Why so many people undercharge for their work
November 16, 2021 10:21 AM Subscribe
More and more people are tasked with putting a price on what they do in the ever-growing gig economy, outside the constraints of corporate pay structures and even preset rates on apps such as Uber. You may hear us called gig workers, independent contractors, or freelancers; people who, like myself when I decided to write and coach writers full time five years ago, are thrown out into the capitalist wild. We release the rope of a job and the health insurance it may provide, and bet on ourselves to do what needs to be done so we and any dependents can live (and retire) with dignity. Before new freelancers discover organizations, communities, and mentors, they have few pricing resources as a guide, aside from the random inspirational Instagram post that says “Know your worth.” For myriad reasons, humans are very bad at this. Paulette Perhach writes in Vox on the challenge of setting fees for your work.
Part of what is difficult about this for me is this:
I know I am not the only person who has suffered poverty and hasn't been able to afford needed services from professionals. When it comes to offering my own services, I naturally want to work on a sliding scale, because I cannot conscionably take that kind of money from people in poverty and who are in need.
The problem then, becomes, you have to market yourself to, erm, people with let's say a certain level of wealth that tends to be higher than your own. Man, rich people are insufferable to work for, they nickel and dime you to death, always want more than you originally signed up for, and just generally are the worst.
So, if living in poverty means I retain my dignity and don't lower myself to please jerky wealthy toads, and allowing myself to help people who are genuinely in need, maybe poverty and not asking for "what I'm worth" isn't the worst thing. I don't know.
posted by deadaluspark at 11:11 AM on November 16, 2021 [58 favorites]
I know I am not the only person who has suffered poverty and hasn't been able to afford needed services from professionals. When it comes to offering my own services, I naturally want to work on a sliding scale, because I cannot conscionably take that kind of money from people in poverty and who are in need.
The problem then, becomes, you have to market yourself to, erm, people with let's say a certain level of wealth that tends to be higher than your own. Man, rich people are insufferable to work for, they nickel and dime you to death, always want more than you originally signed up for, and just generally are the worst.
So, if living in poverty means I retain my dignity and don't lower myself to please jerky wealthy toads, and allowing myself to help people who are genuinely in need, maybe poverty and not asking for "what I'm worth" isn't the worst thing. I don't know.
posted by deadaluspark at 11:11 AM on November 16, 2021 [58 favorites]
I'm with you dedaluspark. I do IT work both on an occasional freelance and as a day job. I do unofficial and informal sliding rates, if someone with obvious money hires me I charge what I think of as my actual, real, rate of $70/hour. If it's someone with less money I'll adjust downward significantly.
Mostly I do work for a lot less than my hypothetical real rate.
posted by sotonohito at 11:33 AM on November 16, 2021 [11 favorites]
Mostly I do work for a lot less than my hypothetical real rate.
posted by sotonohito at 11:33 AM on November 16, 2021 [11 favorites]
My experience is that virtually everyone who freelances sets their rate too low at the beginning, and many keep it too low forever. I'd like to emphasize a few things in this article. For the moment I'm going to put aside the issue of working for people who can't afford your full rate, but I promise I'll come back to it.
#1. Do not use your hourly salary at a full time job as your freelance rate
As the article points out, when you're a full time employee, there are LOTS of other costs your employer has to cover. Health insurance, taxes, the cost of the space and equipment, etc., etc., etc. As a freelancer, your rate has to cover these, or you're taking a pay cut. Most people understand this in theory but don't put it into practice. In general, there is nothing unusual or unreasonable about your hourly freelance rate being double (or more) your full time hourly salary at a permanent job.
#2. There is nothing wrong with missing out on jobs because of your rate
It's a BAD sign if you get every job you bid for. It means your clients would pay more. Many people, either explicitly or implicitly, consider it a moral failing when someone says they're charging too much. It's not! There is nothing immoral about you asking for a certain rate, and there is nothing immoral about a potential client declining to pay that rate. They're both simply business decisions.
#3. Count all the time you put in
Most of my freelance work involves conference calls with people who want insight into the industry I work in. The calls are typically about an hour, but I usually put in about an hour or so prepping ahead of time. Many people would consider that just one hour of work because that's the time they spent with the client. Don't do that!
