When we are talking about how you price yourself as a freelancer is to sell a solution. You don’t sell an hourly rate; you don’t sell the website. You sell the solution, which happens to be a website.
00:29 Nanci: When a prospect ask you for your rate card what do you say, Julian?
00:34 Julian: I say, can we talked about it? I think sending in a rate card is probably the worst thing you can do if you want to get paid and make real money. Because once you have sent a rate card, you have established the upper limit of what you are going to get paid and more than likely the rate card is going to yield a client who’s immediately focus on price and didn’t want to have a discussion about getting the price down. I mean, what’s a rate card for? A rate card is a great thing to have on an excel file on your computer, so you know; if you do x you should be getting paid this, and I use it for things like the figure a price for portrait if I’m doing a set of portraits. If somebody asks me, what does it cost to do whatever? I immediately want to change the tone of that conversation because I know that their focus is on price and not value and as we discuss in the last episode If you’re talking price and you are not talking value you having a wrong conversation.
01:50 Nanci: You are delivering a project and not necessarily the right project, and you’re quite possibly seen by your potential client as an expense and not necessarily an investment. So like Julian said you want to turn the conversation around to identify the client’s pain point. As we talked about in the last episode if you find out why he wants the new website, and you put yourself in his or her shoes, and you identify, you listen, and you say I hear this is the problem, this is the cost of your problem I have a solution. It’s not exactly what you thought you wanted, it’s not just a website it also involves some search engine optimization and some local Facebook targeting, and the price is 9800 because that’s what I charge for a project of this scope and as Julian said you completely change the tone of the conversation. Now it’s not x website for certain amount of money you are giving him the website that he needs to keep his business at a good rate or even performed and you’ve offered a solution that provides leads from multiple sources, not just websites. My friend Geeta Nadkarni who is expected to be a podcast guest soon has a saying self-hare is not the airplane. I mean, can you imagine if the commercials we saw on the TV were of the interior of an airplane and they were featuring the service, the food, and the legroom, nobody would ever travel, but no they sell us the experience. When we are talking about how you price yourself as a freelancer is to sell a solution. You don’t sell an hourly rate; you don’t sell the website. You sell the solution, which happens to be a website.
05:38 Julian: And you are selling yourself. If you’re the person who’s doing the delivery the actual relationship, you are immediately starting to establish by having this discussion. Before you give a price is already setting the tone for the relationship that you are going to develop, and I think that’s where your focus should be as the freelancer, as the service provider, as the seller. You are not trying to drop off the goods in a back alley get the money and run. You are starting your relationship, and I don’t know about you, but I’ve never had a good relationship that started off arguing about who pays the bill. It’s a dynamic when you’re on the sell side of that and you are selling a product, or you’re selling a service. If that person is asking you only about how much it cost, they are not thinking about all the added value you are bringing and that relationship is not going to flourish, it’s not likely to even to develop very well. Pricing is as much about pacing as it is about anything else. There is a point where you give the price at no matter what you are selling there’s a point where it’s like here is what it’s going to cost. There is no reason to rush to that point no matter how urgently the requester is asking for. Whatever I’m doing I am always trying to lead back with the question that gets the prospect talking and as they talk I am taking notes, and I am listening. I am listening not just to what they think they are asking me for but other opportunities. In my case, I often I’m able to hire a videographer when I get contacted as a photographer. The prospects aren’t calling me for videography necessarily but as I get them talking they like well do you also know a videographer; Yes I happen to know a videographer, bringing another person, that person is getting paid, I’m getting paid margin for bringing in the videographer. My little contract is drawn twice or triple before I’ve given a price if I’ve given the price right off the bat that conversation would never have happened.
09:44 Nanci: If you haven’t figured it out by now, you’re going to lose prospects. There is going to be someone that says that’s not your business just give me a price. The question I want to ask you is, do you want to work with that caliber of a client? Tire kickers, who are always looking for the best price and to grind you down and not listen. At some point you ask yourself a technical skill like Julian, am I somebody that point and shoots or am I someone with a craft and art that brings something to this project and you price accordingly and you work with those clients.
10:28 Julian: The internet is a great tool for bringing leads to your front door but what it also does is it also brings you a lot of low-value clients or prospects who are looking for the lowest price.
