later.

Been there.

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45 minutes ago, manuelmarino said:

Thank you Rachel, for your wonderful reply. Absolutely true! Anyway there is an exception when there are customers haggling for a real reason, as example they really have low resources. Anyway you have to understand which customer you have in front of you with your intuition 🙂 

Yes, I totally agree. And if I have a good working relationship with a client and they're going through a hard time, no problem working for a little less, especially if I already know that are no trouble. I have another exception, too. Sometimes a customer comes at me with a project I just really, really want to get paid to do - something that will be fun for me and will look good in my portfolio. I will offer a cheaper price for that sometimes.

Buuuut sometimes you find customers who *always* have a new sob story. And I have no problem gently turning those people away. Listen, friend, I have plenty of sob story of my own. My husband can't work anymore due to a terminal illness and I'm raising four. so don't even start. I'm just grateful I'm able to use Fiverr to keep clothes on my kids' backs while doing things I like.

I like what you said about intuition. It sounds corny, but my instincts have usually paid off pretty well in this area, too.

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53 minutes ago, rachelbostwick said:

I like what you said about intuition. It sounds corny, but my instincts have usually paid off pretty well in this area, too.

Yes, I believe a lot in intuition. I must say, hey, we are artists. If we are not intuitive... 🙂 mix with some logical thoughts and you have the perfect mix 😉

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