So, a few weeks ago, I offered up a competitive bid on a project for a commercial writing client I’d done some good work for some time back. The graphic designer on the project (we’d submitted a “turnkey” project bid) had actually worked for the client for 10 years a while back, had the inside track, and knew all the players. They did tell us they’d be looking at several bids, but we figured that was just a formality (after all, they were a government entity, so they had to go through a “competitive bidding process”). Yeah, buddy, we were in like flint.
Well, guess what? They went with a lower bid. Hmmm. Just an anomaly or a “bad economic sign”? Depends on what you decide, I suppose.
Fast forward to last week. It hit me as I was putting together a quote on a project for a prospect who’d called me out of the blue. I knew what I’d normally charge (and get) for a project like this, but found myself wondering if taking the business-as-usual approach was wise in a time when things weren’t quite usual. With the prospect’s admission that he’d be talking to several other writers echoing in my head, I shot a bit lower than I would have, say, a year ago. Still a healthy fee – we’re only talking maybe 10% lower than normal – but the fact that I was playing the game at all pissed me off.
Okay, so I’m a bit torn. Part of me hears my voice admonishing commercial writers: “Don’t play the price game! You’ll lose because there will always be someone willing to do it for less.” Absolutely true. And, “Stick to your guns; the good clients will always pay for quality.” Also true, and I’m working for several of them who haven’t made a peep about wanting me to charge less (and this new guy has no direct experience working with me, so he hasn’t yet gotten to the point where my competence trumps any price sensitivity). And the new year is off to a bit slower start than usual, so maybe that’s part of it.
But then the other side ponders, “Should I be a bit flexible these days? Are clients getting more budget-sensitive?”
So. Am I making a mountain out of molehill? Am I losing my nerve? Or just being realistic? In case all of you think that us seasoned folks always have it all figured out, think again… 😉 Love to hear from you guys about what you’re finding out there…
Are you finding price is becoming a bigger issue these days with your existing clients?
If so, are you becoming more fee-sensitive these days, making adjustments for changing times?
Or, even if it is, are you refusing to play the game at all, charging what you’ve always charged, because, by George, you’re worth every penny?
Personally, I haven’t noticed any issues with my prices. But maybe economic conditions are taking longer to hit my clients.
My concern with dropping a price during the “lean” times is getting the price back up when times are good. Let’s say you drop your price and down the road, the economy is much better. Can you go back to the client and say, “Y’know when I gave you a break? Well, times are better now so I need to adjust your rate back up.”
I think clients get used to a certain price. That’s why it’s so important for beginners to set a fair price from the start. Because it can be almost impossible to get a better rate with that client when you’ve trained them to expect costs to be at a certain amount. It doesn’t mean they won’t pay a higher rate, but you risk them looking around to see if someone else will match your old rate.
I once read a suggestion (not related to any economic conditions) that when you put together a proposal, you should always compete with yourself. Instead of one option for the client to accept or deny (and compare with competitors), you should offer two or three options at different prices. One price would be for the job exactly as the client wants it, one price would be for a scaled back version of the project to cut costs, and the third would be a higher price with more bells and whistles. Then you let the client determine their comfort zone with price.
The idea is that you stand a better chance of landing clients when you’re “competing with yourself” and giving the client more options. I’d be more inclined to do that than lower my normal fees. You’re risking being taken advantage of by clients who might be perfectly able to pay your normal rate, but are seeing what they can get by with by playing the “economy” card. (To be fair, there’s no harm in them asking. It’s good business on their part. And in some cases, they really are getting hammered by the economy.)
The other concern I have with lowering rates is that Murphy’s Law usually kicks in. You accept jobs at a lower rate and are booked, but then have to turn down some jobs from people who call and are willing to pay your normal rate.
Having said all that, this is another joy of freelancing… we’re free to do what we feel is best for us at any given moment.
Thanks, Mike,
Good stuff, as usual. Good points all. In truth, given that the example I gave was a new project for a new client (as opposed to me charging less for a project type I’ve done many many times before for a given client), I’m not too worried about “raising” my prices later.
