The Goldilocks Pricing Rule for Freelancers (Not Too High, Not Too Low)

Brian Hood (0:00)

This is the Six Figure Creative Podcast, episode 386

Welcome to the Six Figure Creative Podcast, where our mission is to help you turn your creative passions into a stable, reliable income. If you're in audio, video, design, photography, or really any other creative field, and you just want to learn from other successful creatives, you're in the right place. Every single freelancer has a Goldilocks zone for their pricing. And in this episode, I'm gonna show you how to find your own personal Goldilocks rates, where you're not charging too much, you're not charging too little. It's just right. And the goal is for you to stay booked, to stay profitable, and stay sane. That's the Goldilocks zone. This is something that I have obsessed over, starting probably in 2014 or 2015, so over a decade now of obsessing over this sort of Goldilocks zone. And after earning over 5 million revenue, I have tested lots of different approaches to pricing. I have overcharged and felt the thinning out of my own calendar and bank account because I was charging too much. I have undercharged and felt the soul-sucking pain of slogging through a project that I knew that I was being underpaid for and I hated my clients for. And I found the sweet spot in many different businesses, including my own freelance business. And I've turned this into a pretty simple process for my own trial and error that you can just follow and benefit from. So if you make it to the end of this episode, you will understand my four-step process for finding your own Goldilocks rates. And I'm gonna give you the three metrics that you need to track if you want to be sure you're in the perfect sweet spot. If you're new here, hello, I'm Brian Hood. This is the Six Figure Creative Podcast. It's a podcast that I've been doing since 2017, 2018

And the whole goal of this is to help you earn more money without selling your soul. Part of that is making sure you have perfect rates that are balanced, not too high, not too low. AKA the Goldilocks zone for your rates. If that sounds interesting to you, you're in the right spot. And I encourage you go back through our backlog. We have 385 other episodes that are business related topics to help you make more money as a freelancer. And only one of those, only one of those is about potentially selling your soul. Go find that episode. It's an interesting one. It's the case for selling your soul to make more money. There is a case for it, actually. But only one out of 386 episodes covers that thing. So let's talk about the Goldilocks zone. I want to start just talking over the two extremes. There's the too high and the too low. The too high is what I call or consider like the luxury mirage. It's like a mirage. It seems like you're luxury because you're higher rates. But this generally happens when you hear people like me or other experts, gurus, if you want to say, I'm definitely not a guru, but I pretend to be one. They say this, raise your rates. They say it over and over again. And I've probably been guilty of just saying, raise your damn rates. I've told clients specifically, raise your damn rates. And in certain cases, that's great advice. But in a lot of cases, you raise your rates simply because you hear this over and over again, despite the signs that you shouldn't raise your rates. And some signs you shouldn't raise your rates could be that you have an empty calendar. It could be that you have built up no real reputation that supports a more luxury rate type pricing, and you're not offering enough value for what you're charging. And this is the thing that I've said over and over again, but value does not equal price.

Value and pricing are two completely different things. They in no way, shape or form affect each other. The value of what you provide is given whether or not you charge any money whatsoever. You could charge $0 and the client will almost always get the same or more value out of the thing that you're providing. Now, there are some circumstances where not charging means they won't take it seriously. They won't get as much value out of it, et cetera, et cetera. But generally speaking, all other things being equal, the price has nothing to do with the value that they receive from your services, especially in freeland services. If you get into the education world, like coaching, courses, even software, if you don't pay for it, if you don't feel the pain of investing into something, you likely won't spend the time, effort, energy necessary to utilize that service or that product. So if you get a free software, you're probably not going to take the time to set it up and learn it and put it into your actual workflows. If you get free coaching or free course, you're not going to go through it or actually utilize it because you don't value it. So you will get no value from it. But I'm going to table that for the discussion for the side. Most freelancers, you're offering done for you services so you can provide those done for you services whether you're getting paid for it or not. So values whether they get, prices what you charge. And if that argument is true, then we could say that your price could be very high, luxury pricing, but the value that you provide could be way down here and basically beginner level. Chances are, it's probably somewhere more like you've worked your skill set up over the years. You've had some signs of success. You've had a couple fee seasons followed by a lot of famine seasons. You've heard the raise your rates thing. Maybe you raise them for a while and it seemed okay, but then everything fell off. You stopped getting clients, your schedule thinned out. It's generally going to be because your value is somewhere in the middle. It's that kind of like middle band area, pretty average, but your rates are above average. Anytime your rates are higher than the value you provide, you're gonna have a tough time. It's not a sustainable business. And the consequences of that imbalance is you're gonna lose out on great fit clients because of sticker shock. They're going to see the value you provide. They're gonna see the quality that you provide compared to the price that you are charging, compared to other people with that same quality level and that same price point. And they're gonna have sticker