This article clears a lot of things up for me when it comes to pricing. Nice article.

I quite agree. This is a bad time for freelancers to be selling themselves short.

Reminds me of Cialdini’s “Influence”

Phew! really an eye opener , I think i have been in this situation and know i think i know what needs to be done …. Thanks a lot

I like the coffee bean analogy, good way of putting it.

The only problem is that in some cases, clients will look at things like they would gravel. For instance, if a client puts out an RFP with specific requirements (implement this CMS, do this logo, this many pages, etc.), looking for a project that should be the same technically from all freelancers, pricing does come into play. I’m not talking about low cost bidding websites either, I mean stuff like government contracts and the like. Sure they won’t necessarily go with the lowest bid, but if there are a few proposals from freelancers with similar skillsets and experience (in the client’s point of view), price will be a major factor, especially if there are big differences. The problem is that that’s either what they are used to doing for other things, or they really don’t know the difference. And, let’s face it, some freelancers will overquote just as easily as they underquote.

This is definitely one of the best articles written here on FreelanceSwitch. I loved everything about it: the valuable info, the narrative style and that coffee metaphor… pure magic! A real eye opener, I’m sure!

Great article, Mark! Hope to see you around here more often.

Great article Mark, I think that making the distinction between offering a service, and selling your services as a commodity is extremely important. Very simple consumer psychology here, the higher (within reason) you price yourself, and so long as it’s backed up by a respectable level of quality and confidence, the more the client will value your service. Also as you mentioned Mark, your pricing flexibility really can affect a clients decision as to whether or not they think that you are good value. I think it’s extremely important to take care when handling pricing objections, as it all comes down to trust. If you quote a job, and then reduce that quote significantly based on an objection the client has, it can eliminate the trust between you, as the client will think that you were overcharging them in the first place. I think you should only adjust pricing as a last resort. Great stuff.

In times of economic meltdown, I keep on raising my rates and get more work than i can handle… I must be one of the most expensive designers on my continent and work just pours in….

funny heh ?

A very honest and meaningful article. It taught me something, and will help me endeavor to charge what i’m worth and stand my ground in these times and also when dealing with those tough clients.

Thanks for posting a great article, would be great to see what you else have to offer for the Freelancing Community.

You’ve got a great writing style that’s easy to follow and is understandable. As others have said, the metaphor was a great one – certainly one i can relate to.

Very nice and interesting article.

Didn’t see something like this for a while here on freelance switch.

I mean something that captured my attention and made me take a break to read the whole article.
Thanks

There’s something about this article that makes me think there’s a ton of fallacies at play with the arguments presented…. I’m not comfortable with the lines being drawn but don’t have enough coffee in me to come pick it apart.

Anyways, doesn’t really matter. The base concept is that price manipulation can influence perception of value. Which is true.

Price integrity is such a HUGE concept when it comes to work/services. This article really hit the spot for me. Thank you for giving suggestions to ponder on.

I have just been thinking about this while writing out a quote for a potential client. I would like to do the work but I don’t to sell myself short as I have done it in the past.

You not only devalue your work but you end with a seed of resentment which grows as the clients asks for little tweets and changes!

My conclusion was if they don’t like the price then they don’t value my work so they can go else where. In the end you get what you pay for.

There’s a reason why price is one of the four Ps of marketing – it absolutely has an influence on the buyer’s perception of value. That is why Clinique cosmetics never go on sale.

Well said. It’s automatically assumed that people will go for the “product” that is the cheapest. But when it comes to running a business, it is my experience that not many business owners will go cheap when it comes to marketing their business. Besides, history tells us that the companies willing to spend more time and money in this type of economy are the ones that set themselves up for greater success later.

@James – Obviously there are other factors at play. If you are a horrible at writing, you aren’t going to get more clients by increasing your price. However, there are great writers out there who are basically telling people they aren’t very good based on their pricing.

Once you get enough coffee I’d be interested in hearing the problems you see with it. I would also like to know what type of coffee you drink and whether or not you can differentiate between it and a less expensive brand in a blind taste test.

@Adrian – Thanks. I appreciate your kind words.

“If the client says they need a lower price, offer to do a four page brochure for $1,250.”
In the above case the prospect will not come back to say they need a lower price. By the time we as designer put a quote or estimate together they have mailed out the same request to hundreds of other designers and are waiting for the lowest quote. Only regular clients might ask if the price can be lowered.
Also finding about the prospects budget at beginning is very important, in which majority of the cases they do not enclose their budget.

