One of the tenets of wealthy freelancing is getting more out of the work you do. Getting more out of it in the way of enjoyment, satisfaction…and income.
And one of the best ways to boost your income is to raise your fees until they’re truly aligned with the value you deliver. Once you reach that level of parity, you must continually work to add even greater value, which in turn allows you to raise your fees again and earn a better living.
(You can also boost your income by improving your productivity, but that’s another post.)
Of course, when your fees are higher than the average freelancer in your field, it won’t be long before a prospect balks at your quote. You’ll hear comments such as, “Wow! I usually pay 30 percent less with other freelancers.”
Or, “Are you kidding? This should only take you a couple of hours to complete. How can you justify charging $600?”
There are several ways I address these pricing objections (some of which I’ve never used because they involve profane language!). But the best commentary I’ve ever heard on this issue came from author and blogger Jonathan Fields.
In a recent post in his Career Renegade blog, Jonathan commented on his recent throat surgery. He ended up going with a top-notch (and ultra-expensive) specialist who didn’t take his insurance. But Jonathan was happy to pay several thousand dollars out of pocket because, as he pointed out,
“I wasn’t paying for his ‘time in the O.R.’ I was paying to be as far as possible away from the guy who went first. I was paying for his 25 years perfecting his skills, thousands of patients, tens of thousands of hours and tons of newbie mistakes avoided. I was, quite simply, paying not to be first.”
Here’s the thing, my fellow freelancers. If you’re experienced — and if you’re good — smart clients are NOT paying for your time. They’re paying to be as far away from your first client (and the mistakes from your first project) as possible.
Smart clients don’t want costly mistakes. They don’t want the project to bomb. And they certainly don’t want to hold your hand.
Instead, they want to be able to award you the project and feel confident that you’ll come through and deliver an excellent product. On time and with little to no hassle.
The more experience you gain, the more projects you work on, the more problems you help clients solve, the more value you can add…and the more you’re worth.
Are you charging accordingly?
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Ed Gandia is the co-editor of The Wealthy Freelancer and author of the popular report “7 Steps to Landing More Lucrative Freelance Projects.” You can get a free copy (a $29 value) by subscribing to his biweekly newsletter, The Profitable Freelancer at www.TheProfitableFreelancer.com.
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Amen. I think I’m going to quote you on this one.
There are other professions where it pays to be first in line. Surgery and translation (my profession) are definitely not among them!
this is such refreshing news, I think we think that it’s obvious, but in our businesses, we get so wrapped up in the hourly rate. It’s beyond that and thanks for sharing what that means!
Many people hiring freelancers may learn the hard way when they turn down that quote for the one that was 30% less, then have to turn around and hire you anyway because that lower priced quote did not provide the quality of work that was needed. They ultimately lose money paying for the same job twice.
It happens. Although not all lower quotes are going to be a lower quality service provider (in the case of less expenses to pay for) but it is important to check references and quality ~ not just price.
Nedra – You’re so right. It’s easy to get caught up in the hourly or “by the pound” mentality. But we need to shift our thinking as freelancers. Fields’ article really put it in perspective.
Penny – I couldn’t agree more! I’ve done it myself in the past when I’ve hired a contractor for a home improvement project. Going with the cheapest has often costs me much more. And let’s not forget the headaches. I’d rather pay more to avoid headaches and hassles. At this point in my life, that’s worth something!
Thank you both for your comments!
This is such simple logic and I am a firm believer in this argument. All too often, freelancers forget these simple arguments or just do not believe them when they fight for their own fees for services.
The modern web age does not help either. So many sites give every service away and the public expects everything that is online to be free. I’ve observed that selling online services for a fair price is a less than simple task because people expect it for nothing, sites like Twitter, facebook, myspace, linkedin and thousands of others set these standards and this can be crushing for other online service providers.
While I fully agree in principle with the argument being made I would like to hear the practical side of it as well. What have you said when a client said “you are charging me how much? I can get this for X cheaper with company or freelancer Z”.
I am a huge fan of Alan Weiss’s value based pricing and I have used it to a degree in my own contracts several times and it has worked, but only to a point. I am able to charge more than my competitors, but only to a certain point and then the parity can no longer be justified no matter how hard I try and sell the value.
In other words if the normal market rate for a service is $1,000 I come in and show a big track record for performance and make a killer presentation and build my case I might be able to charge $1,500 for the same service, but I doubt I could come in and charge $5,000 no matter how good I am.
The only exception to this might be a pay for performance model. I could see that if you were developing a direct mail campaign and most people said they could pull in 3% return for our $1,000 and you come in say you can pull 15%, but you want $5,000 to do it and you are willing to wait until the campaign has hit this goal before collecting your fee. In a situation like that, yes I could see this working. However short of that I am not fully convinced that your top end can get too out of sight of your competitor. In addition, the idea of constantly putting your self on the line as a pay for performance model can be problematic.
However I would like to hear how others may have done this and what they have said to their clients to overcome the inevitable your too high objection.
Kenny –While I agree that the Internet has had significant downward pressure on fees, overall, it has created more opportunities as well. And I truly believe that the size, number and quality of these new opportunities far outweighs the pricing “efficiency” it has enabled.
Michael — You bring up some very good points. Frankly, your questions warrant some healthy debate and deeper discussion, so I hope others chime in with their thoughts and ideas.
Couple of points: First, I don’t think the point is to try and get $5k or $7k out of a project that would normally run $1k. You’re right — there are some models that would favor this (profit sharing, as you mentioned), but in most cases, that’s just not going to happen without also offering other add-on services that would warrant such a difference.
But you can do very well for yourself if you can justify, say, $1,500 when most others charge $1,000 – $1,200. Over the course of a year, such a difference can be dramatic.
There are many ways to do this. One is to specialize in an industry, market or type of project/expertise. Positioning yourself as the go-to guy/gal would allow you to charge more, as long as you can justify the reason.
Second, to earn more you must qualify your prospects better. You must pursue only those whom you know would be more likely to see the value in paying more. This is an area where many freelancers stumble. They see every prospect as virtually the same, when in fact they’re not. You must get clear about what your “ideal” prospect looks like, and you must concentrate your prospecting efforts in finding more that fit that profile.
Again, there are dozens of practical ways to earn more than the average freelancer in your field. I welcome the exchange of ideas!
Fees reflect the self-esteem-confidence and business-marketing acumen of the one setting the fee. They play a significant part of how we position ourselves and how we are perceived. Fees also attract and reflect the quality of clients we believe we deserve.
Alan Weiss, a global consultant has written an excellent book on this topic, Value Based Fees.
Good point, Alan. Self-limiting beliefs hold us back. It’s something we all must deal with — especially if we want make a good living as freelancers. Good advice re: Weiss’ book. I have his Million-Dollar Consulting book. Excellent stuff.
My advice: use the excitement and energy from your wins as fuel to build that confidence over time.