Pricing Strategy and Receiving Payments

As a freelancer and small business owner, it’s so important to dedicate time to your business finances. I know I’ve said this before, but I strongly believe that keeping on top of your finances is what will allow you to create a sustainable business that works for you in the long term.

When I talk about keeping on top of your finances, I don’t just mean getting them organised once in a blue moon and then forgetting about them. You need to be able to look at them and analyse them on a regular basis so that you can understand which direction to take your business in moving forwards.

I designed my virtual coworking session, Focus on Your Finances, with this in mind. I wanted to make it easy for my mentees (and non-mentees) to set aside two hours of their time each month exclusively for their business finances. Those who have taken part so far have found that the extra accountability has really made a difference. It’s a lot harder to put off your finances and move them further down the to-do list when you have a scheduled appointment you’ve already committed to…

In part two of this series, in which I’m suggesting how to spend these two hours, I thought I’d deal with reviewing your pricing and receiving payments. I find that freelancers don’t check in on their pricing nearly often enough and are frequently working to an outdated pricing strategy. It’s important to remember that what worked for you six months ago might not be working for you now…

So, to help you get your pricing consistently right and receive payments from your customers easily and efficiently, here are five financial tasks you could try the next time you dedicate two hours to your business finances.

1) Look into time-tracking tools and test them out

In the interests of making sure your pricing is working for you, if you don’t already have a time-tracking tool, get one and start using it!

Time tracking is something I ask my mentees to do even before we start working together. This is because if you know how you’re spending your time and how many hours of paid client work you can realistically do in a day, you can understand precisely how much you need to be earning per hour.

In the same way, knowing how long a task is likely to take can help you price it accurately and make sure you’re earning enough from a project to make it worth your while.

I find that time tracking is often an eye-opening experience for my mentees. Besides helping you decide on your prices, it can give you a greater awareness of the value of your time, encouraging you to plan more and procrastinate less.

If you’re still not convinced, in this blog post on why every freelancer should be tracking their time, I share some of the benefits my mentees have encountered in their own words and tell you how to get started.

Finding a time-tracking tool you like is therefore a great way to spend time on your business finances. A good place to start is Toggl, which is the tool I use for my business. The free version does everything I need it to and even provides me with reports on the work I’ve done per client and per project. That said, there are lots of different time-tracking tools for you to try. Another one I’ve heard good things about from my mentees is RescueTime.

2) Get up to date with your invoicing and overdue payments

Getting on top of your invoicing and chasing up overdue payments is an essential task that you really should fit into your schedule at least once a month. It’s one of those things that often gets pushed to the bottom of our to-do lists but that we need to make a priority if we want our business to be sustainable in the future.

Of course, meeting client deadlines is important, but if we never actually get paid for the work we do, it’s a lot of effort all for nothing. We need to get into the mindset of prioritising our income by invoicing projects shortly after completion and insisting on receiving money from clients who haven’t paid us as agreed.

If you’re dedicating a couple of hours to your finances, check that all your recent projects have been invoiced for and that you aren’t overdue any payments. If this isn’t the case, issue any invoices you can and follow up with your clients to ask them to make payment as soon as possible.

Once everything is as it should be, ask yourself whether you could develop a better system to keep track of your invoices and any payments that are overdue.

3) Investigate invoicing tools and other software to streamline your process

Many freelancers and small business owners find creating invoices extremely time-consuming. If this sounds like you, spending a couple of hours looking into invoicing tools and other software that could make your life easier is a great use of your time.

Unlike invoices that have been created manually in Word or Canva, an invoicing tool can help you track when payments have been made, removing some of the admin burden. It also allows you to send automated payment reminders to your clients and link directly to ways your customers can pay you online. Not only does this make you more efficient, it also makes things easier for your clients.

I personally use Zoho Invoice for this purpose, but once again, there are lots of different tools to choose from. Another software tool I recommend to translators (and am an affiliate for) is LSP.expert, which allows you to create individual projects, tracking your time and sending invoices for each one. It now also offers multiple reporting facilities for your sales, profitability per client and expenses.

4) Consider alternative payment methods you could offer your clients

It’s not just invoicing tools that will make it easier for your clients to pay you; offering them a choice of payment methods will also help them pay in the way they prefer.

In my blog post on how to receive international payments, I cover a variety of payment options that you could consider offering your customers. Although this post was written with payments in multiple currencies in mind, the different methods can be applied just as well to single currencies.

When dedicating time to your finances, if you’re currently only offering customers the option to pay via bank transfer, you could also think about enabling them to pay by card or direct debit. The more options you can provide your customers with, the fewer barriers you’ll come across when making sure you get paid on time!

5) Carry out a review of your business for the previous month

This is how I often spend the two hours during our virtual coworking sessions. On top of making sure you get paid for the work you’ve done, it’s important to review how things have been going for your business recently.

I find a lot of freelancers and small business owners struggle to do this consistently, but it’s essential to see how your business is performing, take corrective action where necessary and make plans for the future.

This is also a good opportunity to check that your current pricing is still working for you. If you see your expenses shooting up and your profitability per client going down, it’s a concrete sign that you need to make some changes to your pricing strategy.

In this blog post on how to carry out a monthly business review, I run through the steps I take each month to assess how things are going and what, if anything, needs to be changed. This way, I can always be sure that my pricing is right and quote confidently on every occasion.

If you’d like to check in on your pricing or carry out any of the tasks mentioned above, why not join us for the next session of Focus on Your Finances? When we meet, we each say what we’re going to be working on, and we ask one another about our progress at the end of the two hours. The extra accountability really helps you to avoid procrastinating and concentrate on the task in hand.

To register for the next session and make sure you’re dedicating time to your business finances every month, click on the link below and get the date in your diary!

Sign up for Focus on Your Finances