Wow this article was super helpful! I find myself falling into that trap since I don’t get a chance at clients very often. Plus I am just too nice by nature, so I’m easy to go “oh that’s too much for you, no problem we can lower it!” I definitely need to work on that!! This article explains it so much better and thats what I needed, thanks so much!

Perfectly said. It’s all about cost versus value.

I’ve had some coffee. It wasn’t the cheap-ass no-name brand but the step above that had nice, compelling packaging that said, “Special coffee right here”, and definitely a step down from the pricey Starbucks that was available at the time that lacked any compelling packaging or copy to make me want to choose it. So, I’m going to pull out my rusty critical thinking training here and see where I get.

Bear with me – it’s long.

Here are the premises I see being presented:

Economics say low price equals high demand – I can accept that.
A commodity is something supplied without qualitative differentiation across a market – Agreed.
Freelancers lower their prices to get more work – True.
Some freelancers signal their services are a commodity – True.

Then I see something that says:

Signaling you offer commodities creates a downward pricing spiral – False.

I feel this doesn’t hold water. There are many factors involved in a downward pricing spiral, and establishing you offer a commodity service isn’t enough to start a price war.

Also, I feel this grates against a previous premise, that a commodity is something supplied without qualitative difference. You can offer commodity services, but if you have differentiation from other service providers, then you protect yourself against price drops. There’s more to what you give clients than the design or copywriting you create – customer service and experience, etc.

The situation gets a little more nebulous in the second half, which presents something entirely different:

Clients often don’t understand the creation value of a service – True.
Clients rely on price to determine quality – True.
Dropping your prices influences the perception of quality – True.

Therefore, if you don’t drop your prices, you aren’t offering commodity services.

Well, there’s where I scratch my head. That doesn’t make sense. Price alone doesn’t establish whether you’re offering commodity services or not. I don’t understand the tie-in with this set of premises to the first half of the article.

Plus, the conclusion you make is that heavily discounting conveys that you’re desperate. So I’m not sure what the main point of the article is, based on its conclusion when paired with its title of “Are you a commodity?”

Like I said, though. The point of price influencing perception (which I believe to be your main point) holds water.

Do I need more coffee, and should I have gone for the heavily overpriced and sadly undifferentiated Starbucks?

@crazywabbit – If you are bidding a $2000 job against hundreds of other designers, you are doing something wrong. If your client’s see your work as interchangeable with all the other designers then you are definitely seen as a commodity.

@Mark I am not bidding, I offer my price but the prospect is on the hunt for cheaper price. I am not doing anything wrong, the prospect is.

Nice article, if a client want’s a significant lower rate than what you offer usually they are the ones that want a million edits, they will call and email you nonstop, I try to avoid them. If they like your work they will pay what you ask otherwise they are just trying to rip you I think.

@crazywabbit – if your client is mailing their specs to hundreds of clients they have no concept of value. Trust me. You don’t want those clients. They will talk your price down and then work you twice as hard for half as much. They are the clients that always complain about poor quality and poor service but will call you at 10:00pm with some obscure question.

@James – I think you had too much coffee Marks article made perfect sense to me but your response kind of lost me. Then again, it’s late and I need some coffee.

I am definitely not dropping my prices, even in this economy, and has paid off.

It’s true, though, that I’ve commodified myself by providing a fairly unique combination of services, and specializing in sustainable design. Without that, and the high quality of work and customer service that I provide, I would likely have had to adjust my rate for the recession.

I find that it’s much easier to maintain a steady rate if most of your work comes from word-of-mouth, however, because then the new clients have some idea of what to expect and what they are paying for, whereas a new client who doesn’t know you except through your work might not understand the full value proposition that you offer.

I think CrazyWabbit needs the coffee more than I do…

@men with pens, I always read that mens with pen?s yes you may be right, let me mix some carrot juice with coffee see how that tastes

@ Crazywabbit – Probably better than the Nabob’s I had!

Excellent article.

Most people believe you get what you pay for. One of my clients could not afford Package A, but Package B was within their budgets. Package B doesn’t include as much as Package A, but that’s what they can afford.

Never short sell your self. You’re only ripping your self off.

PERFECT timing for this article – I was just considering raising my rates to get rid of some of the fluff.

Great job, Mark!

I realized what it is about the article that was bugging me, and that’s that there are a couple incorrect assumptions.

