In this episode, I answer reader questions about pricing:
- How to put a price on knowledge and connections as a consultant
- How to set “reasonable” prices on services when you’re just starting out
- When is it okay to bring up the subject of money with a client
- Value-based pricing instead of time-based pricing
- How to handle rush requests
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TranscriptClick here for full transcript.
Jennifer Fultz 0:00
Your clients need to pay you not just to do the work for them that they’re asking you to do, but they also need to pay you to not do something else. To not take other clients, to not go work a steady desk job with benefits and a regular salary. The stability of something like that needs to be compensated for in your freelance prices. You’re listening to Chief Executive Auntie, the podcast exploring the work lives of Asian Americans beyond the conventional doctor, lawyer and engineer. I’m your host, Jennifer Duann Fultz.
Hello and welcome to our first Ask Auntie session. Today I’m going to be going over some specific questions people have regarding pricing. Which is probably the most commonly asked question, topic of confusion and discussion amongst freelancers, creative professionals, etc. So my first question comes from Courtney. She says, “I have recently been offered consulting work and asked for a proposal how I would like to value my time. The nature of the consulting work is different in each scenario. For example, one company is looking to bring in artists and makers from Japan into their food hall for a temporary six month pop up space, and they require my assistance to make the connections and be the conduit for those relationships and transactions to happen. Another Japanese artist is having me do some management-like work, such as helping to put together press materials, providing creative feedback about the production, but I’m also handling some booking services for her. How do I price my services and also the knowledge that I have as a connector, producer, and consultant.”
So Courtney, I think, especially in cases where the scope of the project is different each time, you want to protect yourself. I typically don’t recommend charging based solely on time. But in cases where the scope of the project is real different from project to project, it’s not a bad idea. What you could do is, I find hourly pricing, very tedious. It also kind of punishes you for being efficient. So, you know, if you reach out and you make a connection for your client that is super valuable to them, and that phone call takes you 15 minutes because you’ve spent five years building a relationship with this person, that one phone call is worth more than the 15 minutes you spend on the phone with them, right?
So, my suggestion would be perhaps to charge a day rate for this kind of consulting and so they book a certain amount of time with you. But you can do whatever it is you need to do during that time to get the the final deliverable that you want to get. So you’re not stuck nickel and diming every single minute that you’re spending. They’re booking a block of time with you, in order for you to get what they want accomplished. So, you could spend a day working on the management work, whatever it is that you need to do during that day you can do. You can do it as efficiently as you need to, you’re not stuck billing hourly and then trying to get enough hours to make it worth your time. And then let’s say a bigger project might require two or three day rates. I think the advantage of day rates is that well, let me back up for a sec. The reality of charging based on time is it’s hard to switch from task to task. And so if you book a project and you work for three hours on that project out of your eight hour work day, chances are you’re not going to be able to turn around immediately and have exactly five hours to fill the rest of that time. And so when you charge by the day, you’re accounting for some of the time that you cannot spend on other clients. In other words, they’re booking that whole block of time with you, in order for you to not go pursue work with other clients.
Because that’s the reality, you know, that I didn’t really think about myself until I had been doing this for quite some time is that clients are not just paying you to do something for them. They also need to be paying you to not go work for somebody else, if that makes sense. So, for Courtney, I would maybe recommend some kind of day rate or you could have a half day rate if you want to. The half day rate should be more than half the cost of the day rate because again, the reality is you book a half day rate, chances are you’re not going to necessarily always be able to find another half day client to fill the rest of that time with. So I always have my half days cost a bit more than half of the full day rate.
My next question comes from Carol. She says, “I’m considering copywriting/article writing and maybe photography. I used to write at a content mill for literally $1 to $2 per article. And that sucked. My specific questions are how to figure out a reasonable price for your services.” I hate that word reasonable, by the way. “How to figure out a fair price for your services when you’re an amateur, or don’t have much published work out yet? And how to counter the belief that people should do art related work for free. We see this all the time for photography, dance, etc.”
