How to Price Your Services to Allow for Volunteering and Unpaid Work
In my role as a pricing mentor, I’ve noticed that a lot of freelancers and small business owners have a drive to help others through their work.
One of the benefits of running your own business is being free to make decisions in terms of who you help and how you help them. There is power in small business as we can decide what we want to do and follow through on our wishes.
Having said that, it’s all too easy to fall into a situation where we're helping others at the expense of our own financial stability. If we choose to help others through our work, we need to make sure that our business remains financially viable. Are we earning enough to make ends meet and cover both our business and personal expenses?
In this blog post, I’m explaining how to account for volunteering and unpaid work in your pricing so you can make sure you’re running a financially viable business while still enjoying the freedom to help others.
How to price your services as a freelancer helping others
When you do decide to help others through pro-bono work, it’s important to make these decisions consciously and intentionally. What I mean by this is that you should fully understand the financial implications of your choices.
The first step to understanding them is to identify how much you need to earn from any given client to make their project financially worth your while. In Charge with Confidence, I show my mentees how to calculate their minimum hourly rate for a project by taking into account their business expenses and personal outgoings as well as the time they have available for paid client work. If you know what you need to be earning to make a project worthwhile, any decision you make to accept anything less becomes a conscious one.
With this in mind, it’s essential to then limit the scope of any discounted or unpaid work you take on so it doesn’t have a negative impact on your finances. If you agree to too much low-paying or unpaid work, you’re risking the financial viability of your business and your own financial security.
It’s important to remember that every time you accept a project that falls below the minimum hourly rate you need to be charging, the income you’re losing out on will have to be made up elsewhere. If it isn’t, you’re not going to be able to cover all your expenses and everything you need your business to pay for.
More often than not, the income you’re losing out on will need to be made up by either working longer hours or finding other clients who can pay more to compensate. When you know that this is the trade-off, deciding to help others through discounted or unpaid work is always an intentional action.
Pricing your services to allow for volunteering and unpaid work
One way you can make it easier to help others through your business is to build in a certain amount of pro-bono or discounted work as standard.
To do this, you need to put a limit on your pro-bono work and make sure you aren’t considering the time you’ll spend on these projects in your capacity for paid client work when calculating your rates. In Charge with Confidence, we always arrive at our minimum prices by dividing the total amount we need to be earning by the number of hours we have available to do the work. If you consider your pro-bono work among these hours, you’re not going to be earning enough to make ends meet.
Instead, if you want to build some unpaid work into your pricing, you can do this in a couple of different ways:
1) Set aside a certain number of hours to dedicate to pro-bono work
One way to build in pro-bono work as standard is to define a certain number of hours per week or per month that you're willing to dedicate to unpaid or discounted work. Once you’ve decided how many hours you want to set aside for this, you can reduce the billable hours in your rate calculations accordingly.
Of course, this will mean that your rates with fully paying clients will go up. But you won’t have to work longer hours to make sure your business remains financially viable as you’ll already have accounted for the unpaid work in your prices.
2) Decide on an income figure you’re willing to write off over the course of the year
Another way to build in unpaid work as standard is to set an income figure you're willing to write off during the year for causes you feel passionate about. Once you’ve decided on the amount you’re happy to sacrifice, keep a tally against that allocation whenever you do something pro bono. It’s a bit like recording an expense in that you dedicate a set amount to that specific purpose until it’s gone.
When building pro-bono work into your business this way, it’s important to increase your financial requirements in your rate calculations accordingly. By doing this, you’re making sure that your other clients are effectively compensating you for that amount. This means that you can afford to dedicate your time up to the allocated amount of unpaid work because you’re earning enough from other clients to cover it.
These are just a couple of ways of incorporating pro-bono work into your business as standard. However, always remember that when you earn more than you need, you can use that money any way you wish.
If you think about things from this perspective, a better approach may be to always charge full price for your services. In this blog post on pricing your services when all you want to do is help people, the final section looks at how earning more than you need to cover your costs puts you in a better position to support others.
When you have extra disposable income, you can donate money to specific causes you’re passionate about, or you can take time off from your business to volunteer. You’re already earning more than you need, so you can help those who will truly appreciate your support in a way that will benefit them the most.
If you’d like some help to calculate your rates so you can make sure you’re earning more than you need, you might be interested in Charge with Confidence. During the programme, we’ll look at your expenses and financial requirements to enable you to earn a decent living while running a business that takes your priorities into account.