First is this : “once you get past a certain level of competency, clients have no real way to value your service.” No way. As HHB commented above, aesthetic service providers aren’t piles of gravel. Artists and writers create something with an intangible quality, yes, but just because it’s intangible doesn’t mean it’s not real, or not valuable, or not recognized. The vast majority of my clientele comes to me and says, “I want what you do.” When I ask in further detail, I often get the response, “I trust you. Just have some fun with it.” And I do and everything turns out gravy.

Second point : I think it’s a mistake to say that lowering your prices, or even doing a spot of pro bono work, enters you into the dwindling spiral. There’s something more insidious and inherently wrong with a business or a product if offering it at a temporary discount dismantles the business. In fact, it can do quite the reverse, if you play it right.

Third : To be fair, I should pipe in that I never lower my prices. Not because I’m afraid of becoming a commodity, but because I believe if someone wants what we designers/artists/writers do, they can earn it.

Thank you for the article. I need to stay firmer with my price.

Sotto voce: I’ve heard that there’s a recession going on. And I’ve heard that it’s a ba-a-a-ad one.

But let me whisper a little secret to everyone: My business is on the upswing. Part of the reason is due to all of that aggressive outreach (cold calls and warm calls) that I’ve been talking about in my Freelance Switch articles. I’ve also been working hard at improving my skills. (Martha’s unofficial motto? “Get better on every project!”)

The combination of these two things has led me to a much more lucrative clientele than I had before this recession.

Ya man! Don’t drop your prices.

I tend to be shy and lacking in confidence, and I hate conflict. I’ve definitely had trouble in the recent past sticking to my rate in the right way. I really appreciate this advice!

@James – Ok I see your point. The article assumes that freelancers are good at what they do and actually offer value beyond a commodity service. It doesn’t do anything about telling you how to become outstanding at what you do.

So it doesn’t answer the question “Are you a commodity?” Instead it addresses “Are you perceived as a commodity?”

Signaling you offer commodities creates a downward pricing spiral – False.

I feel this doesn’t hold water. There are many factors involved in a downward pricing spiral, and establishing you offer a commodity service isn’t enough to start a price war.

I agree that there are almost always other factors involved. I’m not trying to say it will start a price war over a particular quote. However, on average, if all your clients think of you as a commodity, it is going to push your prices down. (The exception would be if your prices are already the lowest, but that isn’t really who we are talking to here.)

Also keep in mind that within the context of the article, I was talking about a particular signal–making drastic price concessions without a cooresponding reduction in value.

@HHB – Yes there are jobs out there where technically you could interchange anyone. Those are projects I’m not interested in because I’m not adding unique value. If I don’t add unique value then it is going to be difficult for me to delivery extraordinary results. If I can’t delivery extraordinary results, then I can’t charge a premium for it.

@Charfish Design – I think you missed this part: “once you get past a certain level of competency”. I’m not saying that clients can’t tell the difference in output between a high schooler with Photoshop and someone with a masters degree in graphic design. I am saying that if you take 20 good graphic designers most clients won’t be able to tell who is better–at least not in any meaningful repeatable way. The client is going to have to rely on other clues to determine how good they are.

I love the distinction made between lowering your rate and working to accommodate a client’s budget. If you lowere your rate, you can only go down from there but if you tailor your services according to the clients budget you keep your rate in tact. You may make less on THAT project but you wont lose face with the client and you helped yourself cement an opportunity for reapeat business.

I’v had this discussion with a few freelancer friends of mine and here is what advice comes up the most :

1. Ask which of your portfolio pieces they like and see their project being similar to.

2. Ask them for examples of other work they like. It shows they have a genuine interest in the creative and how much they have thought the project through.

3. Be upfront with your rates from the beginning. It hurts less to lose a prospect early in the process.

Good article!

@LuisRoca

Excellent.

Thanks, some good tips

Here I thought becasue I was small-time that I could really help other small-time business people by giving them low rates. No wonder, I never thought of it this way. I will charge what I normally do and they can go elsewhere if they want less for less. I guess I thought that being kind should trump the old rule ‘you get what you pay for’.

I think the aspect of pricing that any freelancer needs to consider carefully is the *type* of clientele that you will attract with different selling propositions and different prices.

There are basically two kinds of clients:

1) Bargain shoppers – who will almost always sacrifice quality for lowered price, and who have various (often short sighted) behaviors of seeking “the best deal” at all times.