So that’s a really common complaint, or gripe, that I hear a lot with creatives saying, “Well, you know, I can’t work for exposure, exposure doesn’t pay the bills.” And that’s true. That’s totally true. And I understand that sentiment. Then don’t be shy talking about money. You are the creative, you are the the driver of the process. I think part of the reason that the general public and clients expect you to work for free is because we don’t talk about money enough. We’re not confident about our prices. I got a question during the workshop, the live workshop that I did in September, and the question was, “When is it okay to talk about money?” Immediately! You don’t walk into a store and take five items and then act all surprised at checkout when the cashier is like, “Okay, that’s going to be 42 dollars and 17 cents.” Nobody does that. But people walk up to a photographer and they’re like, “Can you shoot my wedding for five hundred dollars?” And, you know, part of the blame for that does lie with creatives. So, you know, don’t be coy about money, especially on your website, in those first conversations that you have with people. Don’t say things like, “Well, I can work with your budget.” Nobody wants to spend their budget. Nobody wants to spend money. So don’t think, oh, what does the client want to pay? They don’t want to pay anything. You decide what you want to be paid. And that’s going to be based on your cost of doing business, your living expenses, if you’re saving up for a particular goal, like if you have debt to pay down. All of that is determined person to person. There is not a formula, or I’m sorry, you should not be pricing yourself based on what everybody else is pricing themselves. So there’s that little rant first.
I think the more specific question here from the listener is, how to figure out pricing for your services when you don’t have much published work out yet. So first of all, you don’t have to have that much previous work, as a matter of fact. At least in my experience, I don’t get a lot of clients asking for specific work samples. Most of my work does come from word of mouth, so that is helpful, I think. Clients that I’ve already worked with, they refer me to somebody else. So they kind of provide the work sample and the testimonial. They can say, “Hey, you know, Jennifer did my website, it looks like this.” And their friend is like, “Okay, cool. I want one like that.” But I don’t have a ton of clients asking to see my entire portfolio. And that’s going to be different, I think, depending on what it is that you’re doing. Honestly, I think a lot of how I get my bookings is how confidently I can explain the process of how we’re going to work together and my plan for delivering the outcome that they want. Because that’s ultimately what they’re paying me for is to know how to get them from point A to point B. And is my previous work, a kind of supportive testimonial for that? Yes, it is. But just because you haven’t published a lot of places, you haven’t done a ton of work on your own, that’s okay. Don’t assume that that is a deal breaker for a client. If you can explain your process very confidently with them, whether that’s what you’ve learned through classes or through internships, or shadowing people, if you know what you’re doing, explain it to them. And that can sometimes go a very long way in persuading people to to hire you.
If you want to get more actual work samples, I highly suggest doing spec work and spec work is different from free work. Again, there’s the people complaining that “I can’t work for exposure,” but you can and honestly, if you’re just starting out, you can and maybe you should work for good portfolio samples to have. And so the difference between spec work and free work is that with spec work, you are in control of the process. You don’t treat a spec work client like you treat a paying client. I mean, I treat them all with the same level of professionalism and respect. But if I’m doing something on spec, or if I’m doing something as a donation to an organization that I care about, I set the boundaries for that project. I listen to what it is that they need, and then I use my best judgment to deliver what they’re looking for. They get feedback, they get input, but I am very definitely the driver in that and I will be thinking what kind of website or article or email campaign do I need for my portfolio and I will nudge the project that direction within reason. Again, I’m not going to force them to do something that they don’t need or don’t want. But I’m staying in control of that. So you can do spec projects, you can just do, you know, projects for yourself. It’s kind of like personal projects, you can totally put personal projects in your portfolio. The key to the portfolio is, is it work that you want to be hired for? And if you’re not currently getting hired for the things you want to get hired for yet, that’s okay. But then you need to find a way to make or get work samples that are indicative of the kind of work you want to get hired for. So it’s kind of a rambling answer, but I hope that’s helpful.
Next question came from Matt, who is a web developer, who’s currently working, I think, in-house somewhere, but he wants to start freelancing. He asks, “Do you have thoughts on trying to price projects at a fixed and upfront value, presumably as high as the client is willing to pay? I read a book that argued against time based pricing in favor of value based pricing.” So yes, I have lots of thoughts. And I’ve lots of thoughts on that question, actually, “presumably as high as the clients willing to pay.” Just be careful with that because, you know, I understand what he’s saying. It can become a slippery slope, at least for me, I don’t know, this is just my personality, I’m a people pleaser. Well, I want them to be happy with what they’re paying. Nobody loves spending money on building a website.That’s just not, it’s not retail therapy, it’s not that exciting. What you’re really selling is the benefits of that website, so, a seamless, easy way for potential clients to find you, learn about you, and contact you. That is the value of a website.