Put another way, given that a was a very custom project (a web site with x # of pages and a few other small things), it’d be harder for the client to discern a higher price later on a completely different project type with completely different parameters. But, absolutely, if you decide to temporarily charge less than you would normally on a “fixed” project type that carries a set price (i.e., an ad, direct mail postcard, etc.) that you’re doing a lot of for ONE client, it WILL be harder to bump them back up later.
I love your “competing with yourself” strategy with multiple scenarios and multiple prices. Often, we resort to that only when the client balks at our bid, and by definition, we’re only offering lower-priced scenarios. Makes a ton of sense to do it from the get-go. Won’t always apply, as sometimes, the project is pretty fixed in parameters, but it’s something to absolutely trot out when there are shifting project boundaries. Good stuff.
That sounds like something that would make a great tip for The Well-Fed E-PUB! 😉
PB
I ***really*** like Mike’s post.
I have a couple time offered a client 3 different rates based on 3 different word count scenarios, and they actually ended up choosing the highest price/biggest book, which was great. I hadn’t thought of that as a tactic, but it could work more often than I have used it.
I also agree with Mike that the problem with lowering rates in lean times is that you are going to find it nearly impossible to raise them in better times.
Maybe a better way to go is rather than lowering prices, being selective about increasing them. Some people up their rates by 10% each year – perhaps in lean times, only raise by 5%, or by nothing at all. At least this way you can avoid sliding backwards, rate-wise.
I haven’t lowered my prices, but I haven’t raised them either. Towards the end of last year I emailed my two wonderful, long-time clients and let them know that as a courtesy to them, I am freezing my rates for 2009. It may cost me a little this year, but I definitely gained some goodwill. And in the long run, I figure that if I can help my clients, I am also helping myself.
I’m in the heart of the recession (Michigan) and I’m quite price-sensitive. Last year, I wrote a quick children’s booklet for a local bank and got $1,500. This year, they wanted a sequel but were only willing to pay $1,000, and I took it without hesitation. (The hourly net from the project is still very good.) I have no doubt that banks and most other organizations have slashed marketing communications budgets this year, and I don’t want to be so inflexible that I lose projects, especially when there are fewer projects to go around.
I agree with Bob Bly on this one: the busier you are, the more you can afford to push for your desired price. If you have 8-10 happy clients and you’re working 60 hours a week, then maybe you’ll balk when a new client is offering lower than desired rates. But if you have only one or two clients at the current time, maybe “staying busy” is more important than pushing for $100/hour and possibly losing jobs.
Thanks Lauri and Rick,
As you both point in your own ways, it’s somewhat specific to one’s own situation. Always the case. If I’m busy, I don’t have to take less or even take it at all. And funny, since last week, when I went easy on my bid to that one client, I’ve picked up a bunch more work (including 3 projects from one of those clients of mine who never question my bids, because they know they get great work from me). And she said as much in our conversation about the slowing economy.
Her comment was something to the effect that, “You should probably weather it OK, because you do quality work and there will always be a demand for that.” So, I’m quickly moving back to a position of being able to pick and choose. But even a brief slowdown can give even seasoned folks pause. But everything works in cycles and if you’ve laid enough groundwork, and do strong work, it all seems to work out.
PB
I think we have to be realistic. I know you have even told me personally, Peter, that the economy is not such a big factor…but I saw this coming (call me the canary in the mine). Yet, when I recently did a job for a concern you would recognize, I told them going in they were sort of famous for minimal pay and I dickered them up a (small) bit, wondering the whole time was I NUTS? I think I was feeling stubborn that day. Alternatively, and this is more likely, if a client balks, I always (even in good times) try to change the work to suit a lower payment. I say, “Well, OK, I can see that. What if we go to the amount you suggested, but say this will mean only one rewrite under two hours and payment in two weeks or less?” Bargain a little, in other words. So many writers are spilling out of newspapers and magazines–and yes, we know how to do this–but we are really in a free-for-all. I hate that word FREE. In Peter’s case of the client getting several bids–can we start saying, “If you are getting other bids, I wonder if you would consider doing a ‘best and final’ and letting us discuss our termsif we are not the winner.” Get another bite at it…I am asking…I have never done this.