2) Pragmatic shoppers – who will generally buy what they actually need, in many cases regardless of the price. They may buy the cheapest toilet paper for the office at the warehouse club, but they know that they need a top notch image for their advertising if they are to succeed. (for example.)

The bargain shoppers are typified by scared, often neurotic acting startup company owners who may be moonlighting at a new business, and they are always scared to death of “paying too much” for anything – often because they have no revenue yet. They tend to get screwed over by freelancers who kill themselves to offer a “can’t refuse” price to them and then can’t perform or lose interest.

Also in this group are business owners who have a zero sum, distrustful view of things and shop “price only” on the assumption that everyone is out to screw them. This group tends to reinforce its cheapness by receiving such poor results from putting the screws to vendors that they literally believe that nobody provides quality.

The pragmatic shoppers tend to run established, stable companies with revenues, and are relatively successful. They look at the vendor’s past work, interest level in their job, and reputation, and they deduce (correctly) that the best person for the job will rarely be the cheapest. Mainly, this group doesn’t want to waste their money – they want it well spent. They don’t want a “throwaway” deliverable.

Each group tends to receive self reinforcing results in response to its tactics.

The same self reinforcement applies to freelancers who position themselves to work for each type of client.

Those who work for #1 – out of fear – afraid of raising their prices – and who never get to work with #2 client types because those clients see the low rates and assume that they can’t be any good – destroy their self esteem and burn out. The price pressure and hassle alone make you do less than quality work, and it never gets any better. Those who work for #2 types tend to prosper. They don’t have someone breathing down their neck asking why they aren’t as cheap as the offshore person who bid $3/hr.

#1 clients – the cheap – just plain suck – and are losers in business and in life. #2 clients -quality focused pragmatic types – are generally winners in their businesses.

Avoid losers because they will suck your life energy. Always charge at least at the median or preferably in the upper quartile of rates. This makes losers flee and gives a signal to the remaining good clients that you are serious.

And you are serious, aren’t you?

This was a great article. Pricing and business are always such dynamic subjects. I recently had an experience where I was sick for like 2 weeks and was out of commission. In the mean time projects should have been getting done. Because things were delayed as long as they were I decided to discount my bill on those particular projects and the clients were happy. In a situation like that, I think it shows you do care about the outcome of things and its ok lower a price in certain situations; and on the flip side there are times where you charge more because of a rush job, ect. It’s always exciting!

~Xtian

This time last year I intentionally gave myself a ridiculously low hourly rate (fresh out of University as a 23yr old), and yes the work came in quite steadily, and my client base grew, and I made contacts, and got experience – all good! Now I find myself working too much – the reason I didn’t decide to go freelance in the first place. I took a step back and looked at why I decided to work for myself in the first place..

I will gradually raise my rates in the short-term. If my current client base continues to benefit from my skills and experience, then I know I’ve offered a good service. If I continue to grow my client base, and take on new clients, then I know I’m still offering value for money.

As soon as either of these factors [a) Good service and b) Value for money] goes wrong I know my business is failing and I logically I will stop enjoying things as much I’m guessing, which IS all that matters.

‘Work to live, not live to work.’ – your health will thank you for it.

Good article Mark – very timely I feel.

Great article! My experience shows – when people are serious, they find the money!

Definately a brilliant article. It is really coming from true experience, one can tell.

I know I have won jobs because I showed I valued my work and stood my ground. Clients like that, they want to feel they are getting the best and most of out their money. They are in a constant battle in going with the cheap guy, but worried they may just waste their money or go with the guy who shows confidence and stands by his work.

As the article pointed out, there should be a proportional change in your pricing and actual amount of work you do, always keeping your rate, but making sure you work with the client.

More from Mark please

Excellent article!

Offering a different, more affordable project to accommodate a client’s budget, rather than lowering my rates (or turning the client away), is something I’ve been implementing lately. I’ve learned not to be afraid to tell someone my rates, or ask for a budget. I’m worth what I charge. Why should I be embarrassed to discuss money?

This is so true. There are times when you lose clients when you tell them your fee. From experience, these are the clients that
a. usually don’t understand what it is you do
b. do not treat your work as another professional service – they are still prepared to pay the plumber, doctor, lawyer what they ask!
c. want alot for nothing
d. are the “painful” clients that end up jeopardizing your reputation
e. not worth the trouble.
The number one rule is they “get what they pay for”. Pay crap, they get crap. If they didn’t want proper design services, then why on earth are they asking for them. The cheek.
Now businesses, corporation, marketing agencies, that understand the value of your work, will actually not use you if you are “too” cheap – the feeling being “they don’t ask for much, therefore they must be crap”.

