How do you set a price?

I would start with a package, not an hourly rate. Define the specific result the customer will receive, and then set a fixed price for that. Next, test your pricing: after each five customers, increase the price and observe how the market responds. Also, ensure that your customer receives significantly more value than they pay. As a general rule, I use a factor of ten.

What pricing strategies are available for self-employed individuals?

From my perspective, there are two viable paths for entrepreneurs. Either you are extremely cost-effective, relying heavily on technology, processes, and structure. Or, you provide exceptional service, helping successful clients become even more successful. For most self-employed individuals, the second path is easier. In the middle ground, you gain no advantage, because being the second-cheapest option doesn't win you anything.

How do you calculate prices for services?

I calculate services as bundled packages with a fixed outcome. First, I estimate the effort involved: labor time, preparation, support, and costs. Then, I determine the value the result holds for the client. The price must cover both of these factors and allow for sufficient flexibility to ensure high-quality work. By offering a tiered pricing structure, starting with a basic option, a core offering, and a premium package, you can reach customers with varying needs.

How can I correctly calculate prices?

Answer six questions first: Who is paying? What are they paying for? How much? How often? How complex is the delivery? What profit remains? As a control, I use the ten-times rule. Your customer should receive approximately ten times the value of their investment, and ideally, the delivery should cost you only one-tenth of that amount. Also, keep in mind that an affordable, one-time product needs a large reach, while a high-value result can be achieved with fewer customers.

How do you calculate the hourly rate for a service?

I would recommend against quoting an hourly rate. Hourly work is often poorly compensated, and your client is interested in the result, not your time. Only at the very beginning, when you're building your portfolio, might an hourly rate be a temporary solution. For yourself, it's worthwhile to calculate a benchmark: the total project price divided by the number of hours you realistically need. As you develop templates and streamline your processes, you'll become faster, and that value will increase.

Pricing Your Services: Common Mistakes to Avoid

By Artur Neumann. Published November 2, 2026, updated November 2, 2026. 8 min read.

Pricing your services: avoid common mistakes, sell packages and test prices with real customers. My approach to margins, price tiers and the tenfold rule.

I run my business in Germany. Monetary examples use euros unless another currency is stated.

I once considered awarding a design project and reviewed several proposals. The lowest bid was €500, while a typical price would have been around €2,000. One provider, however, wanted €55,000 for the exact same project.

Many freelancers get their pricing wrong. Most undervalue their services, while others significantly overcharge. Both approaches can cost you clients and profits. In this article, I’ll show you the five common pricing mistakes I see repeatedly, and how you can instead determine a fair price for your services.

Two Paths to Success: Not the Middle Ground

In my experience, as an entrepreneur, there are only two paths to success. Either you offer extremely competitive pricing, relying heavily on technology, processes, and structure. Or, you are exceptionally skilled. Then, you help people who are already successful become even more successful, and you are compensated accordingly with fair and reasonable prices.

The second path is often easier for most freelancers. There’s always someone who prioritizes cost over quality and therefore offers lower prices. You won’t win that race. Being the second-cheapest option doesn’t offer any advantage.

Good pricing isn’t an end in itself. It allows you to build reserves, invest in better tools, hire good employees, and provide excellent service. This investment, in turn, allows you to improve your own performance.

Mistake 1: You’re Too Cheap

This is one of the biggest mistakes. Many are genuinely excellent in their field, but they don’t understand the value of their work, and they can’t effectively communicate that value. As a result, they charge too little.

This ultimately backfires. You can’t invest in your business, and you lack the flexibility to prioritize quality. When a project isn’t worth the effort, you may start cutting corners, even if you don’t intend to. Your clients will notice the difference.

With good pricing, things work differently. You don’t need to meticulously account for every small task. You can simply say, “This is part of our service.” You’re also available when the client has a problem. Everyone knows the internet provider where nobody ever answers the phone. You’re likely to have paid a few extra euros for better support.

Often, you’re too cheap because you’re offering the wrong thing. Some tasks simply don’t have much value to the client. You’ll never get paid a lot for those, no matter how good you are.

Mistake 2: You’re Unrealistically Expensive

The opposite mistake is just as dangerous. The provider who quoted €55,000 was far out of touch with reality. There was little to no professionalism in that offer.

You only command a high price for two reasons: either you deliver exceptional value, or you are a star everyone knows. If you’re just starting out, the first option is your only realistic path. Your price should reflect the value you provide and the value you can effectively communicate.

If you’re priced too high and unwilling to acknowledge that, you won’t be taken seriously. You won’t get new clients. That’s just as detrimental as being too cheap.

Mistake 3: You Never Test Your Price

I often ask freelancers: What did you charge initially, and what do you charge now? Surprisingly often, the answer is: the same as always. They chose a price once and never adjusted it.