Good stuff, Star,
Again, it always comes down to how much you need and how much work you have. If you need more than you have and you’re in a competitive situation, you ignore the realities at your own peril. As for asking the client for last shot, sounds like a good idea, but it can also have him think, “You mean you’re not giving me your best deal yet?” If you’re not going to reduce your price but reduce the scope, and he can get more from another writer for the same price, then why would he go with you? He would, IF he knows you’re more experienced and more likely to give him a better end result, AND, most importantly, that extra value is something he’s willing to pay for. Why wouldn’t ANY client pay a bit more for better? Well, for some, good enough is good enough. Luckily, the ones I’m working with don’t feel that way.
PB
> “You mean you’re not giving me your best deal yet?”
This reminds me of a story from some time back. (Can’t recall where I read it.) A beginning freelancer was bidding on a project. I have no idea if she was the only bidder or not. She sent in the proposal and got a response back that the price was too high. I can only assume she didn’t ask about a budget. Or if she did, the client didn’t give her one.
Anyway… in a panic, she offered to lower her price to meet their costs and not lose the job. The client kind of went off on her and asked how he could trust he was getting the best price if the freelancer was so willing to drop the price when there was any resistance. In his mind, he’d always doubt the price and didn’t want to go through the negotiation process with each new project.
I have no clue as to whether the client was testing the freelancer or not. But it’s a lesson that stuck with her and it has always lingered in the back of my mind when quoting a price. When I was starting, I think I would have done the same thing if I needed the work. I would have mistakenly thought I was helping the client by lowering my price when, in fact, I might be insulting the client.
As others here have written, it’s a tough call when it seems like everyone is hurting from the economic situation. So flexibility can be a life-saver. This topic is a good excuse for everyone to think through how they want to deal with it before they’re in the middle of a bidding process.
Thinking about it a bit, this is possibly the best of times to actually get a budget from a client before quoting a price. I’d have to think most companies are really watching their pennies and have a better sense of how much they will pay for creative talent. It seems that most of the time, clients don’t want to show their hand with their budget for fear your price will, coincidentally, be close to the same amount. Maybe these days clients don’t have the same luxury to play the “guess the budget” game and will give you a budget upfront.
I’ve been on the client side as well, serving as a communications manager at a prestigious hospital. Many agencies and freelancers wanted to get work from us. As a client, there is a certain logic to fees. Why would you pay $150 per hour to Suzy Designer (who is one year out of art school and scrambling to build a business) when for the same rate I can hire the biggest ad agency in town? This would be a case where Suzy has inflated her value and/or she isn’t aware that you have to pay your dues and learn the ropes before you get top dollar. If I’ve never worked with her before, how do I know she is even worth it? For an intro project, she may want to quote a fee on the lower side and do a fantastic job and thus begin a long-term, lucrative relationship with me and my peers at the hospital.
Even very large ad agencies will do projects at a lower fee if they are trying to strategically build relationships with their target clients. Lose the battle but win the war, as they say.
Great story, Mike and a true cautionary tale. What a car salesman might be able to pull off on his lot and get away with (to the delight of the buyer), a writer could not.
And Rick, thanks a LOT for the wonderful insight into the client side. That’s exceptionally helpful information, and underscores that sometimes a lower rate can be a strategic move. The key is to make sure the client knows they’re getting a special rate…
PB
Rick Middleton asks, “If I’ve never worked with her before, how do I know she is even worth it?”
Well, you could ask her. Ask her for samples and references. And who knows, maybe she HAS “paid her dues” in a year. Some people learn from experience much more quickly than others. And anyway, at one point does one knows that one’s “dues” have been “paid in full”?
In any event, perhaps this is more evidence that Suzy (and others) should avoid quoting by the hour.
Hi Peter – I’ve gone through this twice recently and took a different approach in each situation. For one client who is giving me regular work on a weekly basis, I took a lower than usual fee. I got the job and I should get consistent work from this client well into the future.
In the other case, it was a one-off job. I thought about going low, but decided to quote my usual fee. This client is thinking it over more carefully.
I see two lessons in my experience.
One is that I might need to be more sensitive to the economy when pricing my services. The other is that there is still work to be had – I pitched both of these clients in the past four weeks.
PB
Good, timely post, and great feedback. I’m not as established as most of you – still at the day job, and will be for a while – but I’m in that great position of being able to take a little less up front in order to establish a great partnership and more business down the road. Witness!
