In a Pricing Rut? Try These 3 Strategies

pricing rutIf you want a truly profitable freelance business, pricing and estimating aren’t just a matter of crunching the numbers on your hourly rate or looking up the ranges on an industry association website. We’re accustomed to putting most of our energy into creativity for our writing, editing, and design clients—but when was the last time you devoted some brainpower towards freshening up your pricing methodology?

Different prices for different clients. I recognize that there are freelancers who price everything the same, whether the hourly rate or the calculation for a firm quote. (I won’t argue if that’s what works for their businesses. It’s certainly the simplest route.) Unless you have a truly uniform clientele, however, you’re likely leaving money on the table. To cite an extreme example, it doesn’t really make sense to charge a lawyer or Fortune 500 company the same rate as a local animal shelter. But the principle is also applicable to situations when you can detect that a client is going to be high maintenance with meetings, phone calls, etc.

Seek out other resources. If you’re depending on industry rate sheets and surveys as your primary basis for pricing, you’re overlooking one of the best resources around: solid networking with people who use freelance services, but aren’t necessarily a client. Think graphic designers, marketing and advertising folks, web firms, magazine editors, and even freelancers who subcontract. Caution: This isn’t a shotgun cold-call situation; it needs to be people who you have a relationship with. (And if you don’t have cross-industry relationships, put that on your to-do list!)

Always be experimenting. It’s easy to imagine that an annual price increase is sufficient. While that’s a good start, it’s worth trying different strategies with how you present estimates. One example would be what I call the car sales approach—give the client low, medium, and high options, with additional bells and whistles as the price goes up. My favorite is to provide an estimated range rather than a firm price. That gives you more negotiating wiggle room—and it also encourages clients to go easy on the phone calls and rounds of revisions in order to keep their invoice down.

I’ll be discussing these strategies in more detail—and lots more about pricing and estimating—at the “Gateway to Success,” the 14th annual “Be a Better Freelancer”® conference, October 11–13, in St. Louis. Hope to see you there!

 

When Creating New Client Estimates, Think Small

Don’t be fooled—I’m not referring to the price tag being small. What I’m saying is that the more granularity the better when compiling your estimate for services, particularly for a first-time client or someone who hasn’t worked with freelancers before:

There are three primary reasons for being detailed in an estimate:

  1. Showing significant detail indicates that you listened intently to the client’s request and understood all the nuances. Essentially, you’re repeating back to them what they told you—communicating that you’re on the same page. From a visual perspective, a comprehensive estimate conveys more authority. (Think of how you perceive estimates on, say, automobile repairs—even if you don’t understand what all the line items mean.)
  2. If the client wants to negotiate, a detailed estimate gives you a lot more wiggle room to take out specific tasks rather than just decreasing your price.
  3. Finally, having a formal list of work-product tasks in your estimate and agreement/contract puts you on much firmer ground if your client is inclined toward scope creep. You can (politely!) point to the document to say “that’s outside our scope, here are the ramifications.”

Following the rule of “the newer the client, the more detail is required” is guaranteed to save you headaches. As time goes on and I develop a strong, trusting relationship with a client, it becomes less necessary to give quite as much detail, particularly if projects are somewhat obvious.