11:42 Nanci: If you’re saying yes to a tire kicker. If someone is like you said that it’s $3000 for this web but I want this and this and if you can do it for $2200, I will sign today. You are building a relationship with someone, and you are saying no to somebody else because you have the limited amount of time to do projects. But if you are saying yes to something, you are saying no to somebody else. I’m not advocating, especially if you are starting out, being so picky and choosy that you don’t have enough money to pay because you have this incredibly high standard but ask yourself every single prospect is this a client that I would want to work with long term. Am I learning from this contract? Am I building something useful in my portfolio out of making this contract? Or is it I just need a cast and that’s what it’s all about, and sometimes that’s okay.
12:55 Julian: That’s okay, but you make ten contracts like that you are going to burn out and you are going to have nothing, and the money’s going to come and go. A freelancer, you are building a career. You are building it one project at a time, one client at a time. The clients you choose to work with is one of the benefits that you have by being a freelancer. You get to choose your clients, so you want to choose wisely, and you want to choose clients that are actually going to grow with you and that you are going to grow from not just monetarily but through the work you get to do and the value that you mutually bring to each other in a relationship. If there isn’t a client relationship, you are a transaction and when is the last time you cared about a transaction except for did I save money on it.
13:41 Nanci: I think one step that you can take is to have all of your clients fill out some questionnaire so if you are lucky or your able to have the 25-45 minute conversation about the client’s pain point and the solution that you have and delivering the right project, not just a project. You see it more and more in like the graphic design and the web space because the theory is there are two sides to it one there is information provided in the questionnaire that you need to finish the project like do you have existing brand colors that I need to work with please let me know 3-5 websites and why you like them, who would you consider to be your top 3 competitors. Once you start getting this information again like you said best case scenario is to talk to the person and get the information. The person wants to work with you. The person has come to you and said good news I’ve chosen you, and at that point, you get to say but do I choose you?
16:25 Julian: Now it’s part of your deliverable now you are saying before we start the project we need to get this information straight, but then you are already working. You are already on the project. It’s like what you referred to me to that road mapping from Ben and Dan. You build in a preface to any project that entails you know asking these questions, having a meeting which is already going to be something that the clients may balk at because most clients are like everybody else once they made a decision they want to move on now it’s your problem, you deal with it. I’m giving you money, you solve my problem for me, but what your job is as a professional is to say, you know what to do the job that you want me to do we still need to have this. This information has to transfer, so you need to set down with me, or you delegate or the contact person who is also a key part in validating in qualifying your prospect is who am I going to be dealing with when I’m doing this project, and you need to get their attention, and that is where I think your point is. If they don’t want to give you that attention, then you might reconsider taking on the project because if it’s really critical information that’s going to make the decision-making smoother and make the whole process work.
18:27 Nanci: I think when Julian was talking about in the whole process of pacing, that if you think it is appropriate to have your client fill out a small questionnaire just so that you can get the information that you need to do the project and you structure the question in such a way that there are some red flags in there about whether you want to do long term work with this client. There is going to be a natural point in the process where it makes sense to do it or not but I do think that whether it’s a phone call which I would think to be the best or some questionnaire of like web form or something there should be a pre-qualifying thing because you are not a commodity. You are not just someone that deserves to be thrown a bone and be paid the cheapest rate, so you do have a voice in the process, your art means something, your service, your creativity and what you bring and you deserve to be paid for that and just don’t want to see you ending up working with clients who don’t see that and from the beginning of lead to the end of client. There is a process that where that gets wash out.
19:44 Julian: And the questions you’re asking whether they are in written form or verbal, they are helping to direct your client’s attention to things that you know are important that they may not have thought of. So you already bringing value and a good client recognizes that. This is great for some kinds of the project, but I’m a new freelancer, I don’t have a lot of experience, I’m pretty talented I just came out from school, or I’m retired, and I want o to start this thing. I don’t know how much the price worth, how do I even start? Where do you go for your first pricing? How do you do it?
20:47 Nanci: That’s a super good question. I read this formula today that most people, in general, they take the salary that they had at their job and they divide it. So you take your last salary, where you feel like this is what I’m worth and you divide by 2000 which is the typical number of hours in a year and that’s your hourly rate. When I started I charge $60 an hour and at some point when I thought that my skills had improved and I brought a lot more value to the project my rate card which I rarely use, but it’s $80 an hour but just as everything that we’ve been talking about in the last two episodes if someone called and said what is your hourly rate I wouldn’t say $80. I would say we need to talk about what it is that you want.
