There is a devastating pricing mistake that almost every freelancer has made. (Me included.)
Here’s what typically happens.
Say a potential new client calls you. She is the marketing director of a large company and has a project she wants you to quote on. It’s right up your alley. You’re excited! You want the work. And, if you do a good job for her, she could potentially send a lot more work your way in the future.
But first you have to quote the job. Hmm. How much do you charge?
You don’t want to take any chances. So you quote a low fee, a real bargain, just to ensure you get the work.
Big mistake.
Why? There are two reasons.
First, when you quote too low, you look like an amateur. It’s a red flag. The client thinks, “This writer is a beginner.” She wants to hire a professional who can work independently and write great copy, not someone just starting out who may need a lot of direction and hand-holding.
In a quick survey I did of writing opportunities posted at elance.com (an online job board where freelancers can bid on projects) virtually none of the low-ball quotes ever won. Not surprising.
But what if you do get the job?
That’s the second reason why quoting too low is a big mistake. You get locked in at that bargain basement rate. You see, when a new client receives a first-time quote from you, it’s like a calibration setting. That price level becomes fixed in her mind — and it is very, VERY difficult to raise your fees to that client later on.
Think about it. If you charged a measly $250 to design a logo, what are the chances that you can get $500 form that client for a similar letter later on? Zero. The client would balk at your 100% increase in fees. Even if you explained that you gave her a great deal on that first job, she would still feel ripped off.
Trust me. You don’t want to be locked in at a low rate with a client. I can tell you from experience, there is nothing more miserable than toiling away on projects that are paying you far less than you could have been earning.
Now, I can understand how tempting it can be to quote a low fee. There are a lot of issues that come into play. You want the job. You may feel uncomfortable or even too shy to quote a higher rate. You may not even know what the market rate is for a particular writing project. (And if this is the case, do some research and find out!)
But, despite the temptation, know that a client is MUCH more impressed by a writer who confidently quotes an accurate, professional fee than one who comes in at a low price (as if begging for the work.)
So quote the right fee (hint: it’s probably much higher than you’re quoting right now) and clients will take you more seriously. You’ll have a much better chance of getting the work. And you’ll earn more money, too.
—————————
Steve Slaunwhite is co-editor of The Wealthy Freelancer and author of the popular manual Pricing Your Writing Services.
{ 2 trackbacks }
{ 14 comments… read them below or add one }
Hi Steve,
Absolutely spot on! I remember years ago a client negotiated rates down with the promise of “much more work” in the future! That never happened.
I think that when you take everything into consideration, are not hasty with regard to providing a fee, and really cover all your bases, then that gives you the confidence to know that you’ve been fair and that this is what you honestly feel the job should cost. Not the other way around of trying to just set a fee based on winning the job or anticipating what that client might be expecting.
The hardest thing always is to stand firm to your quoted fee when you are “hungry, in debt or desperate in any way for the money”. I have discovered that it’s still best to stand firm because it affects you psychologically, particularly when in these instances the project involves much more work than you even anticipated!
Thanks Steve for writing about this!
Very true! I can’t believe how much money I have left on the table on projects because I was too nervous to ask for higher fees. Now I use value based pricing that I learned from Alan Weiss and offer 3-4 options in my proposals with my lowest option being what I probably would have quoted at if I had not offered any other options. It is amazing how many people don’t choose the lowest option, they push themselves up and I get even more money from a sale than I probably otherwise would have.
Like Steve, and probably everyone else I have bid low on a project just to get it and I have regretted it EVERY single time. I won’t do it any more it simply isn’t worth it.
I have had a bad run with quoted work, so now I just take on hourly rate work and give an estimate of the time it will take, as opposed to a quoted ceiling. I am finding this useful to “recalibrate” my estimates for quoting work in the future when I head back down that path.
I also agree about the low pricing – since I’ve increased my hourly rates beyond what I would have thought possible a couple of years ago, I’ve never had more work, and am also not locked in to low rates.
Great points, everyone! Of course, the best way to ensure that you quote the right fees — fees that are fair and reflect the value you’ll deliver — is to continually market yourself, even when you’re booked solid. Having a steady stream of profitable work ensures that you always make pricing decisions based on logic (what the project is worth), not emotion (I need to pay the mortgage!).
I know — easier said than done. But well worth the effort.
I agree 100% with you, Steve.
Sometimes when I quote my rate to a smaller company I feel a little bit bad because I know they’re going to gasp when they see it. Then I remind myself that if I quote low so they can afford it they will take it and then refer me to other small companies that can only afford the low rate. That would have me doing more work for less money. The opposite of my personal mission.
So even if it makes me cringe, I stay high and stay honest. It’s really for the best all around. There are less expensive writers they can work with and then come back when they can afford my rate.
Good article Steve.
