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?

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It’s not unexpected that individuals and businesses have tighter wallets in this economy. This, coupled with people who have been laid off and are now starting up their own companies, can be tricky. Little or no money creates a difficult situation for folks trying to promote themselves, thus raising the number of times we service providers hear “no, it’s just not in my budget right now.”

When I first started freelancing, I thought the conversation had to stop there. “They’re simply not interested,” would go through my head. However, I’ve come to realize that responses like these are actually great starters for conversation. There are essentially three things we can do when we hear such a response.

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The coffee bean — a commonly traded commodity, like many freelancers.

Anonymous Corp was a small company that used several freelancers for writing and graphic design. When they decided to cut costs, each freelancer was asked if they could offer better pricing. Joe immediately offered to cut his cost in half. Karen pointed out that they were getting significant value for they money they paid her. She offered to help the client transition to a less skilled freelancer if they no longer required her level of expertise.

What do you think happened?

Basic economic theory says that when price goes down, demand goes up. I see freelancers applying this logic all the time in order to get more work. What most small business owners don’t understand is that this is based on the idea of commodities—products or services that are pretty much interchangeable.

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The penny-pinching, wheel-and-dealing, bargain-hunting prospect. As a freelancer, dealing with this type of person is part of the territory. Unfortunately, this is a delicate situation: if you come off as defensive you risk losing a sale or a later referral. If you give in and offer a bargain price to nab the prospect, you give up a bit of your professional integrity and stumble into an ethical gray area (what about all those clients who never got a deal?).

Because I’ve run across this type of person more often than I’d like to admit, I’ve developed some standard lines to deliver when my pricing is challenged.

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Photo by Endlisnis.

Recently a client of mine tried to low-ball me. She knew our standard rate for the project in mind, but asked if I would consider going lower–of course, just this once.

And I’m sure I’m not the only freelancer that this has happened to. After all, our global economy isn’t so hot. Some people are trying to get something for nothing, while others are honestly having a tough time. As a freelancer trying to keep business afloat, where does that leave you? Is there a way to deal with a prospect or an existing client who wants a discount, or an unreasonably low price? Is it better to do a one-time job on the cheap rather than “spoil” an existing client relationship?

Here are some points to keep in mind when a client asks if you can “go a little lower.” Hopefully they’ll help you assess whether or not you want to reduce your rates, and if so, what the future ramifications of that could be.

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Photo by kennymatic.

Have you ever heard of the Fast, Good, Cheap pricing method?

Clients should only be able to choose 2 of these 3 words and you must keep this in mind when pricing your next job otherwise your work / income / career could be suffering.

Fast, Good or Cheap – Choose Two

If you allow your clients to have fast, good, cheap work done by yourself then most likely you are working your butt off for very little return which is why you must allow them to choose a combination of two only – either good & fast OR good & cheap OR fast & cheap.

Below are some explanations of why and when to use each type of pricing method along with their advantages and disadvantages.

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Photo by from a second story..

One of the biggest struggles for many freelancers is finding a way to stand out from the crowd of others providing similar services. In many cases there really is a huge difference from one freelancer to the next in terms of quality of work, quality of service, specific services provided, experience, and turnaround time.

However, potential clients often seem to have the perspective that we’re interchangeable and all created from the same mould. Therefore, they usually see price as the main point of difference between freelancers.

If this is something you’ve been struggling with, you may reap significant benefits from developing a plan to successfully differentiate yourself from others. If you’re finding the intense competition to be limiting your workload or forcing you to lower your rates, take a look at what truly makes you different from the other freelancers out there waiting to land your would-be clients. More importantly, be sure that whatever makes you different is clear to those potential clients.

Differentiation can help freelancers in a number of important ways. The obvious benefit is more business, but there is also the ability to help you to avoid competing solely on price. If you’re tired of pricing your projects too low in order to secure and retain clients, find a way to be different than the others competing for the business. If you really are different, price comparisons become less effective for the customer, because they know they’re not paying for the same product. Continue Reading

Image by Seeding-Chaos.

