That’s it ! You have decided to take the plunge and launch yourself as an independent auto-entrepreneur in Community Management / SEO / CWT Advertising / What Else… (delete as appropriate). Among the fundamental decisions to be taken when launching a business are: defining the name of your “box”, choosing the model of your business cards, buying your phone and … determining the price of your services. This last question being common to all entrepreneurs, this article will try to provide some answers based on my own experience as a consultant …
So we are talking here about a personal opinion and feedback and not about exact science. We also take the point of view of an independent consultant (auto-entrepreneur) who works alone, invoices intellectual services and does not subcontract.
Here is how to define a starting point: define how much you want to earn “net” per month, multiply by 2, add the fixed costs (a minimum package of € 1,500) and divide by 100. This gives the hourly rate you should apply in theory.
Example: do you dream of having 3,000 euros in your pocket at the end of the month? With € 1,500 in fixed costs, you should bill at least € 75 per hour, or € 600 per day.
- Why multiply by 2? Because taxes, levies and other social charges will take between 50% and 60% of your gross income.
- Why divide by 100? Because if all goes well, that’s the number of hours per month that you can bill on average. [C’est une hypothèse relativement optimiste]
Please note, this does not mean that you will only work 100 hours per month. This is the average number of billable hours per month that you should do at cruising speed (calculated over a year).
Of course, this is only an indicator. Keep in mind that for each hour of “work” (invoiced), you must devote a second to the development of your activity (customer search, marketing, networking, etc.) without counting the additional time necessary for accomplishing administrative tasks. (invoicing, accounting, various paperwork, etc.).
Take into account all parameters
The rule enacted above is only a starting point that should be clarified depending on the circumstances. One of the mistakes most often encountered by entrepreneurs who are starting up (whatever the sector of activity) is to be mistaken about the real cost of their activity.
A priori, as a CWT Advertising consultant, you have little “production” costs and they will essentially consist of a possible professional rent, travel costs and a minimum of laptop or smartphone type equipment.
Beyond the “visible” costs, we must not forget to take into account the costs that are less immediate, but just as important, such as depreciation and future investments, software licenses, training costs, etc. In the example, I took € 1,500 as a working hypothesis, it is a relatively modest amount if we take into account the only cost of additional training in a recognized sector..
The amounts advanced so far are largely influenced by your ambitions and your lifestyle (what you want to have in your pocket and your operating costs). In practice, you will have to take into account the environment and in particular the average prices charged for similar functions by your competitors.
If you have rates twice as high as the average … you have to be very good to justify them. Conversely, if you are half the price, you risk giving an impression of “low cost” and this is rarely compatible with a reputation for quality.
Be careful to compare what is comparable: we do not compare the prices of an independent with those of a (large) agency, and the prices charged in Paris, London or Brussels have nothing to do with those of Arpajon- sur-Cere.
If your prices are between -20 and + 20% of the local sectoral average, you are in a competitive situation. Outside these limits, you need a strong strategic positioning or a specific value proposition.
False good ideas
Be the cheapest
“Breaking prices” to win a market is tempting, especially when you get started, but it is (very) rarely a good idea, for several reasons:
- Discount price implies discount service. – Frankly answer, when we talk about RyanAir, do you mean “low price” or “quality service”?
- We will always find a competitor who will agree to work for even less – Ever heard of outsourcing in Ukraine, Madagascar or Tunisia?
- Above all, when a customer accepts a price for a service, it is very rare for them to agree to then revise this price upwards, even after years of good collaboration. – Now that you know the sales, private sales and other Outlet, you still often buy at the “full price” in stores?
Never forget: “If you pay peanuts, you get monkeys!” Always favor the quality of your services rather than the price.
There is only one case where being the cheapest is necessary: if you want to win a public contract. It remains to be seen whether having an “institutional” client is a good thing.
Make a reduction on the volume
Before agreeing to lower your rates by 20 or 30% in return for a large order volume, ask yourself 3 questions:
- Are you a qualified consultant delivering quality service or a package of laundry that can be ordered “in bulk”?
- Will your fixed charges and fees also be reduced accordingly if you lower your rate?
- Then, if you agree to make a 20% reduction in exchange for an order of 60 working days and finally your customer only orders 30 … what do you do?
Lowering the price of a product is devaluing it … To avoid this, be firm on your prices. On the other hand, do not hesitate to offer a reduction of 2 or 3% to be used on a next service if your customer agrees to pay you more quickly (such as when ordering or within 10 days and not 30 days at the end of the month as this is often done).
A recognized specific skill that does not get sold…
If you don’t have a specific skill, create it … or lower your prices 🙂
Give discounts to good customers
You have been working for a good client for several months and there is a great temptation to thank them by not giving them certain services or by granting them a discount.
Here again, to lower the price of a product is to devalue it … If you offer free services, it is that they are not worth much. Not to mention that the client quickly gets used to gifts and that he quickly risks taking your generosity for granted and always asking for more.
Not yet convinced? So imagine a restaurateur. In its clientele, there are the regulars who come every day and those who come from time to time only, because they also frequent competing establishments. Who is the most interesting to offer loyalty action?
To thank your good customers, bet instead on relationships and content marketing: send them a Christmas greeting card, promote them or give them priority access to your latest “White Paper” for example.
Whether you’re a carpet dealer or a marketing consultant, it’s the same … it’s a story of supply and demand. Since you have no control over demand, refine the supply. Your price must reflect the quality of your offer and vice versa. When you buy a Rolls, we discuss the options we will take, but we do not negotiate the price. You’re a Rolls, sell yourself accordingly.
In this regard I invite you to (re) read this article: How to become an expert in web marketing (or anything else) in 2 hours maximum (This is of course second degree).
One last tip anyway
Remember to stay realistic and pragmatic …
 You can take 80 hours / month for a more conservative assumption.
 For an “executive master” at post university level: from € 3,500 and this can exceed 2 or 3x this amount.
 You could also say “the price is forgotten, the quality remains”.
 Governments are paying poorly, late, and the principle of public tender makes it almost impossible to establish a solid and profitable customer relationship in the long term.
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