Doubling Your Rate: A Thought Experiment
What would happen if tomorrow I forced you to double your rate?
If you bill hourly, your rate just doubled. If you bid by the project, you have to bid twice as much as usual. If you sell a product on the side (WordPress theme?), you have to double its price too.
For the sake of exploration, let’s ignore the understandable backlash from existing customers. Instead, let’s focus on the more interesting question:
What would you have to do to justify the rate?
Don’t escape the question by saying “That’s impossible.” I don’t care that there are crowd-sourced workers in Malaysia who can replicate all of Microsoft Office for $17.32. You already compete against them, and being 10x as expensive is the same as being 20x as expensive.
For everyone billing $50/hour there’s someone billing $100/hour and another billing $25/hour. It’s possible — the question is: How would you do it?
If you can answer the question, it could transform your freelance business. You could raise rates significantly. Or, if you just acted like a person worth twice as much money, you’d blow away the competition.
Here’s some ways to act like you’re worth twice as much money.
I know a freelancer who charges $110/hour for writing whitepapers and website copy. How does she get away with it?
She earned it by becoming an expert.
She’s focused on high-tech messaging and marketing. She doesn’t list a myriad of services she could provide, she talks about how her marketing knowledge leads to more revenue. She only takes high-tech clients. She writes a high-content blog which she uses to demonstrate that she’s a thinker, not just a wordsmith. She gives talks about high-tech marketing.
“Expertise” is the key word here. Not general, specific. Not broad/shallow, but narrow/deep.
To be specific, here’s what an expert looks like versus what a generalist looks like:
- Works for just one, well-defined category of customer / Works for anyone with money
- Can summarize specialization in one sentence / Can’t decide what “one thing” defines him
- Publishes regularly with new insights / Doesn’t leave evidence of original thinking
- Emphasizes tangible results from previous customers / Lists certifications and shows portfolio without context
- Blows clients away with depth of knowledge / Blows clients away with breadth of skills
- Sends quarterly newsletter to customers and prospective customers with interesting information and ideas / Sends automated greeting cards on birthdays and holidays
- Has one detailed case study on the massive effect she had on a customer’s business / Has 10 decent testimonials on LinkedIn
Being a generalist could sound appealing because you feel like you’re not “closing any doors.” But the tighter and stronger you define your niche, the more valuable you become to the folks who are in that niche.
Look the part
Some call it “a sad commentary on the shallowness of human behavior,” others call it “marketing” — you are a book, and you’ll be judged by your cover.
Lexus and Toyota are the same company. The difference between the lowest-end Lexus and the highest-end Toyota is negligible; indeed, next year’s high-end Toyota will be last year’s Lexus. So what justification is there for a Lexus to be far more expensive than a Toyota?
It’s branding — the shallowest type of marketing. It’s not content, it’s not quality, it’s not data, it’s just that Lexus has an “expensive brand” and Toyota is the “quality, hoi-polloi” brand.
How does this apply to you?
- Does your website look stylish and designed, or Web 1.0? Ironically designers often neglect their own website, too busy (understandably) working on paying gigs. Writers are often the most guilty.
- Do you show up to your interview/first-meeting in nice clothes? Not a stuffy suit (unless you live in a place like NYC or Boston where suits are expected), but not just street clothes.
- This doesn’t mean you should be slick, garish, or flaunty. “Expensive” doesn’t necessarily mean wearing diamond cufflinks — in fact it can work against you to look like you have a lot of extra money to spend. Being worth a lot of money is different from proving you have a lot of money.
Give little gifts of time
All freelancers struggle with the balance between when to charge and when not to.
For example, if a client sends you a short email requiring a short response, do you start the clock? On one hand, context-switching is expensive, little emails can add up, little tasks sometimes turn into big tasks before you know it, and you don’t want to establish a precedent of working for nothing. On the other hand, it’s chincy to charge for every little thing, waiting for emails to pile up might not work with your client’s time constraints, and you know it answering emails quickly makes a good impression.
When your hourly rate is low, this is a real problem. No solution is terrific — each choice leaves something to be desired.
But with a high rate, it’s not so hard. Yes, lawyers charge you just for reading a Tweet (rounded up to nearest 15 minutes of course, plus copy-paper charges for having to print out the Tweet and admin costs for having to file the Tweet), but you don’t need to do that.
At $100+/hour, doing the standard, on-the-clock tasks add up fast, especially if you round to 15 minutes.
And another thing: By establishing a high rate but not charging as many hours, the customer gets over the sticker shock once (when they hire you), but will repeatedly be thrilled with the fact that you don’t over-bill them for hours.
Finally, for a client that starts slow but then has a bigger project for you, you’ve established a high base-price for future negotiations.
So, what now?
Now that the juices are flowing — you probably have more ideas, plus here’s 5 more — what can you do with this high-priced mindset?
- Raise rates! If you act like you’re worth it, aren’t you worth it? (Here’s how to handle existing clients.)
- Get business even in a recession by being more valuable for the same money.
- Blow away competition by being more valuable for the same money.
- Take advantage of the virtuous circle: Writing expert articles and offering to speak gets you guest-posting and speaking gigs which gets you attention and clients which get you more material which …
Do you have more ideas for how to be worth a higher rate? Leave a comment and join the conversation!