This stems from fear. Fear of quoting the wrong price, fear of losing the client. I would advise you to start with a price and gradually increase it. A simple rule: after each five clients, adjust your pricing upwards. This allows you to see what the market is willing to pay for your work.

Finding the right price is more important than getting every single project. If you occasionally lose a project because you’re too expensive, that’s not a big deal. As an entrepreneur, you think long-term. If you offer a good product, you’ll find enough people who want it.

Let’s look at an example. Let’s say you charge €5,000 per project and have ten clients. Within those ten, there’s often one who would happily pay €10,000. Perhaps you offer them enhanced service or a premium package. Even so, your overall profit increases, and that client is even more satisfied.

You only find those clients if you’re willing to push your boundaries. That means being willing to lose a client. It’s not about playing poker; it’s about discovering who values your services the most. I now know exactly who my top clients are, what their personality profiles are, and who I enjoy working with the most. I want to maximize my earnings from those clients.

Mistake 4: You State Your Price Like It’s a Question

Some have a strong offering that solves a difficult problem for clients. Then, they state their price hesitantly, as if it were a suggestion.

State your price clearly. Explain what the client receives and what they can expect. Be confident and practical. The best clients don’t want to negotiate. They want to hear a number and know what they’re getting for it. Then, they say yes or no.

Conversely, I never try to haggle with the people I work with. If the price is fair for the service, I don’t fight over a few euros. Otherwise, the other person feels devalued, and that affects the outcome and quality. I’ll show you in the article Conducting a Sales Conversation how to state your price in a conversation and how to handle the resulting silence.

Mistake 5: You Offer Discounts Without Reducing Scope

I learned this very clearly when I ran my agency. A client receives a proposal and asks, “Can we do anything about that?” The provider responds, “Sure, 5,000 euros less.” That comes across as unprofessional. The client immediately wonders where the original price came from.

A better response is: “Certainly. What’s important to you? What should I remove from the proposal? Then I can offer you a better price, as we’ll be delivering less.” Discounts are only possible if there’s a reduction in scope, a limitation, or a return from the client. Otherwise, no.

How to Determine Your Price

Here are three key elements to help you.

Sell Packages, Not Hours

I would only sell hourly rates as a last resort, perhaps when you’re just starting out and building your portfolio. Hourly rates don’t get paid well. You can sell a package with a defined result at a significantly higher price. The client knows exactly what they’ll receive and what it will cost. You can plan better and manage your time more effectively.

Furthermore, there’s an effect that grows over time. When you consistently focus on the same problem, templates and streamlined processes emerge. You become faster. The price for the package remains the same, but your hourly earnings increase. I explain how to describe a package with a “before and after” scenario in the article Winning Clients as a Coach.

Create a Simple Pricing Tier System

For almost any offer, three tiers are sufficient:

Starter: A small result, delivered quickly and affordably.
Core Offer: A clear result with a healthy margin.
Premium: Personalized, faster delivery, and more support.

For example: a 99-euro AI audit, a 799-euro 7-day implementation sprint, and a 2,500-euro four-week collaborative implementation. A simple model is better than a brilliant one. Once real clients start buying, you can refine your offerings.

The next step is a package plus commission model. I’m familiar with this from copywriting. A copywriter receives a fixed fee for a webinar and, in addition, a percentage of the revenue, for example 10%. They create something once and then benefit from every sale.

This can be applied to many businesses, such as an agency, a consultant, or a service provider in sales. The logic is simple: if you bring a client an extra 10,000 euros, they’ll gladly pay you 3,000 euros for it. After all, you did the work. Your client should always earn more than they pay you. Otherwise, they won’t hire you.

Validate Your Price with the Tenfold Rule

As a rule of thumb, I use the tenfold rule. Your client should get approximately ten times the value from what they pay. For a product costing 20 euros per month, it should easily be worth 200 euros to them. Ideally, delivering that value should only cost you a tenth of that, or 2 euros.

This isn’t exact math, but the rule forces you to be specific. If your offer is difficult to sell, people often don’t understand the value it provides. I explain how to make that value visible before setting the price in the article Sales Psychology.

Finally, check the other side. Your price must make the promised performance possible. Calculate the time, preparation, support, and costs. After that, is there enough left over to work diligently? You can calculate that using the Margin Calculator.

Your Checklist for Pricing

Choose your path: Quality over mediocrity.
Verify that your price covers contingencies, service, and care.
Sell a package with a defined result, not an hourly rate.
Create three tiers: Starter, Core Offer, Premium.
Increase your prices after every five clients and observe the reactions.
State your price clearly and definitively.
Offer discounts only in exchange for reduced scope or a return from the client.
Validate your price using the tenfold rule to ensure your client receives significantly more value than they pay.

If you implement just one thing today, write down what you charged a year ago and what you charge today. If both numbers are the same, your next project is the right time to raise your price.