I enjoyed this post, it’s difficult when you first start out to be the one who decides what your’e worth. When you are in employment, the wage is usually fixed or structured and you just ahve to decide if you’re happy with it, but if you had to think about how much your pay packet should be each month – which is what freelancers have to do with each project, money can become very confusing and uncomfortable.

I enjoyed your tips and think diplomacy is always key rather than cowering or getting angry. Good practical advice I’m sure many will benefit from here – thank you.

That was a brilliant article to read. I have also encountered some of these problems and they are tricky to deal with at times. I’ve bookmarked this!

Good advice for dealing with bullies, Lindsay.

With a nod to the elephant in the room, do you think we girl freelancers get a harder time than the boys? Would be interested to hear other opinions.

Thanks for that Lindsay. I’ll add some of your ideas to my hourly justification spiel. “65.00/hr. is cheap considering the amazing productivity I am able to achieve given my experience and in using the industries best computer hardware and software. For designers with my experience and skill-set, my hourly rate has been very well received” Nice!

Great post, a lot of good information here. We already practice a lot of this.

Something I would like to add about working from a coffee house. When clients ask us that or if we have a location, we politely respond by saying.

“Currently we do not have offices, we feel that office space isn’t required and the savings from not having all of the overhead is passed to our clients.”

Of course it is different for every occasion, but that is the just of what we say and 9 times out of 10, clients respond positively and are happy to hear that we have their best interests at heart. I normally land jobs with that line if that is something that the client is concerned with. We actually got a software development contact last week because of that very line. The client was so impressed that we would even consider it, he fired the other company he was working with and came over to us.

Nice article! Some good answers to some tricky questions and spinning them into positives. I enjoyed reading it, thanks.

Great tips! With these type of clients, their questioning doesn’t end after the biding process, they question every detail of the design, billing, or whatever they can milk out of you. If I can, I just stay away from client like this. They usually, not all the time, end up being more trouble than it is worth.

Spec work is not okay. Never. Providing speculative work makes it hard for anyone else to get an assignment without doing the same. It devalues a profession; design produced under spec is pushing pixels around and making stuff look pretty, rather than an attempt at defining and resolving a client’s communication problem.

Quote: “I usually don’t work on spec, but I do need some new portfolio pieces. If you’d be willing to sign a contract that allows me to use completed pieces in my portfolio, I’d be happy to submit a project.”

Except for projects under NDA, I’ve always retained the right to use client work in my portfolio. I retain copyright on my work. I charge extra if a client requires a transfer of copyright, and so should you. This is the norm in graphic design, at least among people who aren’t busy undercutting other practitioners, and the retention of copyright and of the ability to display work in portfolios is part of the standard Graphic Artists Guild and AIGA contracts.

Wonderful suggestions! I always hate debating about my pricing – it is what it is and, well, that’s all there is to it. The above ideas are great for flexibility!

I’m dealing that with a client right now.. the funny thing is that in the end he’s going with the most expensive option (with additional features) than I’ve originally quoted it for…

I’ve had clients argue my hourly rate, and your tips sure will come in handy next time this happens.

I never state a per hour or per day rate. It’s meaningless. And the people who demand to know those rates are tire-kicking powertrippers out to dicker you down.

One of the other problems that feeds this type of client is the freelancer who isn’t charging enough and who bends over every time someone challenges his/her rate. I know one guy whose rate philosophy in my market was to charge half as much as everybody else so he’d get twice the work. We pointed out to him that he’d be working twice as hard to make as much as we did, which just wasn’t a sustainable model. He didn’t get that. Even more importantly, he was devaluing the rest of us. ANy client who worked with him (and this guy did great work, by the way) began to expect that level of work/service for that price. If you know somebody doing this, sit him down and help him see the light.

I agree in every point but the last one.

I personally wouldnt work in my spare time, for social life I would preffer going with friends… anyway, whatever I do in my spare time have nothing to do with my clients.

To avoid the haggle sell yourself as a service rather than sell what you produce as a product.