This is a great post.

I just recently declined some work because the person was trying to “nickel and dime” us. Unfortunately, the end result wasn’t so sweet as with Anonymous Corp, but I have no regrets.

Just thought of this: a few months ago a client came to us for a small project and I gave him a quote. He found someone else that completed the work for half of what we would have charged. But guess what? He came back to us a week or so later complaining about what the other worker did. Not only did he end up hiring us, he also lost that money spent on the other individual/company.

Once again, great article. I couldn’t have put it better. We go above and beyond for our clients, so it’s best not to give in (but, of course, there will always be special occasions where promotional pricing is appropriate).

Totally agree with this post… So enlightening. Clients are actually paying for the type of service and quality you do as a freelancer. It’s like everyone can learn the software, but not everyone has the eye for design — something to that concept I suppose. Cheers!

Found this video posted on the Warrior forum not too long ago. While it’s geared towards writers, it also applies to designers and other freelancers and does a pretty good job of explaining how to avoid the pricing trap that a lot of freelancers fall into that’s mentioned in this article:

http://www.copywriting.tv/SayNo.html

Wow this is such a well-written article…I agree one of the best on FSW. It is great advice too, this is definitely going to go in my archives as something to remember because sometimes you could so stuck on wanting to just get win over a client that you’re willing to drop prices and sacrificing your regular rates.

Good stuff.

I agree with you. It is absolutely right that if something is more experience, it has a more valuable position in people’s mind. But with economic tsunami, it is very hard for some freelancers not to lower their prices in order to fight for more work.

I don’t get you guys. Most of you who will not budge at the idea of lowering your prices to drum up new business in this bad economy will be back here complaining in a year about not having enough work.
Also you will be forced to compete with other designers who will start lowering their price to acquire more business all because of people not wanting to spend top dollars.
I also get the feeling that majority of you designers think that offering discounts, promotional or not will attract troubled client, this is a myth and not true. Majority are looking for savings in price and if you don’t offer it they will go to the next designer that will and is not ashamed of it.
So yes wait for the one that will pay you top dollars but you got to wait a long time meanwhile others are getting the work and getting their bills paid.
Don’t tell me designers who have kids expenses, mortgage to pay etc.. will not give discounting a chance.

Thanks so much for this. Great information!!!

Thank you for the article.

I design hanmade wedding invitations in my free time and I don’t work with the clients that want a cheap deal. I send them to a company that sells mass produced invitations. However this means I still need to keep my dayjob to pay the rent.

Agreed. Lowering your price whilst still promising the same value sends a message that you have over-charged on your initial cost estimate.

There hasn’t been a better time for this article than now. This definitely reminds many folks to stay consistent and stay the course. I find that the lower the rate, the more clients expect. In the end, the client does have a choice. Like my folks always say, don’t cry over what could have been, but be grateful for what you have.

Being a new designer i find it tough to fix on a price. However as this post illustrates i need to prescribe to the thought “my designs cost what they cost, i’m happy with it, if you’re not then maybe you should find someone in your price range”

In a recession, it is more important than ever to defend your margins and prices. Why? Four reasons:

1) If you lower prices to get (more) work, you may be stuck with those low prices after the recession is over.

2) Clients who are only motivated by price are unlikely to value your work or the relationship they have with you and, very often, turn out to be more demanding, later-paying and more difficult to work with than clients who are willing to pay for quality. Let your competitors have the cheapskate nuisance clients.

3) There is the risk of overtrading. In other words, you get lots of work but you can’t complete it quickly or cheaply enough and so your cashflow and profitability suffer.

4) Which is better: to fill 50 hours a week with work at minimum wage or 25 hours a week with work that pays double minimum wage? It’s the same money but with a higher price you’ll have more time to do other things like marketing or self-development or to sit by a broken teapot and grow a flower.

In short, it is better to do more marketing and offer better value to defend a higher pricepoint. Of course, if the bailiffs are at the door, it’s a different story.

A really valuable lesson.

In many ways, differentiating yourself from the competition by lowering your price, puts you in a certain bracket in the clients’ eyes.

You’re the cheap and dirty laborer, the person they turn to for their lowest common denominator work. Even if they do get a windfall and land a great account, it is unlikely they’ll entrust it to their cheapest option.