22:02 Julian: So you’ve already in your establish business and practice over the years, and you have broken your hourly rate because the hourly rate is a thing. It can be beneficial in some cases it ca also be a trap and certain jobs you be paid a lot more money if you figured out a way to price by the project, or by the result, or by the outcome versus working on a strictly time base equation which is ultimately demeaning because as we know we can’t make more time, and therefore you are going to always stock by the limited number of hours that you can actually work in so you want to get out of the hourly rate.
23:09 Nanci: We’re saying that there are still some industries that the hourly rate is the way to go and I will say that I still use it. If a client calls me and says well I need a few updates from my website. I don’t have a value proposition conversation with them. I’m like it took me two hours here’s an invoice for $160, we don’t even have the conversation I just send them.
23:28 Julian: In that context, the benefit of the hourly rate is it allows you to be a, it’s a building block for developing a price. It’s a good tool to use when you develop things like minimums. Somebody want’s you to come in and work for an hour, most of the time it’s not going to be worth your effort. The other point I want to make is I like to say charge more but to not be facetious charge the right price for what’s your worth and don’t assume you’re worthless. There are a lot of freelancers undervalue themselves and as a result under price themselves. If you’re not paying yourself enough money to survive or to thrive preferably, then you are not getting paid. It’s because of you. First, it’s not your client fault that they don’t pay you enough money. No clients are going to pay more if they don’t have to it’s up to you to establish a reason for them to pay the right price, First, now what you’re right price is and not be bashful that asking for it.
25:07 Nanci: And then the second question becomes what Gigi want a client does push back on a price. So if you go with an invoice quote of say $8000 for a website and they come back and say well our budget is $5000, don’t say okay. What you want to do is two things, you can just say I’m sorry, but this is the rate, it’s $8000 but what you can do is you can start to remove features, then you are not devaluing yourself or your services you are like no problem, that’s cool I can work within your budget. What can we take out of the existing contract so that you get the value of $5000?
26:20 Julian: The a very rare and off cases sometimes you might want to offer what I call a ‘first-time client discount” or something like that. Sometimes you find yourself in a competitive situation maybe more often than not where you’ve got a client that you want for good reasons, and they are saying ‘wow, we’ve got an incumbent you know. We’ve got our current guy that we use or our supplier. They say this is how much they always charge us and your job there is if you decide I want this client because I think there is a future value to this client but you realized you are going to have to drop a little bit the price to get in the door because they are comparing you to their existing supplier who is better then so you’re going to beat out on quality once they’ve seen your quality. If they were never going to pay you what you’re worth, then don’t waste your time, wait for the client that will find the client that will.
29:55 Julian: There is another way around that issue which comes up a lot, and I learned this when I was working as a consultant years ago. It’s a phrase you probably heard ‘walk before you run’ let’s walk before we ran. Sometimes a client comes to you with the shopping list of everything they want to be done and you know it’s going to cost a lot of money and you know they are not ready to pay that kind of money. So what you can do is you can break something down, you can leave work on the table. You can sort of break it down to a point were here is what we should do start with and I pitch that like this is a way for you to get to know each other, this is for you to see the quality of my work and to learn how we work together and we kind all those growing pains out of the way at a lower price that you are going to be comfortable with, that I’m going to be comfortable with. It’s a try before you buy the type of prospect. You are still getting paid, but then you can leverage that if it goes well which is assuming you do your job right and your professional its going to go well, you’ve already established ‘Okay, now lets talk about the real project, ‘ and now you can go in and now you can price accordingly and price properly. You’ve let their appetite, and they want more, and you’ve proven your value. I think the walk before you run approach sometimes is a way in when a client is pushing back on you with price constraints. The only point that I was trying to make was when your clients are pushing back on you, if you are doing the dance of how much is it going to cost, what’s going to cost, pricing it, nobody’s giving a number for. You can’t put out the number if you’re going to put out a number make sure it’s a high one and if they come back at you and say well that’s more than we expected and below our budget. Then okay, what’s your budget? And then immediately they have to now give you a real number and then you have a starting point from which you can as you said Nanci start peeling back things that are less than necessary to fit within the scope of the budget that they can actually afford or you do the walk before you run approach where it’s like okay for that budget we can get 80% of the way, and that’s a good start and that would achieve these 4 goals that we’ve already discuss and then we revisit at the end of a month, 3 months whatever it is.