Look at it like this… if you want to buy a new lawn mower, there’s nothing wrong with haggling over the price. If you get it cheaper, it’s still the same lawn mower. However, if you hire somebody to mow your lawn and haggle their rate down, would you still expect the same quality job?

Personally, I think it is important that clients know your hourly rate and at the end of the day they are paying for your time.

Wow, great tips. I’ll be sure to use them in the future.

I’d just add – don’t be scared to tell customer’s to go elsewhere if they’re questioning your prices. Tattooists don’t give discounts and will happily tell you to leave their shop for this kind of behaviour. Plus you could probably do without the hassle of dealing with this type of customer anyway!

Really useful article for beginner’s freelancers like me!
Thanks a lot.

Some good tips about handling those who like to dispute charges here.

One good way of explaining the rate is that as a freelancer, the hourly rate reflects more than your time on the project. On their project there’s admin, meetings and consultation time. Also part of your fee should be towards paying any rent you need for business, software and hardware upgrades.

When you factor all of this into the package it becomes clearer. If the client you are doing business with will not accept this then one would have to question their wisdom. Anyone knows it takes time and money to make a business work outside the realm of the actual work being completed, and for freelancers it is even more relevant.

Yes, totally agree with most of the comments here, especially Barbara Ling “I always hate debating about my pricing”. I am right in the middle of quoting for work at the moment and have a client who is haggling for me to convert a site I did years ago into something different because his business model didn’t work. It leaves you in a tricky position as the site they have isn’t working and it’s not down to anything you have done (or not done). So essentially they want you to fix their business model by deconstructing the work you have done, oh and don’t want to pay much for it.

Excellent article. I find real and successful business people respect your prices, as they know quality costs. Its the dodgy ones that try to scrape a deal…

Be warned of your friends too – they expect “mates rates”… lol Mates rates don’t pay my bills!

Excellent article! I have run across these types of clients in the past and I know I didn’t handle the situations adequately. With these tips, I’m sure I’ll make better presentations in the future!

Thanks!

Jeff Cross
http://www.jeffcrossphoto.com

Good article and tips, these situations are always difficult to deal with. From personal experience, I think a lot of times the companies that try to low ball you are the ones that if you do decide to renegotiate a rate with them, they always want more edits, more changes, additional add on’s etc, for free. They always argue well, we paid you xxx and this shouldn’t take much longer and I don’t think we should have to pay more.

If you do decide to do free pitch work to compete against other designers or agencies for the project not only do you run the risk of doing some free work and not getting selected but if your price is too high and another designer/agency offers a lower rate but the client likes some of your stuff they will just show the other designer/agency what you and any another non bid winning designers have come up with and ask for something similar.

Good article.

I can almost guarantee you (freelancers) that you’re not charging enough. Anytime we’ve raised rates, we haven’t see a loss in work. In fact, it opens you up to a higher level of clients (read: they have larger budgets).

What I’ve found over time is that no matter how much you charge, someone will inevitably try to get you to lower your price. And if you haggle or lower your rate, even as a good faith gesture, you immediately lower your self-worth and the worth of your work (what the work is worth to your client).

I believe there was another excellent point made in an article here on FS that talked about estimating — the difference between saying “it will cost about/around $___” v. “the cost to do ___ is $__ ” The former is negotiable, the latter is not. So pick a price/rate and stick to it.

I also don’t believe in defending your rates. There’s a reason why someone has requested a bid from you. A new prospect has seen the quality of your work or an existing client already understands the benefit their company will realize from it.

So don’t be afraid to raise your rates, you’ll be happier for it

I find the best strategy around the price issue to shift the discussion from price to value. I’m charging the price I charge because I’m bringing a certain element of value to the company or organization in question. The end goal is not that I’m going to design them a new web site. The end goal is that I’m going to help them convert more leads online, promote events more widely, communicate more effectively with existing clients, and so forth. It’s about value, not price. If someone’s way too focused on price, they’re frankly not worth my time or effort..I’d rather preserve my mindset for those who “get it.”

Rule #1: Never let your clients see you driving a nicer car then you. Working at a cofee shop can’t hurt either….