What you said about accepting a reduction only by obliging with less is spot on. If you accept the lower rate with no changes in your contribution, what that implies is you gouged them on the price the first time, and backed down when you got caught.

It should always be, “I can do it for less, but that means you have to do your own printing, DVD copies, etc and you only get one round of changes.”

This way, not only do they know you are flexible to make compromises based on their budget, they also become aware of the ‘extra’ services and concessions you make like rounds of changes, re-versioning and other ‘freebies’.

When they have a job with a better budget, they will be willing to pay your full price, because you’ve made them aware of the difference between your ‘reduced service’, and your ‘full service’.

Whereas, if you had reduced your price with no visible reduction in contribution, that becomes your price, period.

Consistency is professionalism, sticking to your guns is essential.
Great post thanks.

“So what happened at Anonymous Corp? They got rid of Joe entirely. They kept Karen on at her regular rate.”

Yes… and then required Karen to do Joe’s work load too, effectively cutting her rate in half anyway.

But she still has a job, I suppose.

Wow, this is an absolutely great article Mark. A good lesson that we all need to hear as every industry feels the crunch a little bit. Thanks for the reminder.

I would really love to believe this article, and it sounds good on paper, but it flies in the face of reality.

Look at the coffee example. One might assume the more expensive coffee is better, but decide that in today’s economy, they’ll go with the cheaper coffee and hope it’s good enough…. or just add a lot of sugar. It’s also interesting that you say people who don’t know much about coffee would conclude the more expensive one is better. Does that mean the more expensive coffee (or designer) really isn’t any better?

With any sort of service, such as home remodeling, it’s never a good idea to go with the cheapest quote. But I don’t know anyone who would go with the most expensive quote either. The winning bid is usually somewhere in the middle. Of course this article talks about one specific example, where the designer has an established relationship with the client. But when seeking new clients, your rates have to be competitive, especially in this economy when there are even more people out there looking for work.

I also don’t agree that offering a discount devalues your work. At my last job, I was involved in a CMS evaluation and selection. From the three final candidates, we were most impressed with the two cheapest offerings. And while the mid-priced one offered some nice features, I thought the cheapest product offered the best value and bang for the buck. When our department head went back and talked to the companies about a non-profit discount, the cheapest vendor could only come down a little, while the mid-priced vendor offered a substantial discount. What happened? The “bang for the buck” ratio swung in favor of the mid-priced vendor.

But like @crazywabbit said, new clients don’t usually come back and ask you to lower your price, they just pick someone else. And in this economy, I’d rather have a paycheck than none at all, and I don’t know any business owners who aren’t making decisions with one or both eyes on the bottom line.

The same is true with photography- especially wedding photography. I hear brides bragging about how much their wedding photography was. The more that is charged, the higher the perceived value of the goods or services will be.

Great article! Thanks!

I’m very interested in the responses to this article. I’d be interested in seeing the results of everyone involved.

In general, I think this way: whatever your price, the client has to think you’re worth it. That’s where selling comes in. Gotta know how to convince someone to buy!

I prefer to add value rather than give discounts, or give discounts while cutting services, like someone already mentioned.

Thanks!
This confirms what I’ve suspected, and it’s very helpful advice. Once we start underpricing our work out of desperation, we send the wrong signal.

So, so true!

I’m still a student in graphic design, and I’ve been selling myself short for a long time now. I’ve had the idea, that giving the clients a “student-discount” was a brilliant idea, but i’s not…
I haven’t gotten any clients on the contrary! I do however have ONE returning client, that I make logos for. And let me tell you: he always wants 10 logo-drafts for the price of one…
And as hungry as i might be – I do it! I’m Cheap!

But recently, when I have dared, I turn up the price just a little bit, and he agrees – almost too fast! So I’m concluding, that I’m too cheap!

I’ll have to change my pricing on my website, so I don’t come off as a comodity! Thanks for the tip…

Can anyone link me to an article or a list with prices, that I can lean up against?
I think I saw one here on Freelanceswitch some time ago?

@Marc
>The winning bid is usually somewhere in the middle.

I agree with you on this point. Certainly, I’m not suggesting you should price yourself out, but it is imperative not to make yourself unprofitable.

>I also don’t agree that offering a discount devalues your work.