This post is part 5 of 5 in our four-author series on perfect pricing and rates.

Most freelancers hate dealing with pricing. We would rather focus on what we do best, and as a result, pricing sometimes doesn’t get enough thought and attention.

Pricing obviously has a huge impact on how much money we make, but what about its affect on potential clients?

Ways that Pricing Impacts Clients

While these items are not absolutes, they certainly should be examined and taken into consideration as you are developing a pricing structure for your services.

1. Their Level of Expectation

When clients see a high price tag they’re going to expect a high quality of work. Of course, it’s possible that the client will not have an accurate idea of what price is high and what is not, but most will also look at the prices of some other freelancers and compare.

If clients expect a higher level of quality with a high price, is it safe to assume that they will expect a lower quality of work with services that are lower priced? Not always. Continue Reading

Freelancers spend an inordinate amount of time fretting over how much to charge. But there is no right or wrong answer when it comes to pricing. It’s all completely subjective and dependent on a wide variety of factors, including what the market will bear, geographic location, timing, aggravation factor (or lack thereof) and your level of desperation (hopefully low to non-existent), just to name a few.

If you are selling creative services, one of the things that can get in the way of clear pricing is the belief that what you charge is related to your value as a person. Wrong! It has nothing to do with you.

For example, a client will often ask, “How much do you charge for a web site?” or “How much do you charge for a brochure?” They ask these questions as if they are buying shoes or tomatoes.
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Winning a job in the freelance world often comes down to who is the more credible and more professional candidate.

It’s a sad fact, but many freelancers are inconsistent with their customer service and underwhelming with the quality of their work. In the several years that I’ve worked with freelancers, I’ve seen both unbelievably good work and unbelievably bad (as I’m sure most of you have as well).

When it comes down to the wire, your potential clients are trying to figure out which category you fall into: the good or the bad.

So how can you show that you’re an honest and hard-working freelancer? A lot of the time it’s the little things that count the most.
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Do you break into a sweat at the thought of raising your rates and having to tell loyal clients that you’re going to have to start charging them more?

Is your biggest fear that all your clients will walk away if you add even a tiny increase to your current fees?

As the new year is approaching, it’s a key time to get your business in order, focus on your strategy and ensure your business will not only be here this time next year, it will be thriving. Of course, earning the money you deserve for the value you add to your clients is a big part of that and many freelancers often don’t charge nearly enough.

One of the most common questions I get asked when coaching clients is “How can I raise my rates without losing any clients?”

So far, none of my clients have lost any of theirs once they’ve broached the subject of their increased fees and many, much to their pleasant surprise, have been met with the same response – “I’m surprised you haven’t done this sooner”. Continue Reading

NB. Want a job with SEOMoz? Check out their job ad on FSw jobs!

Image from iStockPhoto

I love discussing how much freelancers should and do charge, so when I came across a post at my favourite SEO blog – SEOMoz – on how much various SEO consultants charge I thought it was worth a link. Especially because believe it or not, SEO consultants go right up to a staggering $1000 p/hr – no that wasn’t a typo, I said one thousand with three zeros!

Specifically according to the site SEO experts charging on an hourly basis fall like this:

The simplest way to price a project is to charge by the hour. Rates in SEO vary with the lowest, entry level folks around $40-50, mid-tier consultants around $100-$200 and high-demand firms & people from $300-500. SEOmoz is obviously actively trying to limit our clients by going way outside the norm and charging $1000 / hour.

Aside from charging by the hour, the post also goes on to explain other methods of charging like:

• Pay for Traffic
• Pay for Rankings
• Monthly Retainer
• Modified Profit Sharing
• Standard Profit Sharing
• Contract Services
• Project-Based Consulting

The author – Rand Fishkin – also describes what projects tend to go for. If you’re a freelance SEO I highly recommend giving it a read.