And yeah, so I do definitely recommend pricing projects, I definitely recommend value based pricing. That was something that a mentor of mine taught me a lot about, kind of in my first year of freelancing. Your work is worth more than the time that you put into doing it. So let me say that again, your work is worth more than the time you put into doing it. You need to think well, first of all, you need to think about the time and money and energy you put into just getting those skills in the first place. But you also need to think about the value that your product gives to your client. If you write, you know, if you’re a copywriter, and you write a sales page, and that sales page goes and makes $100,000 for your client, you deserve more than, I don’t know, the $100 an hour it took you to write that sales page. Okay, if anybody out there can write a sales page in an hour, please call me because I need your help. But you know what I mean? There’s so much more value than just the time you spend.
You also saved the owner of that business a lot of time. And this was something I learned about from my kind of crazy realtor boss that I worked for 1000 years ago. She would go through each sale, each home sale that she had, and kind of estimate how many hours she spent showing the house to potential buyers, how much time she spent in contract negotiations, approximately how many hours she paid me to do her marketing for her. And, she had different hourly rates for those different things. And so, this is just going back to the value that your work brings to your client. If you’re working for a realtor who, you know, like I was, and she gets a commission on this house. And that turns out to be, I don’t know, $500 an hour of her time, then paying me $20 an hour to well, in her case, print out emails in her office, but that’s another story. By paying me she gains that hour back that she can go and basically earn $500 an hour from. So you’re also saving your clients time, and time is money. That’s a little bit simplistic, but it works. You know, you’re saving your client time. And then you’re there for saving your client some money but also time is time, time is valuable in and of itself. We all have a finite amount of that. So, I do highly recommend value based pricing. And you can have some elements of time in there. Like I was saying earlier, the day rate is a good variation on hourly pricing, per word or per page, is a good sort of hybrid of flat rate and hourly pricing as well.
And then my last question comes from Cindy. Cindy is a graduate student at Teachers College. She’s interested in advertising her proofreading and editing services geared toward graduate students and professors who are looking to publish their work in research journals. And she says, “I mainly get requests from students and professors who have urgent proofreading and editing requests, about a week turnaround time or even less time. I pride myself on the efficiency and quality of editing services because of my previous experience as an English teacher, grading so many student papers is no joke.” She says, “I want to make sure that I’m getting paid well for the work and time I put into my editing, especially since I make significant changes to my own schedule to accommodate my clients’ urgent requests.” OK, so number one, rush fees absolutely 100% you need to have some kind of upcharge for rush jobs or kind of a, I don’t know, “cut in line” kind of fee. If somebody wants to get to the top of the stack, they need to pay to be there. Not only because she’s rearranging her own personal life around her clients. If you are doing something like that, if you’re like a personal assistant, or especially if you have some kind of on-call availability, you must charge a premium for that because again, those clients are paying you to do something for them, sure, but they are also paying you to not do something else. And that needs to be a significant fee. It needs to be worth not just the time she spends but the other things that she misses out on, which could be other clients, it could be her own studying time, it could be just her own leisure activities. You know, I used to have a really hard time asking clients for money. Charging clients money when I had my photography business, I had a really really difficult time with that. All of that changed once I had a kid, because suddenly if I wanted to go do a photo session or work on a website or, you know, do something for a client, that meant I had to get child care for my kid which does cost money but it’s also just time I don’t get to spend with my kid. Or time I don’t get to spend, you know, sitting in a dark room by myself staring into the void, which is what I need sometimes when I’m a parent. So, I guess that’s kind of my big takeaway for this Ask Auntie session.
Your clients need to pay you not just to do the work for them that they’re asking you to do, but they also need to pay you to not do something else. To not take other clients, to not, I don’t know, go work a steady desk job with benefits and a regular salary. The stability of something like that needs to be compensated for in your freelance prices. I hope this was helpful. If you have questions for Chief Executive Auntie you can go to chiefexecutiveauntie.com and you’ll find an Ask Auntie question form on there.
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