Friday, October 26, 2007

What's the Deal With "Bulk Rates"?

I've been noticing a trend lately. I get an inquiry about an enormous project. I quote an enormous price to match--one that realistically compensates me for the time being put in. And I get this shocked-and-amazed email back: "What? No bulk discount?" I in the wholesale business?

I'm not sure why, but somewhere along the way some buyers have been led to expect that if they're offering a large amount of work, it's common courtesy for writers to offer a "bulk" discount. As if I have a ton of copy just sitting there in my warehouse and I need to move it.

Bulk rates don't make sense for service-based businesses.

Some business owners are used to getting bulk rates on supplies they buy from manufacturers. And when you're selling large amounts of goods, it makes sense to offer bulk discounts. You have limited space in your warehouse; you need to make room for new products; you have to move your goods along. You're still selling your goods for dollars when it cost you pennies to manufacture them; if you have to sell a bunch at a few dollars less, you're still making a profit. And the more goods you can move, the more money you make.

But when you're a freelance service provider, your time is what you sell. And the name of the game is to make as much as possible for every working hour. Say Client A offers me $25 an hour (a "bulk rate") for a job that will take up all my worktime for a month. Well, I could do that....or I could fill my month with smaller projects from Clients B, C, and D. These guys are offering me less work individually, but added together it comes to about the same amount of time spent...and the pay rate works out to $50 an hour. In this case, offering bulk rates hurts me. I have to turn down smaller projects that pay a higher hourly rate in order to accommodate the lower-paying, larger project. It's not a good business decision. The hours I put in per page remain the same, no matter how long the project is.

Discounts for "steady work"?

The other day, a prospective client asked about my per-word price for web copy, and I gave him a standard rate I used--explaining, of course, that this is dependent on a number of factors. He came back asking about what my per-word rate is for a large amount of work--something it would realistically take me four months to finish, even without other clients. Of course, my rate wouldn't change dependent on the length of the project alone, and so I sent him a price based on the per-word estimate I'd already given. He wrote back: "so it's a dollar a word all the way up, huh?"

"Uh, yeah," I said. "All the way up. That's how I roll."

"But I'm giving you steady work!" he said.

Okay, now here's another interesting development: people who think that because they're offering steady work, they deserve some sort of financial break. But here's the thing: if I really wanted "steady work" all that much, I could just get a "steady job." And no full-time employer will tell me that because they're giving me steady work, they're going to pay me less. Actually, they're supposed to pay me more each year. It's called a raise.

I think the perception is that since I don't have to spend a lot of unpaid time marketing myself, what with all their steady work, I should be willing to offer discounts. That even though Clients B, C and D pay more on an hourly basis, I had to market myself to land them...and Client A didn't require any extra marketing efforts on my part.

The thing is, I probably should be marketing myself a little anyway, even with a "bulk" project--because it's not forever, and it's not smart to put all your eggs in one basket when you're a freelancer. A project that keeps me too busy to market myself will keep me from growing my business beyond having to take these crummy bulk-rate jobs.

Maybe some writers can get away with offering cut rates for big projects. But in my opinion, it's not a smart decision. It doesn't fit with the service-based business model, and it costs us in the long run.

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