shock. They're gonna say, oh my god, I'm not paying that much for this service. I can get that same or better service for 50% less. And this is especially bad in situations where you have what I consider like portfolio building clients or anchor clients. Those clients, they are the anchor to your portfolio. Those clients that are like the premier clients, the premier projects that you could utilize to get a lot of other people, whether they're gonna refer a ton of people to you, or they're just no names in your industry that will lead to other referrals because you're associated with them. But you lose out on those because your rates were too high. That's double bad. You miss out on not just the money you earn from that project, but all future revenue that could have been brought back to the attribution from that project, the credibility from that project, the referrals from that project. Now losing out on bad fit clients because your rates, not a bad thing. That's not what I'm talking about here. But when your rates are too high, especially compared to the value you provide, you're gonna miss out on clients that would be a great fit for you. And that's not what we want. You also lose out on referrals or repeat clients. So your old clients will work with you. They'll learn about your new rates, and either they won't come back to you because they're just not gonna pay those higher rates, because part of it's they're just used to the old rates. And that's just part of the game. Sometimes you've gotta out price your old clients if they're no longer a good fit. But they're also not gonna refer people to you. So you're losing out on both sides of things. A client is a very valuable resource to you. They're gonna come back to you again and again and again. If you have that type of service that they could be delivered multiple times. If you're a wedding photographer, you're probably not getting that, but you are getting referrals either way. If you're good at what you do, you have good pricing, you're gonna get referrals. You're gonna miss out on both of those things if your rates are too high. Again, I consider the luxury mirage pricing. It's this mirage, this fake looking luxury. When it's reality, you're just a basic service. That's the too high scenario. The too low scenario is what I call the martyr zone. This is even more common in freelancing. I rarely see the luxury mirage, but I see the martyr zone all the time. This happens because you wanna stay affordable to everyone. You gotta soft heart. And that's a good part because you generally, your clients love you. They're loyal to you, they refer people to you, you stay busy, but you're scared of raising your rates because you don't want to let people down. You don't wanna feel judged. You don't wanna feel like you're too greedy. And generally, what tends to lead to this is this unhealthy relationship with you and money. You were raised likely to think that money is evil. You were raised likely to think that being greedy is evil, or that charging the value that you provide is evil. And the consequences are horrible. You will get burnt out. You will resent your clients. Be attractive to bad fit clients who don't respect you, they don't respect your expertise, or they just don't simply know how to be a good client because generally, if you have really low rates, you're gonna be attractive to a wide variety of people. And that wide variety of people will include some great fit clients, some okay fit clients, the bill paying work, and some horrible fit clients that you just never want to work with. And by charging where you should be in the Goldilocks zone, you will wipe out almost all of those bad fit clients, those low bottom feeder clients that you don't want to associate yourself with anyways. But that's not all. It keeps going. This is even worse than charging too much because at least when you're the luxury mirage, if you're getting any projects at all, generally, you're making a lot per project. You have high profit. You are not burnt out. You are actually eager for more work. In this world, not only you burnt out your cent a year clients, you're tracking bad fit clients. You also have very little profit between all your taxes you're paying and the expenses you're paying and everything to deliver your service. You have very little leftover at the end of the day, and you have a capped income. You don't have more time to work. So you can't possibly earn more. You've basically just capped yourself on how much you can earn. There's only so many hours in the day, and you're earning per hour is probably very low. And in some cases, you might be below minimum wage in some extreme cases. And so you're better off working McDonald's than doing this when it comes to earnings per hour. Now, you wouldn't enjoy it as much. I know that. But show me a burnt out freelancer who is resenting their clients because they're undercharging, because they're a martyr. And I'll show you somebody who would be better off somewhere else. But this leaves you in a spot where you have no nest egg. You don't have any money left for rainy days or famine zones. And so it's really easy for you to be wiped out. Look at it like any sort of human with a horrible immune system. Your bank account as a freelancer is your immune system. If you have a bad immune system, any little, someone coughs in your general direction from 30 feet away, you're gonna get sick. And when you're sick, you're miserable as a human being. Well, in freelancing, if you have a big ass bank account, you can weather the storm. Somebody could sneeze in your mouth, and you're gonna be fine. That's how strong your immune system is. What a disgusting thought. But you just can't weather the storm. Like somebody with a good nest egg, a good rainy day fund can. And when you're in the martyr zone as a freelancer, when you're too low in your pricing, this is where you live. The perpetual, I'm sick all the time, I am on the verge of shutting down as a freelancer because I cannot weather the storm. I can't make it through this famine season. And I can't lower my rates anymore to fill up my calendar. So let's talk about now the Goldilocks zone. And then we'll talk about actually how to find your own Goldilocks zone. Goldilocks zone is that sweet spot. It's where the price is high enough so you can deliver it an excellent