One of the other options when I client suggests your bid is too high is to ask them which one of the services you have enumerated they would like removed from the proposal. In this way you can fine tune the price, while reducing your investment in time, and in a few cases everyone can win in this scenario.

They’re very good responses to difficult questions. That’s the part about freelancing that I really don’t enjoy. I think you need to develop a thick skin too and not take it to personally. (Easier said than done, I know).

With the last job I did, I told the client my price. It was very reasonable, because I know that their business is also new and I was trying to help out. After discussing everything and I am ready to start, we discuss prices again and he came down with the price a bit.
For some reason I agreed to it, that I have decided not to do again. Right after that he started to add things to what we have discussed previously.
Why do clients think they can do this to freelance designers? They way I see it: I don’t go to the supermarket, let everything get rang up. Right before I pay I decide I need a block of cheese and potatoes. I can not go and just add it to the rest of my groceries without paying for it. It is suppose to work the same for designers and programmers. We might not have products on a shelf, but we do have services that comes with a price tag.

Another good way to deal with questions about your hourly rate or project quote is to refer them to the Project Triangle.

The Project Triangle has three sides: Good, Fast and Cheap. The idea is that any freelancer can be two of the sides, but not all three. I focus (with rare exceptions) on being Good and Fast, and my clients appreciate that, which is a fact I will tell any client who I haven’t worked with before that doesn’t know that about me.

Provided this is true about how you work (it would be very embarrassing to not work Cheap, but also not work Fast or do Good work), it will likely help explain why you are competitive in the market without leaving you with no other response than to put down the competition.

Wonderful article. I recently had a potential client become shocked when I declined the spec work. I explained that we didn’t do spec work, and it seemed like he got insulted. Too bad I didn’t read this article first, I suppose I could have been a bit more understanding.

On another note, people need to understand that quality reflects price.

As usual, fantastic advice. I tend to price my services by the result: here’s what you get for your $X. One service is called The 8-Hour Miracle, and its price might lead a client to think I’m getting an amazing per-hour rate. But in the description, I point out that it requires much more than 8 hours.

In general, if I get a major cost-cutting vibe from a potential client, I tend to walk away. People who want to bargain you down by implying that your services aren’t worth their cost are not people I want to deal with. Besides, odds are those folks won’t be happy with what you do for them because they’re convinced they could have always gotten more out of you for less if they had just undermined your rates a bit more. Who needs that?

Selling your services at “your” price comes down to exactly one thing: the value that you provide to the client in exchange for your fee. Whatever benefit you provide to their business is a platform for your negotiation. This alone removes the price discussion from haggling over arbitrary price points.

Let us not forget one essential fact. Many clients (usually smaller operations) are very dysfunctional and self-defeating, they will eventually fail because of the obsessions of the owner, and they would much rather lose $20 in revenue than pay $0.50 additional to the “money-wasting spoiled freelancer who is robbing them blind.” It’s important to see through the surface representations of some business people and grok that they would rather that you both fail, than you “win” and they get what they really need.

In fact, I’d say that most businesses are dysfunctional and will fail due to their own problems, and it’s the job of the self employed professional to find those that have a long term view of their business and who are good to work with.

This is such a great article, Thank You! I have been dealing a lot with this lately. I have been standing my ground, but these suggestions help. It gives me more ways to politely say, what I am thinking!

I like this reply “It’s great that you found a freelancer within your budget. If they meet your needs and fit your style, I highly recommend working with them.”
I am going to use it!

Great Advice!
I live in a notoriously cheap area for creative services… Duluth, MN.
My hourly rate is about twice as much as you’d find in the local area… but half as much as you’d find in an area such as Minneapolis.

As a result, I normally charge on a per-project basis and limit my local clients as much as possible. Sounds bad, but it’s survival strategy. Charging on a per-project helps hide the hourly rate as well.

Another key point is the cheapest clients are typically the most needy. They’re constantly asking for additional work, mutliple revisions, and try to slide in things on the side. A good revision policy helps with this aspect as well.