Definately clarifying with buyers what they are looking for specifically will save a lot of problems in the long run
A potential client had an editing job that required fast turn around. She asked me my rate. I gave her my hourly rate (I do not adjust my writing rate down for copy editing as some people do). She said that my rate was a tad rich for her company (a major life insurance company). I asked to send me the job so that I could give her a firm quote. I said, “My hourly rate may seem high, but I’m fast. And effective.” She laughed and sent me the document. I did a quick calculation, sent her my quote – and landed the gig. She had received quotes for twice as much from people who charged half as much as I do. She was happy; I was happy. Win-win. I’ve just finished my SECOND job for her.
Do I land every gig that I quote on? Nope. And that makes me happy. It says my rate is right where it should be, for me. Set your rate; stick to your guns. If you don’t have work coming in, spend time marketing your services and looking for clients who can afford you.
Note: If you are looking for an industry rate standard, save yourself some time and stop looking; there isn’t one. You’d think there’d be a standard rate for something like a media release – standard format and length; a commodity, really. There isn’t. I know people who charge $250 dollars to write media releases and people who won’t touch them for under $1,250. Set your rate based on what you need to earn a living, on the value you offer and on the scope of the job — type of writing, required meetings, research and interviews, number of words/pages, approval process, estimated number of revisions and so on.
Paul Lima
hey steve! great points raised in this post, although I do find it frustrating sometimes that there are quite a few low ball bids that win some client projects on elance (usually the bulk article writing, $1/500 words projects, etc). I really do feel that if you bid too low on a project, your tendency also isn’t to give that project your best shot at all, and not giving 100% in the freelance writing business can lead to some roadblocks later on!
Paul – You said something that was so powerful, it bears repeating:
“If you don’t have work coming in, spend time marketing your services and looking for clients who can afford you.”
What most freelancers do is lower their fee when they need the work. Big mistake. Instead, we should all be working harder at promoting our services to companies that CAN afford us.
That’s a much better long-term strategy. In fact, it’s the only WINNING strategy!
Great posts! Now… it’s one thing to get all psyched up and tell yourself that you’re GOING to start quoting higher fees on your very next project, but it’s quite another thing to actually do it! If you’ve got a client on the end of the phone, it’s going to feel strange saying you charge $1200 for a certain type of project if you’re used to charging $750. Whenever you talk pricing, you ALWAYS want to sound confident and in control, but practicing live on the phone with real prospects is not the time to be experimenting with raising your confidence. So… get yourself used to your “new rates” by practicing reciting them in the mirror. Look yourself straight in the eye and say, “I charge $1,200 to design a logo” Or “My hourly rate is $100″ (Or whatever). Say it over and over again until you can take yourself seriously… then you’ll have the confidence you need to ensure your clients do too. This is one of those ideas that sounds ridiculous… but it really, REALLY works.
So if you’re going to make a mistake in quoting, it’s best to err on the side of being too high, instead of too low.
Of course, it’s best to be spot on, but I would say that if you’re quoting a fee, it’s best to quote high.
In the 80s, my mother and I owned a cleaning service based on the team-cleaning concept, long before that was the popular thing to do. Our fees ran from $60-$75. No one ever balked at the cost, which was a good deal higher than the going rate, because 1) the work we did was well worth the extra cost 2)we quoted a flat fee, not hourly, which was the custom at that time. Ocasionnally, a client noted it only took an hour and a half for two or three girls to spotlessly clean their home, as opposed to the cleaning person they had previously, who stayed all day. At that point, they would often say to us, “Your people were here for less than 2 hours! That’s $37.50 an hour. That’s ridiculous!” You can only imagine how we responded, of course.
The point is that a flat rate always beats an hourly rate. Something happens when you charge by the hour- the client becomes a babysitter, wondering how long you’re taking, and if you actually worked on the project as many hours as you did.
I’ve always found a flat fee to be far more professional in most instances and frees you from having to justify the time spent to the client. For very small jobs that might take less than an hour to complete, it’s good to know what your hourly rate is in your own mind so you can charge a minimum for those little things that come up.
Pricing your services is one of those hot topics that never seems to be answered. Freelancers are as much consultants as they are service providers and, as more and more people leave the 9-5 to jump on the freelancing bandwagon, your professionalism and personal USP will allow you to set yourself apart by charging based on what your services are actually worth, not simply on what everyone else seems to be charging.
@Pete Savage – exactly! Do the practice at the mirror. Then, call yourself and leave a voicemail, so that you can hear your pacing and your pitch. If your voice trails UP after saying your fees, you won’t be convincing to your client. Listen for hesitation, throat clearing. You can also ask a friend to call you or work with face to face.
@Paul Lima – thanks for posting this link!
- Maggie
Pete,
What valuable advice! You put the mirror talk idea so well. Some of us have heard about talking in the mirror with affirmations, but you remind us of the effectiveness it has in getting us to believe that we really can ask for – and receive – the top fees we deserve. Thanks for that.
Maggie, sounds like some more sound advice with leaving a voice mail to learn from how we communicate our fees and confidence. Great idea.
Kevin