I believe offering a discount with a implication that you will do the best you can but have to commit less time/resources is fine. The truth of the matter is with any facility, company or vendor, when 2 jobs crash in a resource crunch, with the same deadline/requirements/personality of client, the more expensive job will take precedence. There has to be a perception that the price premium buys the client better service, otherwise, we’ll all be working at cost price.

>When our department head went back and talked to the companies about a non-profit discount, the >cheapest vendor could only come down a little, while the mid-priced vendor offered a substantial >discount. What happened? The “bang for the buck” ratio swung in favor of the mid-priced vendor.

a couple of things I’d like to point out.

A non-profit discount is fine. There are certain jobs you do cheaper for causes, foundations or organizations you believe in. A more cynical view to take is that a good number of people that sit on the board of pro-bono organizations own many other profit driven companies that will hire you if they like your work. That, however, should not be the reason you do it.

As for the mid-priced vendor outbidding the cheapest vendor, one thing that might be worth pointing out is that it’s plausible that the cheapest vendor cannot afford to take a loss on the job as his margins are so lean. whereas the mid-priced vendor has accrued sufficient profit from other jobs that he can make a judgment call to outbid his competition just to get his foot in the door, or eliminate the competition. This has been done by video production houses anxious to protect their share of ad agency clients by underbidding jobs so that up and coming companies give up and go back to their own niches. It is not a long term solution nor the basis of their business model.

>But like @crazywabbit said, new clients don’t usually come back and ask you to lower your price, >they just pick someone else. And in this economy, I’d rather have a paycheck than none at all, and I >don’t know any business owners who aren’t making decisions with one or both eyes on the bottom >line.

This is just personal experience but most clients that award jobs solely on the basis of price are usually more trouble than they’re worth.

A passionate client who knows what he wants with a low budget is worth taking on.

A flunky of a big corporation that has been tasked by his boss to get it done and do it cheap rarely is.

The point is, if the job is to be done so cheaply that you cannot possibly commit the time and resources necessary to fulfill your client’s intended purpose, all you’re going to end up with is an unhappy client, delayed payment, possibly a bad reputation, and the botched schedule of your other paying jobs.

Ultimately, you have to weigh the monetary reward against the amount of time it takes you to get there.

I personally know a very talented young editor that apprenticed under me, and within 3 months was trusted sufficiently to edit online sessions with ad agency clients unsupervised.

Unfortunately, he was not assertive, and allowed himself to be paid $40/day. He’s now quit the industry and is unlikely to ever come back. It’s sad but being talented isn’t enough. You also need to be able to deal with people and negotiate.

@sean_hex
No where in your post did I see anything about the value that you offer as a designer. Does this mean that you feel all designers are the same and the only difference between them is the ‘proud’ ones that stubbornly hold on to their price and the ‘humble’ ones willing to drop their price?

>I don’t get you guys. Most of you who will not budge at the idea of lowering your prices to drum up >new business in this bad economy will be back here complaining in a year about not having enough >work.

Most of the people I know that hold on to their price are turning down work. I used to get calls from companies that wanted me to do it cheaper. I refused. They tried other people and called back again a month later.

>Also you will be forced to compete with other designers who will start lowering their price to acquire >more business all because of people not wanting to spend top dollars.

Again, do I want to be in the workhorse lowest common denominator menial work bracket? It’s not about the money. It’s about the frame of mind of your client when they only care about the money and not about the quality of work or what you can do for them.

It means that delivering good work to them is pearls before the swine. They want cheap swill. I don’t do cheap swill. If anything, as designers/film makers/creatives, we are in this line because we want to create good work. If money was all that mattered, we’d be bankers, very disliked ones at that.

>I also get the feeling that majority of you designers think that offering discounts, promotional or not >will attract troubled client, this is a myth and not true. Majority are looking for savings in price and if >you don’t offer it they will go to the next designer that will and is not ashamed of it.

Wrong, they are looking for value, which is drastically different from savings in price. How far can you stretch their dollar? Would they rather pay $4000 for a corporate video or $5600 for a video, website and print collateral?

If they can only spare $4000, offer solutions and options. Tell them it means they need to have less shoot days, less rounds of changes. Tell them it means they have to be more organized so they don’t incur more costs by wasting time (yours and theirs). They have to do their own color separation or replicate their own dvds. But don’t do it cheaper because they will be just as demanding as other customers if not more so.

Do not compete by being cheaper. Compete by offering more value. Compete by being better and smarter. Ultimately, know their goals and achieve them. Know their headaches and solve them.