If you’re looking to break out of the hourly rate trap, take a look at Alan Weiss’ book, Value-Based Fees. Very well worth the purchase.

To expand a bit on what Colin wrote, I’d like to quote my writing partner, Brian Bass, who believes clients can choose 2 sides of the project triangle with these caveats: Good and cheap won’t be fast. Cheap and fast won’t be good. Fast and good won’t be cheap!

Thanks Lindsay. Over time I’ve found some good ways to answer those difficult questions.
I recently had to decline a job in a face to face meeting. (First time ever!) Their budget was completely unreasonable, but I made some recommendations and in the end we were able to work together. It’s good to be prepared to answer these types of questions, so you are not caught off guard or stumble to find the best answer.

Thanks everyone for your comments!

I agree with the vein of comments suggesting that quality reflects price, the biggest hagglers are the most difficult to deal with, and sometimes it’s best to just walk away. As freelancers, I believe our biggest asset is our inner red-flag alert. If I feel like I’m going to get a raw deal or a client is going to be just too difficult to work with, I follow my gut-instinct and steer clear of that working relationship.

I especially like the “project triangle” idea mentioned by Colin and Cyndy. I’m going to add this to my price objection come-back arsenal.

Thank you!

This is a great article. Thank you for the reinforcement.

One quick comment. I think that if you have a potential client who tells you you’re charging too much or that they have received a lower quote, you may be dealing with a person who doesn’t respect what you do or what you can deliver. I would be wary. It would be difficult (at first), but I would probably walk away.

I do have a question about one statement in response to “Your Bid is Too High”

“Ask if they’d be interested in a payment plan. If you have a normal fee schedule (mine is 50% upfront, 25% after the job is half-way completed, and 25% upon project completion), you might adjust into smaller, more frequent payment increments.”

If you’re half way through a project and on schedule, what do you do if the client drags their feet with the 25% half-way payment? Do you stop working or keep going to stay on schedule?

hahaha.. I loved reading this article. Lindsay you speak the truth Clients always seem to think creative folk are over charging them!

Totally agree with the coffee shop advice. I basically built a freelance writing and design career out of connections I made through working in a coffee shop full-time, which over time became part-time. Now I just go in and sub a shift once or twice a year when I’m missing the interpersonal interaction.

These penny-pinchers can be a real pain in the butt. They drain so much time.

Get this though – they don’t waste as much time as the folks who respond with Maybe all the time. At least when you have the answer No, you know that you’ve hit a boundary to work from. Maybe isn’t helpful at all, and is often the signs of some other non-committal response, like

* They don’t know how to say No, Goodbye to you because they’re chicken
* They don’t have the authority to say Yes or No, so you’re talking to the wrong person
* They’re not skilled at negotiation and are scared, so they’re nervous about giving you an answer

When you hear No, then there is still opportunity to get the price you want, perhaps by adding extras in, or delivering more, or quicker. Price isn’t the only factor in the negotiation. I think it’s always worth starting high and testing that, and then negotiating in the extras before bringing down the price!

If customers do not understand your rate, it’s because they do not understand what you can do for them. Hence they have not hired the right person for their needs, hence you will always struggle when delivering projects/products to them. If the fight takes too long, I would just drop them illico-presto!

Love this! Great tips!! It’s Amazing how people think a graphic designers services are not worth what they really are!

Good Tips Lindsay,
Its very useful, as I have experienced sometimes these type of clients.
Thanks for the article…

Can’t live with them and can’t live without them!

Does anyone know what was used to build the job board on this site? Is that Ruby on Rails?

Thanks for this insightful post. I humbly suggest building a niche (until you are perceived to be worth more than haggling), being patient and continuing the moonlighting.

However, you need to know when you are wasting your time and I always remember this example from when I was a student:

I was in a trendy bar where art degree students hung out and some of them worked behind the bar – artists supplementing their income with bar work. However, one bartender had left art college three years previously … and he was described as being “a bartender with a degree in art”.

