My advice: use the excitement and energy from your wins as fuel to build that confidence over time.

Alan Weiss, a global consultant has written an excellent book on this topic, Value Based Fees.

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!

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.

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.

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!

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.