A little background first. Because I’m not around during business hours to cold-call (I know, I know), every weekend I select a city and google 100 designers. I have a prospect e-mail template: I just plug in the address, the name of the contact if I can find it or just a general “Attn: Project Managers & Creative Directors”. I schedule all 100 e-mails to go out at 8:00 PM EST Sunday night, so that my pitch will be one of the first things the client sees in their in-box on Monday morning.
This weekend, I selected L.A. On Monday afternoon, I got a reply asking for a quote to write a website for an orthodontist. About six pages, mostly from scratch, as the orthodontist had been in business for forty years with no advertising ever. Fine. I looked it over, and quoted $600. Monday evening, my designer replied “That’s about twice what I was expecting. Let me think about it, and if not, I’ll definitely keep you in mind for other projects.” Sensing that this was a good opportunity to kick the door wide open for future referrals, I went down to $400. Score!
I definitely won’t be leaving the cube with my $400 score. But, it’s $400 more than I had Sunday evening, it’s a good faith offer that will lead to more work from this designer down the road, and it’s a signed contract, and another shot of encouragement that I can actually do this thing and build it up to the point of self-sufficiency one of these days. And at the end of the day, I basically just earned $200 an hour. Win/win.
Thanks Michael. I absolutely agree that she shouldn’t be quoting by the hour. You can be great but if you’re publicly quoting $150 an hour AND the client knows you’re relatively new to the game, that’s a recipe for BIG problems. I’m not sure I’d disagree with Rick’s assessment, whether fair or not. Again, I’ve become a convert to the “never-quote-hourly-rates” school of thought. Means nothing minus the context of a particular project.
And thanks Sean, for your comment. Underscores the fact that there are no hard and fast rules in this arena. We all have to do what feels right for our own mix of work and clients. That said, as Mike pointed out earlier, we DO need to be careful about lowering rates only to find it challenging to raise them later (though as also mentioned, if it’s a project with unique parameters you’ve quoted low once, a client may not be able to perceive a jump back up to “normal” rates on other projects later).
And Brian, as a way to start building that portfolio, that’s great! And I applaud your technological strategy for reaching prospects. That is truly working smarter and maximizing the time you DO have. I may want to use a quote from your description in the upcoming updated edition of The Well-Fed Writer (I’ll get with you offline about it).
That said, don’t get in the habit of thinking that $400 for a 6-page web site is even remotely a fair price. I recently quoted a 6-page web site. AND got strict parameters outlined for the length of each page (I hope you did; a “page” can have widely varying definitions…). My quote was about $2200. And no, I’m not trying to rain on your parade. I’m sure you know it was low. I’m just wondering what planet that designer was on thinking $300 is about right for a 6-page web site. Amazing.
Anyway, thanks much for all the comments. Good stuff!
PB
PB
I’d be honored to get with you offline about a quote! Stay tuned.
The designer is in L.A., so I guess they’re kind of la-la land. I agree: $300 is crazy, especially since I’ve quoted and received 2k plus for comparable work before. BUT: A., this project is literally puffing up six paragraphs for a small-time dental practice, and B., this designer has a high-profile client base that I hope to tap into. I guess my theory is that I’ll take quantity (i.e. five $400 jobs) to start and let it lead to quality (i.e. one $2,000 job).
And as if on cue: I just got off the phone with another of my Monday Morning prospects and quoted him a ballpark of 2k for a project, and he’s still sending me project specs so I can work up an official quote. When it rains…
Excellent, Brian!
And if indeed it’s six paragraphs (we’ll see…), then $400 makes more sense. . And good luck with the deluge…;) Talk later.
PB
“You mean you’re not giving me your best deal yet?” I am not too worried about this. Once you start questioning a fee offered, you are in this territory. You have to be willing to walk it or you have no power. If someone said this, I would say, “Well, I am not going to bid against myself, but you have indicated that you have budget constraints and I am wondering what it would take for us to work together and thought maybe we could sweeten the terms a little.”
Point taken, Star, but as you point out, it’s all in how you present it. If it’s a fast, no-thought price-drop, it looks suspicious. If it’s a sincere, “This IS my going rate, but I would like to work with you and understand you have constraints,” it’ll fly better. But as discussed earlier, it’s always stronger to make a couple a price drop with a drop in project scope as well. Again, whatever works for each individual…
PB
Brian –
Wow, this is really good advice — I’m also trying to escape the cube, and my plan isn’t nearly as efficient. I make cold calls on Monday, Tuesday and Wednesday nights, getting voicemails, and then follow up with e-mail on Tuesdays, Wednesdays and Thursdays. I’ve only been making about 50 contacts a week, though, and I’ve been feeling I need to make some changes.
