Determining a Fair Price

So, how do you establish what a fair price is? Unfortunately, there’s no universal answer, as pricing is highly personal and context-specific. Factors such as your industry, skill set, experience, location, speed, and professionalism all play significant roles. Furthermore, opinions on pricing methods vary widely: some freelancers advocate for hourly rates, while others prefer value-based pricing or fixed project fees.

However, there is one principle most can agree on, regardless of the pricing strategy employed. This principle acts as a reliable indicator of whether your pricing is equitable for both yourself and your client: the "double thank you" test.

The Nature of Transactions

In a capitalist framework, there are typically two types of transactions. In the first scenario, a recipient expresses gratitude while the provider responds with an acknowledgment, such as "you're welcome." This represents a gift exchange, where one party receives something valuable with little to no input of value in return. The financial outcome is decidedly one-sided.

The second scenario involves mutual gratitude. Picture your last trip to a café or supermarket, or a fulfilling massage session. Upon payment, you thank the service provider, and they, in turn, thank you for your patronage. In this situation, both parties perceive the value received as greater than the monetary exchange. This creates a sense of satisfaction and fairness—it's a classic win-win.

There exists a third type of transaction that is less favorable. In this case, one party expresses thanks while the other does not reciprocate, often feeling exploited or disappointed. This represents an imbalanced exchange, where one side leaves feeling dissatisfied.

Achieving Fair Pricing

Fair pricing boils down to this: any transaction that concludes with a "double thank you" signifies a fair exchange. The actual amount charged is less significant than the mutual appreciation for value received.

It's surprising how frequently people complicate the pricing process. There's no need for exhaustive calculations regarding living costs or intense debates over the best pricing method. What truly matters is the value delivered to the client.

If you find yourself undervaluing your time, consider raising your prices. Conversely, if clients are not expressing appreciation or returning for more work, it may be time to lower your rates.

When clients consistently express gratitude after each project and return for additional services, while you feel adequately compensated, you're likely on the right track. Keep up the excellent work. Pricing doesn't have to be any more intricate than this.

Interestingly, increasing your rates rarely results in lost clients; instead, it often attracts higher-quality clients. Many freelancers err on the side of undercharging, which can lead to undervaluing oneself. Ensure you maintain fairness to yourself before worrying about fairness to your clients.

Learn More About the "Double Thank You"

For further insights into the "double thank you" concept, check out the following resources:

• The double thank-you of capitalism on Wikipedia
• What makes something valuable, The Futur podcast episode 183 featuring Ron Baker
• The double thank-you of the market, by Steven Horwitz for IEA

Stay updated by subscribing to receive my best articles directly in your inbox.