Module 4 of 7
Your floor
Fully loaded cost, including your own time at a real rate.
Your floor is the number below which taking the work makes you poorer than not taking it. Most people who are underpriced have never calculated it, and are subsidising customers out of their own savings without noticing, because the subsidy shows up as being tired rather than as a line in an account.
Build it in this order. Direct costs for one unit of the work — materials, subcontractors, transaction fees, delivery, anything traceable to this job. Then your own time, and here is the discipline: count every hour the job consumes, not just the delivery hours. Quoting, revisions, travel, chasing payment, the administration afterwards. Cost those hours at a rate you would accept from an employer for the same work; if you would not do it for someone else at that rate, it is not your rate. Then your share of overheads: rent, internet, software, professional fees, equipment replacement, spread across the jobs you can realistically do in a year — not the jobs you hope to do.
The number that comes out is usually a surprise, and it is often above what the person has been charging. Two things follow. Anything quoted below the floor is a decision to lose money, which is occasionally a reasonable thing to do deliberately and never a reasonable thing to do by accident. And the floor is not your price — it is the edge of the cliff. Your price sits above it by a margin you chose.
Floor equals direct costs, plus every hour the job consumes at a rate you would accept from an employer, plus your real share of overheads. Below it you are paying to work.