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Stay cool when
determining what to charge
Teacher: Laurie
Lewis
It’s one of the first things
you thought about when you became a free agent, and it’s
something you deal with every time you work with a new client.
What do you charge?
Some free agents may claim that
setting a fee is a rule-less guessing game. You just take a
stab at a price and hope for the best.
Wrong!
A wise free agent — perhaps,
made wise by pricing failures — knows the two rules for
successful pricing:
Rule #1: Never quote a price
on the spot. First get as much information as you can
about a job. Then take time to assess the project thoroughly
and calculate the best rate.
Rule #2: Before quoting a
fee, determine the lowest acceptable rate — and
what concessions you would like to ask for if you have to
go that low. Never agree to work for less than you know a
job is worth and your services merit.
What causes pricing disasters?
I base the two rules for pricing
success on what free agents, myself included, have described
as their worst pricing experiences. You know the kind: the
job when you end up working for two cents an hour.
The tales of woe that freelances
tell generally result from one of two failures:
- Making a commitment to a price
before knowing enough about the job.
- Giving in too quickly during
the negotiation process.
So, you are more likely to have
such a disaster when you commit to a price — or even a
range — too soon.
Don’t talk money until
you have to
A client communicates with you
about a new job. After describing the assignment, the client
asks, "What will you charge for this work?"
Bite your tongue! Don’t
reply just yet! Even if you have a good sense of a fair fee
for the job, don’t blurt it out. Instead, tell the client
you’ll get back with your price.
Asking for a little time can
be difficult, especially if you sense some urgency on the client’s
part or that other free agents may be bidding for the same
job. Still, even a half-day or "sleeping on it" can be long
enough to get a better sense of what a project is worth.
What is the project worth?
Without the client breathing
in your ear or glued to the screen waiting for your reply,
take time to think about what the project is really worth.
The following steps will help:
- Make a list of everything
that the client said you would have to do. Add to the list
those tasks that you know from your own experience are also
part of the job.
- Determine a fair fee for all
these tasks.
- Call or email colleagues and
sound them out on an appropriate fee.
- Figure out what you would
charge for different payment options: hourly rate, a flat
project fee or a per diem.
- Call or email the client to
clarify any questions that have come to mind during the price-planning
process thus far.
- Reevaluate all the information
you have about the job — what the client told
you, what your years of experience add and what your
colleagues suggest.
- Determine what you want to
ask.
After asking for time and taking
these seven steps, you have complied with Rule #1.
Keep your shirt on
Now that you have a fee in mind,
you’re tempted to pick up the phone or fire off an email
to the client. Whoa! You still have some planning to do.
What if the client does not accept
your fee? Will you agree to the client’s counteroffer,
whatever it may be? Will you kiss the job bye-bye? Or will
you strike a compromise that you both can live with?
You need to determine your approach
before the client puts you on the hot seat. The moment
when rejection is staring you in the face is not the time to
decide on your bargaining tactics.
Many consultants focus only on
how high they can go when talking money. It’s also wise
to think about how low you can go: What is the absolute minimum
you will take for the job? Have this figure firmly in mind
and accept nothing less.
Negotiation should be a two-way
street. If you have to accept less money than your initial
offer, what do you expect from the client in return? For
example, maybe the client can do part of the job that does
not require your expertise. Or perhaps you can bargain for
more time.
Only after you have considered
your negotiating strategy are ready to contact the client.
Strike when the time (and
price) is right
Rules #1 and #2 both concern
timing: when to discuss fees. Both rules are also about thinking
before you speak. Know what the bargaining chips are: money,
time, payment schedule, perks, etc.
If you follow these rules, you
are practically guaranteed a successful pricing experience.
Rule #1 will keep you from committing to a fee that might be
okay for another job but is too low for the one you’re
about to do. Rule #2 will prevent you from saying Yes when
you should say No to a penny-pinching client.
About the teacher:
Laurie is the author
of What to Charge: Pricing Strategies for Freelancers and
Consultants, which can be ordered via the publisher’s
website or Amazon.com.
Laurie has had a successful freelance medical writing and editing
business for 15 years. She works from her home office in New
York City.
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