value, excellent work, and still breathe. It's low enough so that clients feel like they're getting a good deal. They feel like, oh, compared to what I'm getting, this is at fair price. They may not say, this is a steal. God, we don't want that anyways. There's room for improvement there. The pricing is an elastic band. There is a perfect sweet spot in the middle where you're not stretching either way. There's pricing that's a little bit high where it's stretching on the high end, but they're still willing to pay it. And then there's a snap zone where the pricing just snaps and you're charging too much. There's also on the low zone where it stretches you. The lower you go, you can lower your rates a little bit and still be okay. You're not burnt out. You're gonna resent your clients, but you're the one eating it here. And it keeps stretching lower and lower, and then eventually snaps and you break as a freelancer. You have a mental health breakdown and you have to take time away. You get sick and have to take time away. Either way, your body will force you to recover from that burnout. And the sweet spot keeps you right in the middle. You're not stretching either way. If anything, you should be stretching a little bit on the higher price side in that elastic band. And this sweet spot is different for everybody. It depends on your industry, depends on your niche, depends on your own speed, the systems you have, the demand you have, the skillset you have. But no matter where you land in this, your Goldilocks zone should let you take breaks without guilt, go on vacations, take some time off, enjoy the weekends, work normal work hours, nine to five, eight hours a day, maybe nine if you're a workaholic. It should let you deliver great work without burning out, without resenting your clients, without resenting yourself. It should keep you busy without, again, burning you out, keep your calendar full, but again, not too full. And then it should allow you to reinvest in your growth. You always have money for rainy days, money for opportunities. You can go to that conference without stretching your budget out. You can hire that coach without going broke. You can buy that course. The Goldilocks Zone gives you a buffer in both time and money. So if the Goldilocks Zone is different for everybody, how do we find it for ourselves? We've got four steps for you. And the first step is something you're probably not doing, you probably don't want to do, but you need to do it, and that is track your shit. Track your shit. There's an old saying, what gets measured gets managed, meaning if you're not measuring something, there's no way you can affect that number. Just like if you want to lose weight, you need to weigh yourself every day. So you have those micro adjustments, oh, I'm gaining weight, I should back off, or I'm losing weight, I'm on the right track. But if you weigh yourself once a month or once a year, that's not a very good way to track how you're doing. There's no way to manage that if you're tracking once a year on your weight. And so with that sort of thought process behind it, there's some metrics related to pricing that you need to track religiously. And this is not on a weekly basis, this is not on a monthly basis, this is on a as it happens basis. As things happen, you track them. You track them in a place that you can refer back to and find. But the first thing you're going to track is your close rate. And how you track this is up to you. But the way I look at it is, how many opportunities do I close? And what I consider an opportunity is someone I've offered my services to. So someone might come to me with like a rates request or something, and I have no interest in working with them. And so even if I'm offering a bullshittingly high rate because I don't want to work with that person, or I refer them out to someone else because I don't want to work with them, I don't consider that a real offer. But if someone comes to me and they want to know my pricing, and we have especially a conversation around it, or even if I just send them like I used to do, send them an email with like a quote in it, which is the worst sales process possible, that's an offer. So for however many people you offer your services to, you should be tracking that summer, a CRM, a spreadsheet. You can have a sales call log. I recommend every freelancer do sales calls. They don't have to be overly formal. You're essentially just trying to figure out where are they now? What are they trying to accomplish? Diagnose, that's the diagnosis. Where are they now? What are they trying to accomplish? What's holding them back? Or what do they need? Essentially diagnosing their needs. And then prescribing a solution. Not a bunch of solutions. Not here's 16 options. Not here's three packages. It's here's the solution to the problem that you have or the goal that you have. So for every call that I have, I'm gonna put the name of the person, probably the email address of the person. I'm probably gonna put some notes about the person and the outcome of the call. Did I close them? Is it still pending? Or did I lose it? You can do that if you just do proposals. You can do that if you just do emails. You can do that if you do phone calls. You can do that if you do sales in person. Doesn't matter, just pick a method and stick with it. And every single time you have an opportunity, add it to the list and track the outcome. If you have a CRM, it'll track all this stuff for you. And here's why. By looking at your close rate, that is an indication of which way you might be going. If your close rate's over 60%, likely there's room to increase your rates. If you're under 30%, there's likely room to decrease your rates. Not always, but sometimes there's room to decrease your rates. And when I say sometimes, it's because there also could be bad sales issues. You might be bad at sales. You might be talking too much. You might be talking too little. You might be letting them run the call, or you might be running over them on the call. You might be offering too many solutions, or you may not be uncovering the real things that they need. But if you know your close rate, that is one good indicator to know which direction we go. And if you're between 30 and 60%, that's a good sign you're likely in the right spot. That's the first metric. That's the sales