The complete guide to getting paid
One of the hardest parts of running a client service business or freelancing is getting paid. Figuring out what to charge, how to accept payments, chasing late payments, and handling issues can be really challenging. These things take up your time and energy (and they’re not billable), and when things go wrong it can negatively affect your cash flow and the future of your business. This BravelyGo Guide is here to help you with every aspect of getting paid for your hard work, from setting your rates with confidence to preventing late payments to handling clients who won’t pay like a pro. What’s covered in this guide: Chapter 1: Setting rates and prices Differentiating between cost and value Calculating your freelance and service rates Pricing products Additional resources and tips Chapter 2: Invoicing clients What is an invoice? How to create an invoice What to include in your invoice Four common invoicing mistakes (and how to avoid them) Chapter 3: Accepting payments from clients Different ways for your business to accept payments The pros and cons for each method How to decide which methods you should offer (and which we recommend) Chapter 4: Handling payment issues When clients are slow to pay When clients don’t pay When you get a chargeback When you get targeted by a scammer Chapter 1: Setting rates and prices More of us are diving into the world of self-employment. One recent report from Upwork and Freelancers Union showed that freelancers are forecasted to become the majority of the U.S. workforce in the next 10 years. And millennials already have a head start—almost half of these workers are already freelancing. As more nine-to-fivers take the leap into freelancing or running their own business as a consultant, one of the early obstacles they often face is putting a monetary value on their products or services. If you’ve only ever been paid a flat salary, it can be daunting to translate that to freelance or consulting rates. And because you generally have more overhead as a self-employed worker than you would as a salaried employee, you have to factor in these expenses when setting your pay rates—otherwise, your bank balance could end up far lower than you anticipated. So, how exactly do you figure out how to price your products or services? While rates will vary depending on your industry and experience, we’re here to empower you with a few common ways to calculate your rates so you can get paid fairly. Differentiating between cost and value The first step toward setting your rates and prices is understanding the difference between cost and value. These two concepts can help you understand how to set rates that not only pay your bills, but potentially turn a profit. Here are the definitions, boiled down to their essence: Cost: What you spend to produce your product or service. Price: Your pay rate. This is the financial reward from a client or customer for providing your product or service. Value: How much your product or service is worth to your client or customer. For example, a freelance graphic designer creates a logo for a client. Stock images and vector images cost $50 and it takes 15-20 hours to create the logo, costing $75 an hour in labor. The total cost is $1,125-1,500, but the logo is far more valuable than that to the client. Because the client can use the logo on their website, social media channels, and all their marketing materials, the value is more than the cost. As a result, the designer may charge $2,500 for the logo.