Friday, April 25, 2008

The Ethics of Setting Your Prices

Over at Men With Pens the other day, I saw a post that took an interesting take on the issue of what to charge. It got me thinking.

We all struggle with what to charge. And naturally, we all want to make as much money as possible. Most "what to charge" advice, including from the writers-who-started-it-all Bob Bly and Peter Bowerman, is geared toward how to charge more. No thought is given to whether or not it's right or wrong. The prices you charge are a business decision, and a wider morality shouldn't factor too heavily into your pricing. You're running a business, after all--not a charity.

In the writing community, there's definitely an attitude that it's actually "wrong" from a moral standpoint to charge less. There's a good reason for this: so many, many people charge next to nothing for their work that it undermines the community as a whole. The theory goes that when you do an entire website rewrite for $20, it makes it more difficult for me to charge $2,000 for the same service. Of course, you do get what you pay for--and a $20 website will be much different than a $2,000 website. But some clients see only the number of zeroes after the 2--and that brings the writing economy as a whole down. It's a tough world out there, the logic goes--and writers have to maintain solidarity by not giving the work away.

I absolutely believe we should all charge what we're worth. But is there an ethical side to setting prices? The way I set my prices is a personal decision mainly guided by what I need to earn. I don't think I'm the most expensive guy on the block, but I'm not the cheapest, either--and I don't generally worry about what others charge when I set my prices. I choose prices that work for me. However, there are some situations where I will think about what the person I'm working with needs to pay. Here they are:

When it's a nonprofit. There are some causes I believe in very strongly, and I'll work with those nonprofits for a reduced price. In some cases I'm willing to give small projects away for free. I can't afford to do this with larger projects, simply because of the time involved--but I do offer a reduced rate for them.

When it's family or friends. Okay, I admit it--my friends and family get my services for free. I've written my dad's business brochure, my boyfriend's resume (and the resumes of many of his and my friends), my brother's website bio, and provided proofreading and editing for countless other projects free of charge, mainly because it's my little brother or main squeeze or best-friend-since-birth asking. Maybe some would say I should charge, but I like being able to do this for them for free.

When it's a small company with a small budget. Okay, this one's a little different. I don't reduce my prices for every budget-conscious small business that comes along. But if I make a quote and the prospect tells me it's too high, I'll work with them. I'll suggest ways they can save money with me--by writing the copy themselves and having me rewrite it; by providing me with an outline and all research materials; or by cutting back on length or other specifications.

Naturally, you need to set prices that work for your business--and you want to make as much as possible. But there are ways to work in your ethics, too--and work with small, budget-conscious clients without giving away the farm. If you can do it successfully, hopefully they'll come back with more once they've grown.

7 comments:

Anonymous said...

Charging what you know your work is worth is not "charging astronomically" or unethical. Many writers continue to be underpaid. The web content mills that pay $20 for an article, and the writers who write for them, are not helping the situation.

Michael Lombardi said...

First, let me say that doing favors for friends is a decent thing to do. As long as you know when you're being taken advantage of and can stop it before it gets to that point that's really all that matters. I was a Biology teacher and I never ask family members who are still in school for money whenever I help them with their homework.

Now with regards to pricing, I think "giving it away" hurts everyone. At the same time, you should know (and charge) what is in line with the quality of work you provide.

As a marketer/sales person, I will say that as soon as you make price your selling factor you lose. There will always be someone out there who's just dumb enough to sell their service or product so cheap it puts them out of business. And why would you want to compete with that type of knucklehead? Let them ruin their own business and in a year that's one less competitor for you.

If everything was about price, why would you buy a BMW when a Civic will accomplish the same task? Coach purses are $300 because someone is willing to pay it. You have to give your product value such that the price isn't a hinderance.

When price does hinder purchases, you're doing the right thing by suggesting ways to cut costs. You don't want an "all or nothing" scenario. You want your client to be happy even if it means doing some of the leg work themselves.

At my company, if I price a black shirt at $10 and $8 is their budget, I'll suggest ways to reduce their price (such as going to white). Our customers know they can get a better price by going to a "sweatshop" setting that employees illegal aliens, but the value in our product comes from the fact that we have great artists and printers who know when something looks wrong and needs to be corrected before a single shirt is scrapped. We've got knowledgeable sales people, so we can anticipate problems before it gets to the art department (where the client pays by the hour).

Anyway, I apologize for the long comment. Basically the take home message is I think you're doing things the right way.

James Chartrand - Men with Pens said...

Thanks for the link and the discussion, Jennifer. Good thoughts and I find them interesting.

You wrote, "We all struggle with what to charge. And naturally, we all want to make as much money as possible."

No. I'm afraid we "all" don't. Some people do, yes. But many of the people who commented on that post didn't want to make the most money possible.

I'm chuckling a bit, because I remember that you once had a post about generalizations (and I think I started that lol).

Mark said...

"But some clients see only the number of zeroes after the 2--and that brings the writing economy as a whole down."
I am not a freelance writer but I would say that's where effective communication and educating your client comes into play so that you're not giving away the farm! Setting your price is like walking a tightrope and needs constant reevaluation regardless of the profession. Good post Jen.

Rebecca Smith said...

Sometimes, especially with budget-conscious organizations, I simply ask clients up front what they have in mind for a copywriting fee. Knowing a client’s ballpark budget helps me in formulating my estimates—and in knowing when the client is not a good fit.

Great, relevant post, Jennifer!

Devon Ellington said...

I think it has to be on a case-by-case basis. I have a few pro bono clients -- but they are special cases, and someone of whom I've never heard with no track record is not going to get pro bono because they don't want to pay.

I've also worked on barter, which is fun.

What we have to do is find our own "fair day's pay for a fair day's work" in each situation. There are clients who are such a pain that the aggravation fee kicks in, and it's still not enough.

It's a fine, and very individual line.

Taking on your favorite charity as a pro bono client is a good thing; agreeing to do 20 articles at $1/each is what hurts us all, and those are two entirely different arenas.

I actually just lost out on a job that was pitched to me as a paying one, I did the research, set a fair price, and lost it to someone with no credentials who agreed to do it for free for the "experience".

It's part of today's post -- I think you'll get a kick out of it.
(Thanks for adding the Choose identity option so I can actually comment)!

Jennifer Williamson said...

@Anon: very true. Those web content mills actually pay something like $5 or even $1 per article--in those circles, $20 per article is a great fee!

@Michael: Thanks for the valuable insight! I agree; I love helping out friends and family this way--it's something I can offer in return for everything they do for me. And in many fields, making price your USP can only hurt.

@James: you're right; I probably should have said "many of us". I think most people would rather make more money than less, if ethics weren't part of it--and some people are able to filter those concerns out better than others.

@Mark: You're absolutely right. As freelancers it's part of our job to convince clients our work is worth the price.

@Rebecca: That's definitely something I've considered too. I think I'd need to know exactly how much to charge for each service first, so if I sell a service for $x but they can only pay $y, I'd know exactly how much of my work $y can buy. If that makes any sense.