As creative entrepreneurs, many of us feel a little shocked at first that we can be paid to do what we love, and even turn it into a career. What can be even more challenging is convincing those around us that it can be done. Often, there are “dream crushers” who tell us our passion isn’t profitable. That parent, sibling, friend, or relative never managed to earn money by doing what they truly loved, so they have trouble imagining that we can. On today’s podcast, we share how YOU can build a business out of your passion and how knowing your value is the foundation to it all.
What Should I Charge?
When I (Nicole) first started my photography business, I had no idea how much to charge.
There were so many options (should I charge by the hour, by the session, by the number of photos delivered?). I knew I wanted to make my passion, photography, into my career, but I wasn’t sure how.
To gain experience and build my portfolio, I was looking for second shooting gigs and connected with a very well-established and talented wedding photographer in the Columbus, OH area. When I told him that I was interested in second shooting for him, he asked what my second shooting rate was and I froze. I had NO IDEA what second shooters usually charge! I think I quoted him $500.00, which I now know is way over what an inexperienced second shooter should make on a wedding day. Needless to say, I definitely did not get the second shooting gig. If Clay of Red Gallery Photography is reading this, I want you to know that I admire your work and I still cringe to this day when I think about this story!
Let’s take a moment to name this FEAR of charging too much. Nicole’s fault in this situation isn’t necessarily that the price was too high, but rather that she didn’t understand her value in the context of the situation. She just threw out an arbitrary number and hoped it would stick.
Knowing Your Value
Before you can know how much to charge, you have to KNOW YOUR VALUE. In one of my other businesses, The Ambitious Filmmaker, where we help filmmakers build a financially sustainable business, we use the term, “The 100k Mindset.” The 100k Mindset starts with knowing your value. Chip and Joanna, Jay-Z and Beyonce, and YOU all have the same 24 hours in a day. One major piece of these powerhouses’ success is that they value and leverage their time. This is a learnable skill set that can launch a powerful, big-picture mentality.
Before arriving at a number or price, understand your goals. Small business owners often think SMALL, viewing pricing only in the context of what it takes to book the next client or make the next sale. However, our own experience has taught us to consider our goals first, then price our products and services according to what it takes to achieve them.
When we approach goal setting in any new business, we start with a “need goal” and a “want goal”. The “need goal” is the amount of income required to simply afford living expenses, like rent and groceries. The “want goal” is a stretch goal: consider what it would take to thrive financially. Such as supporting your family, paying off your student loans, taking a dream vacation, or increasing your savings. All things you want to be able to do solely with income from your business.
Determine Your Goals
Whatever your goal is, determine the income necessary for your need goal, and your want goal. Establishing a number transforms your financial focus from an ambiguous idea to an achievable objective.
For example, let’s say you own an Etsy shop selling home goods, a side hustle. Your need goal is $1,000/month and your want goal is $3,000/month.
Now, let’s say your average product in your Etsy shop is $50.00. In order to hit your need goal of $1,000.00, you have to sell about 20 products per month. To hit your want goal of $3,000.00, you have to sell 60 products per month.
So, how does this sound to you? Does it seem like a lot of products or does it seem doable? We want you to be confident in what you charge, and also encourage you to get a little uncomfortable. It’s okay to raise your rates so you are not overworking yourself and devaluing your product.
If you want to make the same amount of money or more, but in less time, raise the price of your product. When the cost of your average product doubles, you only have to produce half the amount to achieve the same goals.
Let’s do an example with a service-based business, using with the same need and want goals.
If Nicole had charged $250.00 per family session (which took about two hours to shoot and two hours to edit), she would need to do four sessions a month (16 hours) to achieve our need goal and 12 sessions a month (48 hours) to achieve our WANT goal.
Now, if she were to double her price, the time it would take her to achieve the same need and want goals could be cut in half! She could achieve her need goal in just eight hours a month, instead of 16. She could achieve her want goal in 24 hours, instead of 48.
Imagine: with 24 hours to spare each month, you could relax more with your partner, spend more time with your kids, or even work that extra 24 hours and double your income.
Your Goals Are Achievable
This can all feel really overwhelming when you’re starting your business, but when you’re marketing a new product or service, setting these goals allows you to know why you’re doing it, and exactly how many times you need to do it, to earn the income you want!
Your goals ARE achievable. Anyone can start a business they love. YOUR ambition can become profitable. It starts with building the framework of why you are chasing this dream, and some guidance on how exactly to make it possible. We’ve started a lot of businesses: some of them are successful, and some totally flopped. But much of the FREEDOM we have now is the result of the businesses for which we took the time to establish our goals first.
Are you regularly achieving your business goals on a regular basis? That’s amazing. Stop by the comments and let us know if you related to this podcast. If you’re not achieving your goals, first ask yourself “what am I worth”? Like we said, knowing your value is what creates a big impact. OR you haven’t even started your business yet because you’re too nervous about the money part? Decide now to take control of your business and move from simply surviving to fully thriving!