I agree that still having a day job gives you the financial flexibility to take on “gateway” projects, and it also gives one the flexibility to turn those projects down. I’ve done both in the past couple months.
I think you have to be really careful if you open that Pandora’s box.
If it’s a longterm client with whom you have a good relationship and you know the client’s going through hard times, I think it’s okay, provided you put in the contract that this is a one-time price cut and not your new rate with this client. You have to work project-to-project in that way, I think, because let’s face it, few clients will offer to go back to a higher rate, even when things turn around.
For new clients, I think you have to take it case by case and go with your gut.
Every project is individual, and every negotiation is individual. I have my rates, but I also take into consideration the individuality of the project. It’s one of the reasons I prefer a per-project rate rather than a straight hourly.
My two cents.
Oh, and Happy New Year! Haven’t yet had a chance to say that to you.
Yes, Caitlin, Brian’s strategy IS a good one. And I plan to give it a bit more airplay… 😉
Thanks Devon. Wise input as always. And HNY to you as well…;)
PB
Caitlin, eyes on the prize! We’re going to get there together.
It’s not an ideal strategy, but neither is my day job. And through my weekly e-mail campaigns I’m actually scheduling appointments with my local prospects and phone calls with my long distance prospects. If nothing else, I’m getting a decent number of hits and replies, so I figure I’ll keep on and let the numbers do the work for me. So far I’ve landed one long-term client this way (https://coolbabygear.com – I write all product blurbs and we blast two blurbs daily to subscribers), and the web site project already mentioned. (And yes, it actually is just puffing up about six paragraphs – literally about two hours work for me, and I’ll be submitting drafts to the client tonight.) I’ve got a call scheduled next week with a designer in Austin that averages 2-3 web designs per month, and a meeting scheduled with a local designer that looks promising. I’m getting there.
Great post, as usual.
Although I’m new to the freelance game, I haven’t seen much resistance to my pricing. I know it was a gov’t entity, but is there any possibility of finding why they went with another bid? Maybe cost played a role, but maybe there was another factor that influenced their decision. It would be worth knowing for future bids you might submit. And it might keep you from 2nd-guessing (and lowering your standard bid) when you bid on projects for other clients.
P.S. Can’t wait to read your forthcoming book!
Thanks Michelle,
And to answer your question, we know for a fact that we lost it over price. And we also KNOW that our bid was competitive – under normal circumstances, but, obviously, in these circumstances, not competitive enough. As my original post read, we actually had everything else going for us – familiarity with our work, a long-term rapport with the designer, etc. So, it surprised both of us, and price was the reason they gave. You win some, you lose some.
PB
I humbly suggest that you enhance the value of your work – perhaps giving additional advice on avenues they may not have thought of, etc – to make it seem as your client is getting more but for the same money. Price-reducing businesses will cut each others’ throats and disappear in this recession (and any discount in price means disproportionately more work just to stand still financially). Quality work will always be sought … so maybe time to reappraise marketing strategies and aspirations … ?
Thanks Russell,
You’re absolutely right – that is always the ideal strategy, and if we can do that, we sidestep the price game completely. That said, for some clients, in some situations, who would otherwise cut back, being sensitive to their budget constraints can endear you to someone for the long haul. But, you’re right – let’s just not even have to play that game. Thanks for weighing in!
PB
PB, I totally agree with you on being sensitive to budget constraints in order to develop a good partnership. Sometimes playing the game pays off handsomely! Especially for beginners like myself. The designer above who contracted me for $400 for an orthodontist website*? We’ve developed a great partnership, and she just designed my logo in exchange for me writing and revising copy for her new site. Being flexible definitely worked for me: wouldn’t necessarily recommend it for more established FLCWs, but in my case I’m all about quid-pro-quo.
*Incidentally, here’s the orthodontist’s site, which didn’t take me terribly long to do.
Thanks Brian,
Good stuff. Never know where something could lead!
PB