Pricing Your Services when Self-employed

Managing finances can be particularly challenging when you’re self-employed, especially if you have an irregular income. We spoke to money coach, Dennis Harhalakis, who gave us some useful guidance, particularly on the crucial issue of pricing your services appropriately.


Photo by Mediamodifier on Unsplash


What is the key money management lesson for self-employed people?

Self-employment is a really interesting space. I think it’s wonderful how tech developments have given so many people the chance to set up their own business, and they don’t feel they have to follow the traditional trajectory into work.
One of the main reasons businesses underperform or fail is caused by under-pricing. So, I’ll explain why this problem occurs and how people should approach pricing.

Know the full cost of doing business

One reason people under-price themselves is they have not calculated the full cost of what it takes to deliver their service. It’s a bit easier with products, because you can start with the costs of building and delivering them.  But when you’re providing a service, it’s not just a question of how much can you charge, but what is the total cost of setting up and running your business? That includes things like paying for your accountant, marketing and social media. You’ll need to factor in your days off plus a few sick days, as well as investments in yourself and your business.
Also, bear in mind you will spend a significant amount of time on essential tasks, other than specifically delivering your service, whether that be chasing invoices, pitching for new business or creating a social media campaign. For example, in my business as a money coach, I spend far more time doing marketing than actual coaching. So, you need to look at the overall picture, and understand how much of your time is spent providing your service, and how much time must be allocated to all the other areas you need to run a business. And are you pricing that appropriately?

Get comfortable with asking for money

The second reason that people under-price themselves, is that they don’t like asking for money. It’s a very personal thing – this is what I do, I’m giving you a bit of me, my time and energy, now can I have some money in return? It’s not easy, and it takes us back to asking for money as a child. And, if you ever had a negative experience (and who wasn’t told ‘no’ at some point?!), that stays with you. It’s worth recognising, because if you are going to run your own business, you do need to have a healthy relationship with money. You’ll need to price yourself properly.
If you are working for a company, you have a discussion at the beginning to negotiate your salary, and that money goes into your bank account for the foreseeable future. You have a level of certainty and security. But when you’re self-employed, that’s not the case: you usually have to ask for money, and you need to have that conversation with every client. So, you’ll need to get comfortable with that.

Engage with your finances

If you can’t manage your personal finances, then managing business finances will be challenging.
If necessary, find some help, because you’ll need to get on top of that for your business to be successful. You need to engage with your business finances; know where you are making money and where you are not. And even where you are making money, you need to understand the economics of that (e.g. the costs and profit associated with a particular service or customer).

How should you approach pricing your services?


Know when you can charge more

Be careful of falling into the trap of under-pricing because you have only just started your business. It’s OK to start lower, but you need to understand when you can charge more, e.g. once you have a little experience, some established clients or positive reviews.
You don’t want to compete solely on price, as illustrated by this concept of the £5 shoes:
If I offered you a pair of shoes for £5, what would you expect them to be like? You would think they are cheap and nasty, unfashionable, poor quality, would not last. All you know is the price, and yet you already have a whole set of low expectations and negative feelings about the shoes. People make judgments made based on price, assuming ‘you get what you pay for’.  If you are in business selling your services, you don’t want to be those £5 shoes.
Market research is a good place to start. Know what competitors are charging for similar services and set your price accordingly.

Put money aside for essentials

Make sure that you put money away to cover your tax bill and also into a pension.

Understand how to value your time

As I alluded to above, there is far more involved in any business than just providing a product or service – you may have heard about the concept of the 10 Hats of business? When you set up as a website designer, a photographer or a coach, don’t forget you are also the accountant, you’re in charge of sales and marketing, you’re head of HR and operations, many different areas. One minute you’re checking an invoice, next you switch into marketing mode to take a call from a potential new client, then you’re packing equipment for tomorrow’s job.
Either you need to do these things yourself or pay someone else to do them. You need to understand how to value your own time and work out when it’s worth paying someone to do certain tasks better/quicker/cheaper. And then you have to build it into your pricing, so it is worth getting some guidance on that. If you end up feeling ‘I couldn’t possibly charge that!’ then you need to seriously think how you might make things work, and what makes sense for you.

Get help & guidance

With all these factors to take into consideration, you can see why it is so important to price yourself properly.  That inevitably involves getting some help, maybe from an accountant or business coach. They can help you put a value to your time, ensure you have factored every aspect into your pricing model, advise you on what allowable expenses you can claim as a self-employed person etc. etc.
Finally, all power to people who set up a business, I think it’s a wonderful thing!


For more help or information, you can find Dennis Harhalakis at: Dennis Harhalakis

Cambridge Money Coaching

LinkedIn – Dennis Harhalakis

Dennis Harhalkis set up Cambridge Money Coaching to transform the way people think about money, helping to reduce stress and enabling them to make better financial decisions.



Find out more from Dennis:

Grad Bites: Managing Money when You’re Self-Employed

Grad Bites: Dealing with Debt

Understanding our Relationship with Money