metrics. There's some other metrics we need to track related to projects. And I want you to track this after every project has been completed. You've been paid for everything. You've delivered all the files. You essentially are going to have all of your post-project breakdown covering this. And you can have this in a, could be in your CRM as well if you have one. It could also be just in an Evernote or a Notion document. It could be on a spreadsheet. But what did you charge for this project? How many total hours did you work on the actual delivery of the project? So actually working on client work. How many total hours did you work on the project related to admin, stuff that's outside of that? So meetings, sales conversations, prepping things, sending proposals, doing revisions, if you count that as a separate thing, bookkeeping, et cetera. This is always a difficult one to track because there might be things you have to do anyways. And you're like, I did like 30 minutes on this, but it was for like every project I did this month. Well, you can just say, well, I had four hours in this admin task and I had four projects. I'll just throw an hour on every one of my projects and call it a day. We just need to be reasonably close here. How many total hours did you work on delivery? How many total hours did you work on admin? And then did you actually enjoy the project or not? You can make this a scale, a one to three scale. I hated it. It was OK. Or I loved it. You make it one to five scale for a little nuance. I would never go above one out of five scale. You could also just do a gut check. And the gut check test is this. If I had to work with ten more clients like this and ten more projects like this, would I love or hate my business? Would I love or hate my life? And the reason we ask this is because you're building a business because you want to actually enjoy working in it. And there's going to always be things you don't like about running any business in the world or having any job in the world or doing anything that makes money in the world. There's almost always going to be elements of it that you don't like. But that doesn't mean we have to just crush our souls and grind our souls away every day working on shit that we absolutely despise with projects or clients that we absolutely despise. So if you start getting a lot of these, we need to inspect on, where are we getting these clients? Are we getting referrals from clients we hate? For other clients we hate? For other projects we hate? We need to just do a whole reset. We need to go find some leads or some clients that are outside of this horrible circle. But this is just basic lead maintenance. The true thing we're trying to really track here is, what is our actual earnings per hour? If you look over a month period, for example, you'll know from all the hours I worked this month, divided by all my project income for this month, this is my true hourly earnings. And you will likely be surprised. Sometimes you'll be pleasantly surprised, but more often than not, you'll be unpleasantly surprised by how little you earn per hour. And knowing is always better than not knowing. Because again, what gets measured gets managed. If we're afraid to know that we only make $12 an hour, when we think we make 30 or 40, because we have so much admin work, or so much extra stuff, or we were just filling out our hours, but when we actually track them, we do like twice the amount of work than we actually thought we did, I would much rather know that I'm actually earning 12 bucks an hour. That sucks. And I need to affect that. I need to change that in some way, shape or form. And that's where we get to our second step here. Once you get the first step done, again, that is just tracking all your sh**, knowing your numbers. What's my close rate? What's my actual earnings per hour? Those two things are really important for this. This is getting to our second place, and that is we have to kill all of your inefficiencies. And this is important to do before you worry about Goldilocks pricing, because slow freelancers force higher rates compared to efficient freelancers. If you're inefficient, you're slow, you're a perfectionist, you overthink, you overwork, you overdo, you redo, you re-redo. You will have to charge more than a competitor who is fast, who's efficient, who has their systems together, who has their processes together, who maybe even delegates some of the work, the people who get it right the first time, that don't second guess themselves, that don't overthink, that don't overwork, don't overdo, they don't re-redo. Those people can naturally charge less and still make more than you. And this is one of my biggest unfair advantages growing up in the music production world because I was so efficient in what I did and I had such low overhead that I could charge less than a lot of other studios in my area, especially my area, especially because I was in Nashville, or I still am in Nashville. I could charge way, way less than anybody in my competition, but still make more per hour, still make a higher hourly rate. There are studios in Nashville that have such high overhead and take so long to do some of the same work that I do, that they have to charge two to three times my rates in order to just make a small amount of profit, 20, 30% profit, if that, because they have millions of dollars of gear. They have either investors they have to pay out or they have loans they have to pay out. They have so many hours invested in doing certain things because their workflows require it, because they weren't in the box. They have so much hardware, so much routing, so many different things they have to do that I don't have to worry about. And so when I reduce all my work to where the only thing I'm doing is the highest leverage part of my job. It's the part where I have to be creative, where my skill set shines, where my sound as a music producer shows, when I just work on that, that's where I'm able to earn the most money. And so I did something called The Easy Eights. We have a whole podcast episode about this. It's episode 216 It's a while back, back in September 2022 It was three years ago, over three years ago. Episode 216 is called How to Spend Less Time Doing the Stuff You Hate, The Easy Eights Framework. You can get to it by going to sixfigurecreative.com/twoonesix.