Great article. The one thing to always remember is that if someone else is totally flustered by pricing or seeking for the Wal-Mart of freelancers it has more to do with them and their perspective than YOU. Good tips on ways to handle different situations in your article. One thing I have done is reduce items of value from a proposal to reduce cost but let them know they are getting less. Of course this only works if you are not compromising end product. I’ve found that it is best to trust your gut. If someone is not a good client for you…walk…in the end you’ll save yourself grief and end up making more money with more ideal, collaborative clients later.

Thanks for this very practical and useful advise. Even after seven years of freelancing, I appreciate your helpful advice, as occasionally a client can rattle me still.

Oh and yes, Michael, creatives are definately undervalued! Hmmph

Great article with some very useful tips.

The only bit I disagreed with was “If you do have time for spec work, you’re hard-up to gain a new client, or are looking to add some high-quality pieces to your portfolio, consider the project.”

I feel that if someone is asking for spec work, then you aren’t doing the industry any favors by providing it. If you are desperate to update your portfolio, there is always going to be someone more deserving of your talents than a client who expects to be able to “pick a winner”. If I was going to work for free, I’d rather offer my services to a charity, or make up a project that focuses on skills i want to develop, or do a freebie for a mate. Not for some schmuck who doesn’t value my time or services.

My response to tightwads who complain about my rate has always been, “I can cut my rate in half… but it will take me twice as long.”

THis has always been a problem for freelancers, and even for employees and agencies. But lately it seems that the recession has given people license to be even more difficult with budgets and pay rates. Of course it is understandable in many cases, where the people managing the projects are handed tighter and tighter budgets for creative work from higher-ups that are looking to cut costs anywhere and everywhere. But I’ve seen some pretty ridiculous stuff lately from companies that are pretty much recession-proof and are just low-balling because they feel like they can.

Maybe it’s just me, but I feel like it is much more common today to be asked to reduce hourly rates, cut overall project costs, even knock money off of a final invoice. I’m not inclined to do any of those things, but I’ve seen it happening more and more often. And in some cases, I’ve seen people comply with all three of those requests. The worst is the client who comes back at the end of the project and asks for a reduction in the final invoice. At that point there is no negotiating, no walking away. You’re just in a fight for the money that you are owed, and it’s a frustrating spot to be in.

They’re very good responses to difficult questions. That’s the part about freelancing that I really don’t enjoy. i think you need to develop a thick skin too and not take it to personally.
Thanks.

Great article! There is a lot more of this with they way the economy has gone, thanks for the reminder and refresher on how to handle it all.

James
http://www.alavri.com

A good deal of my business comes from referrals (which can be a double edge sword) and the prospects almost always expect the same rate that their friends get. So from jump I tell them that I prefer to work by the project. If people press on for the “rate” I rather walk away because more than likely, its more trouble than its worth.

Great tips

but I doubt if I said to someone:

quote: “It’s great that you found a freelancer within your budget. If they meet your needs and fit your style, I highly recommend working with them.”

I think he’ll think I’m rude

I rarely ever tell a client my hourly rate and only bid out complete pricing. If a client is making $40 an hour and you’re charging $60 it can make them feel uneasy about their income. Rarely do people realize that a lot of expenses come out of that $60 and what you charge and what you make are two different things.

One of the most effective things I’ve done to deter these kinds of reactions is just to post my rates (or at least rate ranges) publicly. I’ve found that, since doing that, very few people who want a “bargain” bother contacting me. I waste less time justifying my rates, and more time with clients who understand and appreciate value. On top of that, when I stopped making people contact me for quotes, orders from people who could afford my rates increased dramatically, and it contributed to significant earnings growth in a short period of time. I started taking that approach a few years ago, and have never looked back. For anyone who constantly gets low-balled, I’d suggest giving it a try. You can always stop if it doesn’t work for you.

Now I am wondering if I should try working at a coffee shop since I am so getting used to working in my home office. As for the budget, I usually ask my client’s budget and from there I will negotiate for a better rate with the workload that is appropriate.

As for pro-bono work when working with a charity…

I like charging them the full amount. But you have an agreement that that money will be donated back to the charity (you’re essentially trading checks).

