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How to Charge What You're Worth
The penny-pinching, wheeling-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 appear defensive you risk losing a sale or a later referral. If you give in and offer a bargain price to convert the prospect, you give up some of your professional integrity and stumble into an ethical grey area (what about all those clients who were not offered 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.
"Your hourly rate is too high."
In the beginning of my freelance career, a prospect asked for my hourly rate. Being new to things and lacking a bit of confidence, I responded. The potential client asked if I just made the number up. I was embarrassed, to say the least.
Even if your hourly rate is $25, someone will challenge it. The key to responding convincingly, in this case, is to be confident and act surprised: "Really? I?ve found my pricing to be quite competitive in this area." Or, "Really? For (designers, writers, programmers, etc.) with my experience and skill-set, my hourly rate is very reasonable.?"
Most of the time, your surprised demeanor and casual confidence will simultaneously disarm prospects and let them know that you're worth your rate.
"This bid is too high."
When you've provided a bid to a client, you can be flexible. If your customer says that an estimate for service is too high, have an honest chat about pricing structure and your process. Explain what is included in your bid: research, brainstorming, travel, the actual implementation (writing, designing, programming), etc. If, after you explain all the elements of your bid, the client still feels that the bid is too high, you have a few options:
- 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.
- Take some time to crunch numbers. Perhaps you can come up with a smaller estimate by doing less research, brainstorming, etc. If you can remove some of your normal procedure and still provide a product of value, go for it. However, always explain to your client that you're making an exception, and that you're removing some elements of the creative process.
- Not working with the prospect. If you decide that the client is not worth the trouble or that the estimate accurately reflects the scope of the project, you might choose to part ways. Be professional: let the client know that you're sorry to have missed the opportunity and provide a referral to another freelancer that may be able to help the client.
It's important, in this case, to appear to be as flexible as possible without compromising the value of your service or product.
"I've gotten quotes for less."
For me, this rebuttal is always tricky: responses can come off as elitist or snobby. If you respond directly to the challenge, aren't you throwing a fellow freelancer under the bus for their shoddy work or too-low prices?
A diplomatic approach works best for me: "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."
You can get more specific if your prospect is asking for a service that is outside your specialty zone. For instance, "I'm glad you've found an affordable designer who specialises in brochures. Please let me know if you need help with website design in the future. I specialise in websites and I'm sure I could provide you a competitive estimate."
"Do you do pro-bono work?"
Alternatively, "I'll decide which freelancer to use after I review several projects."
Let's address spec work first. If a client wants you to submit a completed project to compete with other freelancers, I would walk away in most cases. A potential client is only going to pay you if they choose your project (in other words, you're gambling with your pay cheque). When declining, be polite: "Thank you for the opportunity, but my schedule does not allow for spec work at this time. My current contracted clients demand most of my attention."
If you do have time for spec work, you're hard pressed to gain a new client, or are looking to add some high-quality pieces to your portfolio, consider the project. But, make sure that your potential client knows you're doing it for your sake, not theirs: "Thanks for the opportunity. 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."
Now for pro-bono work. I like the idea of volunteering for two reasons. One: you get to help out and make a difference, and that feels good. Two: volunteering is good promotion for your service. So, make volunteering a priority if you want to, but be sure to schedule your time appropriately (you can't spend all your time on pro-bono projects, you have to eat!). A graphic designer friend of mine gives about three pro-bono hours per month on one client for the year. Only you know what your schedule allows, so plan your time accordingly. In addition, you should still have pro-bono clients sign a contract (this way you can use projects in your portfolio, stipulate that your logo appear on finished pieces, set-up the length of the arrangement, etc.).
"If you're so successful, why are you working at a coffee shop?"
In my spare time, I work at a local coffee shop. I'm positive that I'm not the only freelancer in history to moonlight.
Here's the thing: the coffee shop has been a source of numerous referrals and projects (not to mention the extra spending cash). I enjoy working at the coffee shop because it provides a break from working alone, a bit of social stimulation and outside inspiration. I don?t know about you, but my computer is not always the best companion!
On more than one occasion, I've had a customer ask why I'm working at the shop if I'm in business for myself. If you work a second job, do not get flustered or be embarrassed. Here's what I normally say: "As a freelancer, it's just me and my computer. I work here first, because I enjoy the conversation and being around people. I've gotten tons of connections from this place! Second, I find that I get inspired by all the stimulation. When I return to my work, I have a fresh perspective that helps me be creative." Usually, people respond positively to this response.
As a freelancer, we'll always come across people who want a bargain. When you can address common objections and questions confidently and professionally, you'll scare away the tightwads and make room for the clients that will appreciate and pay what you're worth.