34:17 Nanci: I love Julian’s strategy if someone is pushing you and playing the game and the power struggle of your going to throw out the first number, give them what they want and throw out the big number. I mean there are times when it’s not going to make sense like in Julian’s case for instance to price per project.
35:54 Julian: That’s one of the reasons hourly rates are a trap because at the better you get at doing better at something, the faster and more efficient you get at delivering it as your experience level increases and you get better and better at delivering you are going to get paid less and less if your charging for the hour because what used to take you four hours might only take you two.
36:11 Nanci: I think that might be one of the most important points we’ve made this episode. I work so much faster than I did three years ago. It takes me minutes to do things than it used to be, some of that is technology, and some of that is investments that I’ve made in platforms or whatever.
38:22 Nanci: What we wanted to do with this episode is have a discussion on pricing because it’s huge and we start talking about this market rate, and I don’t think there’s a market rate.
38:39 Julian: I realize that there’s another important point I think we should make it. It does relate to market rate because there is a market rate. You cannot go blindly into pricing. Pricing is where the rubber hits the road when it comes to anything particularly if you are the business. You want to be up higher up on a pricing scale whatever you’re doing because that’s where you are going to get money but you can’t be completely ignorant of what it cost. If you are ignorant of what the going rates are for whatever you sell in your market then you have a problem that you need to address, and it’s addressable, learn the pricing. You don’t have to charge the same price as everyone else. You can charge whatever you want that makes sense but you do need to know what the going rates are because your clients know. That’s why a range is very important. I mean there’s a big difference between 80 and 120 if you’re the guy getting 120 everyone else is getting 80 you’re making 50% more. There’s range for everything on the planet. You want to be on the upper end of that range but you need to know what the range is and what moves you from the lower end of the range to the higher end of the range well it’s your experience, professionalism, the amount of time you invest in understanding about your prospect, there’s a lot of facts there’s a glint that hopefully, we’ve to discuss many of them will continue to do so in this podcast. There’s range, and you need to know what the range is, I guess is my point.
42:42 Nanci: So my point is on a spectrum when were talking about market rate. As you increase your rates base on either your experience and your technical ability, your confidence, the scope of the project you actually move to a higher caliber of client that can afford that and there are pros and cons to working with big corporation, we know that but when I say market rate let’s agree that there is a market range for sure.
44:03 Nanci: There are two primary driving things financial and status. Right or wrong I think it comes down to status. You will find clients that are going even to want to pay a little bit more because you’re a celebrity web designer or you’re the one with the moo card or whatever. My point is there’s a range of client caliber as well and their expectation of what things cost. My point is every once and awhile your going to get a unicorn client like that, that thinks a website should be $12,000. So as Julian said earlier throw a high number because you never know when someone might say, okay cool.
46:01 Julian: Okay, we are going to wrap up.
46:04 Nanci: So that is our first not the last, but our first overview of pricing. We hope that we gave you lots of stuff to think about and your homework if you are charging an hourly rate, is to find some creative ways that when someone asks you for a quote or your rate card, how you might change the tone of the conversation.
46:23 Julian: If you are charging an hourly rate, do yourself a favor establish a minimum and don’t let it be an hour and make sure that no matter what you never work for less than that, as just this a starting point. Charge the right price, don’t undervalue yourself and don’t be shy about asking of talking about money, I think we didn’t get too much into that, but I think that’s really important point. Especially first-time freelancers, they’re reluctant to talk about money. They go through all kinds of hoops to not talk about money. They start delivering on value; they start projects. I know people who started to work on projects before they establish what they are getting paid for. That is a mistake, you need to get the money conversations going at the right time but before you are starting to deliver on work the way you might have to spend money and don’t be ashamed, don’t be afraid and don’t be shy.
47:13 Nanci: Never say to a prospect or a client, just pay me what you think its worth. I have people said that to me. I hire people on Upwork or something well just pay me what you think its worth and I am like I just want to reach out and like help them. Whole other issue is afraid to talk about money. Wrapping it up. See you next week.