Friday, October 9, 2009

Defending Your Prices

Recently I had a client request a quote for a small project--a landing page for a new website. I quoted a price based on my pricing parameters, and the response I got was this: "this seems awfully high for such a short project. Would you consider charging less?"

Once upon a time, I would have considered doing it. I would have had an insecurity attack, thinking my price was really too high, and would have offered a lower quote. Here's a hint: never do this. Every time I've done it, it hasn't worked out well for me--either I didn't get the project anyway, or I got a client who continually tried to negotiate me down--and got stuck working for much less than I was worth over a longer period of time. If you show weakness once, folks, it's all over with that client.

The thing is, I knew that price was reasonable for that project. I knew the type of work that would go into it. And I knew that despite this client's protestations, I was still probably undercharging. So I didn't back down. Instead, I justify my prices.

If you haven't been called upon to justify your prices yet, don't worry--you will. The good thing is that most clients are reasonable too--and in most cases, once they understand why you charge what you do, you'll get less resistance. Those who are unreasonable are probably not ideal prospects--if you've done your pricing homework, that is.

Here are a few things to consider when justifying your prices to clients.

You have overhead, too. I hear over and over that freelance writing is a low-overhead business. Maybe that is true--sometimes. But you're paying twice the Social Security and Medicare taxes that employees pay--that's a business expense. Internet costs, computer costs, rental for your home or off-site office--all business expenses. And let's not forget marketing, classes to build your skills, even costs of living. The truth is, if you don't charge enough to cover your expenses, you can't provide your services to anyone--including them.

Just because it's short doesn't mean it's easy. This is pretty common with me: I'll send out a quote on a short but complicated project, and I"ll get back a reply to the effect of "But it's only 2,000 words!". The thing is, some promotions take time to get right--even if they're short. Think about how much has to be packed into a tagline or postcard mailer copy--just because these are often just a handful of words, does that mean you should charge pennies? No. Explain what goes into the project, and that if you were working for a really low price, you wouldn't be able to afford to put the time in that it takes to do this type of job right.

You're more qualified than the cheap guys. I occasionally get a question from clients such as "why do you charge $x when the guy down the street charges $y?" I don't go off and criticize the guy down the street--instead, I simply list my qualifications, which the guy down the street might not have. I'm not the cheapest guy on the block for resume writing, for example--but I'm CPRW-certified, I have a history of working with executive search firms and larger resume-writing firms that serve executive clients, I've written hundreds of resumes for the client's industry, and my interview rate is over 90%.

Next time a client questions your prices, don't back down. Put some thought into your initial quote--based on what you need to make to meet your revenue goals--and give some justification. Chances are, you'll get paid what you're worth a lot more frequently.


Myric said...

Don't back down is a good rule - as long as you can back it up. If you have the experience, if you have the training and if you have the ability to do the job, your prices should be rock solid. Maybe for a good client who is willing to sign a contract to provide a certain amount of work a small discount might be appropriate, but only if you get it in writing.

With that in mind, I used to work for a company whose rate card was priced about 10 to 20% higher than what they actually wanted to charge for the work. The clients seemed happy because they felt they could haggle with the sales reps to get a good deal, when in reality they were being charged the going rate.
The owner and head of sales would almost always throw something in "gratis", even something as seemingly insignificant as lunch, which kept up the illusion.

I don't alter my pricing like that, but I know several people who do something similar. Do you think there's anything to that approach?

Mike Chen said...

To put it bluntly, I say "screw 'em" when they claim I cost too much. I had one guy who asked for a quote on a Sunday, I reviewed his stuff on Monday and asked for more info, he replied on Tuesday, and I gave him a quote on Wednesday. He said my quote was too high and I screwed up his schedule, bla bla bla.

At first, I took it a little personally, then I re-reviewed what he was asking for and I realized that 1) I responded in a timely fashion and 2) my quote fell in line with similar projects from other clients.

I tried to kill him with kindness, saying that I invited him to shop around for prices and that he'd find that my prices were quite reasonable for my experience AND I gave him some tips on hiring students or new writers for free. ;) He still gave me a bad time for "ruining" his project.

In other words, the guy was an unreasonable jerk, and there will be people like that despite all we offer them. It's their bad karma, not ours. :)

Lori said...

Absolutely the best post on this topic yet. Great job, Jen! I'm with you - no negotiating because they think it's high. If they want quality, they have to pay for quality.

Jennifer Williamson said...

@Myric: I've heard of people doing that and I've considered doing it myself, but at the end of the day I really prefer not to work with clients who haggle. I've also heard of people claiming a higher retail price for something and then offering a "discount" that's less than they prefer to make. Personally, I try to price high enough so that there's a little wiggle room--not for hagglers, but for occasional discounts for regular clients and those who are ordering lots of services. I don't think that it's a terrible idea to leave some wiggle room in your pricing.

@Mike: That situation is totally not your fault. If he was in such a rush, why would he take a whole day to respond to your request for more info? I've had that kind of thing happen to me too, and really their emergency isn't your emergency. Most of the time THEIR emergency isn't even their emergency--they're just trying to guilt you into giving up something.

@Lori: Thanks! And absolutely--quality doesn't come cheap.