What have you done? If you work it right, you’ll get a tax deductible receipt. At the very least, you’ll have a provable deduction for tax season… which will save you money.

“Spec work is not okay. Never. Providing speculative work makes it hard for anyone else to get an assignment without doing the same. It devalues a profession; design produced under spec is pushing pixels around and making stuff look pretty, rather than an attempt at defining and resolving a client’s communication problem.”

agreed. spec work hurts everyone in the design community. nice article otherwise. http://www.no-spec.com/

A professional should NEVER do spec work. If you’re looking for a new portfolio piece, there are TONS of non-profits EVERYWHERE who I’m sure would love to work with you. You might even get a referral out of it down the road.

We have just bought a new Macbook pro for 2500euros. We also bought Adobes top of the line creative suite for about the same amount. Thats 5000! Apart from the time it takes to go through create, design and implemímentation. Its that easy. You do it!
Getting into arguments about costs and charges is silly. Explaining the process is also. We often take pictures for our clients. But its not the taking of the pictures its the making of the pictures thats important. Editing, cropping, enhancing so that clients look the business. Try it! Take a picture one picture and put it into Photoshop and edit crop and enhance it. How long does it take? Then put it onto the site. An hour? 2 Hours? half an hour? It doesn’t matter. It costs what it costs. You need to take payment for the work!
Find out how much you need each month to pay yourself at least 6000 Euros a month. Because when you take into account tax, rent, materials, sending mail, receiving mail etc that is the absolute minimum you should be working for as a business!
Divide that by 160 hours minus your overhead and your left with what? Minus new purchases etc. 3000 a month! 750 Euros a week!!! It aint a lot and for most of you you will be lucky to get one project a month.
START TO TAKE PAYMENT FOR YOURS AND EVERYONE ELSES SAKE! The Baldchemist

Just for the record nice article, but it is not for clients, prospects or anyone else to tell you that your rates are too high! That’s your decision and your decision alone.

Great article!

I try provide a fixed quote based on the services requested. For clients with budgets that are within range, I will negotiate pricing by reviewing the scope of the project to see if there are any areas that can be removed, redefined or moved to a subsequent phase.

Serious business people/professionals would not expect that you work for free (or near free). Also, if the service provided is of any value to the client, they would expect to pay for it.

And IMO, I would not waste time with a a client that states “If you’re so successful, why are you working at a coffee shop?”

I recently decided to let go of a client who was just like this! She was always haggling down my rates. I should have done it earlier: she didn’t pay me for the last two assignments.

On the other hand, one of my best clients recently hired me DESPITE my higher than average rates. She admitted she had sticker shock so I said, “I completely understand if you decide to go with somebody else.” What do you know? She hired me!

Unless you’re a complete newbie, be honest about what you know you’re worth and stick with it.

On another note, I think it’s refreshing that you’re working in a coffee shop. Hmm that gives me an idea. Even though I’m now a freelancer I can still pursue those jobs I always thought would be a blast. Well, maybe when the kids are older

Great Article. This is the unfortunate thing that as a freelancer, I’ve dealt with on a continual basis as of late. Appreciate the alternative suggestions in dealing with things.

Great article, a lot of very useful points put forward in here and a lot to take away and think about. I look forward to reading more in future!

Thanks for the article. I especailly like the answer to use while working at a coffee shop.

Thanks for the article. The advice there and at the comments is great. I’m new to the business and sometimes I find it really hard to argue with the clients. This article gave me the answer to a few questions I had problems to respond to.
I would ignore the Coffee Shop question. Your answers are great, but the question is a bit too private for my liking.

I remember having a very obtuse potential client who thought my (reasonable) rates were too high. I was busy at the time so could afford to lose the job so said “Look! When you take your car down to car dealership for a service and it needs new pads, tyres, plugs etc. and they quote you £x for parts plus labour, do you try and haggle with car dealers rates? Plus, WalMart sell jeans for £10. Do you wear Walmart jeans or £60 Levis?”. I got the job for my rate.

This is a great article. I am going through this right now and this article will help me with those difficult conversations.

Very well written and insightful. How do you respond to scope creep?