#4. If you have enough work, raise your rate
This is the simplest and most effective piece of advice I can give. If you're getting enough gigs, charge more! If the amount of work you get drops off, you can always lower your rate in the future. But usually you'll find that you have just as much work as you did before. Which means you need to raise your rate again :)
Now, to get back to doing work for people / organizations who truly can't afford your full rate. This is a tricky issue, but years ago someone (I forget who) suggested a solution that I think works really well. For ALL the work you do, no matter for whom, send an invoice with a top line based on your full hourly rate. For those who can't afford that rate, give a discount (included as a line item on your invoice) to reduce the cost. The discount can be 100% if you're working pro bono, but always document your full rate. That helps establish the value of your time, both for yourself and for others.
posted by tom_r at 12:35 PM on November 16, 2021 [179 favorites]
#1. Do not use your hourly salary at a full time job as your freelance rate
As the article points out, when you're a full time employee, there are LOTS of other costs your employer has to cover. Health insurance, taxes, the cost of the space and equipment, etc., etc., etc. As a freelancer, your rate has to cover these, or you're taking a pay cut. Most people understand this in theory but don't put it into practice. In general, there is nothing unusual or unreasonable about your hourly freelance rate being double (or more) your full time hourly salary at a permanent job.
#2. There is nothing wrong with missing out on jobs because of your rate
It's a BAD sign if you get every job you bid for. It means your clients would pay more. Many people, either explicitly or implicitly, consider it a moral failing when someone says they're charging too much. It's not! There is nothing immoral about you asking for a certain rate, and there is nothing immoral about a potential client declining to pay that rate. They're both simply business decisions.
#3. Count all the time you put in
Most of my freelance work involves conference calls with people who want insight into the industry I work in. The calls are typically about an hour, but I usually put in about an hour or so prepping ahead of time. Many people would consider that just one hour of work because that's the time they spent with the client. Don't do that!
#4. If you have enough work, raise your rate
This is the simplest and most effective piece of advice I can give. If you're getting enough gigs, charge more! If the amount of work you get drops off, you can always lower your rate in the future. But usually you'll find that you have just as much work as you did before. Which means you need to raise your rate again :)
Now, to get back to doing work for people / organizations who truly can't afford your full rate. This is a tricky issue, but years ago someone (I forget who) suggested a solution that I think works really well. For ALL the work you do, no matter for whom, send an invoice with a top line based on your full hourly rate. For those who can't afford that rate, give a discount (included as a line item on your invoice) to reduce the cost. The discount can be 100% if you're working pro bono, but always document your full rate. That helps establish the value of your time, both for yourself and for others.
posted by tom_r at 12:35 PM on November 16, 2021 [179 favorites]
tom_r, that is amazingly good advice, which is completely new to me. Thank you!
posted by Bella Donna at 12:45 PM on November 16, 2021 [7 favorites]
posted by Bella Donna at 12:45 PM on November 16, 2021 [7 favorites]
There's a designer who used to be my student, then my T.A., then started working for me and next year will be joining the workshop I teach as a Professor. She's in high demand and I'm always after her to learn how to properly charge for her work. She gets skittish when I ask her how much she's going to charge me when she works for me, and I usually end up paying her more than what she expects.
Kids these days…
posted by signal at 12:52 PM on November 16, 2021 [3 favorites]
Kids these days…
posted by signal at 12:52 PM on November 16, 2021 [3 favorites]
The discount can be 100% if you're working pro bono, but always document your full rate. That helps establish the value of your time, both for yourself and for others.
That's really excellent advice, and I really see the value in that when it comes to a lot of customers, especially the ones who don't respect or value what you're sacrificing to help them.
However, what about customers who might feel intimidated by this line item? Is it reasonable to try to talk to them like a person (say, outside of email) and let them know that the line-item isn't necessarily about them as in their case you're reasonably sure the value to them is priceless?
Because yes, I've dealt with customers who need to be reminded of the value of the work I do, but I also have a lot of sad, lonely, ashamed customers who would look at that big number at the top and see the discount and feel like a failure and feel like it's some reminder of what they are unable to give back. They may not lash out, but they may hurt deeply inside and feel like they're not giving enough, even when you've already decided that they are.
I don't know, I just get incredibly anxious about making vulnerable people feel more vulnerable and ashamed. I'm speaking from experience on this feeling, when you know how much someone usually charges and how little they're charging you, it can often make you feel like you're just a taker who isn't contributing enough. It can be a heartbreaking feeling.
I feel like those people already value what I give them enough to not have to prove it on paper, however I understand the cold hard logic of why I would need to give that line item to everyone to show people the value of what I am giving them.
posted by deadaluspark at 12:55 PM on November 16, 2021 [14 favorites]
That's really excellent advice, and I really see the value in that when it comes to a lot of customers, especially the ones who don't respect or value what you're sacrificing to help them.
However, what about customers who might feel intimidated by this line item? Is it reasonable to try to talk to them like a person (say, outside of email) and let them know that the line-item isn't necessarily about them as in their case you're reasonably sure the value to them is priceless?
Because yes, I've dealt with customers who need to be reminded of the value of the work I do, but I also have a lot of sad, lonely, ashamed customers who would look at that big number at the top and see the discount and feel like a failure and feel like it's some reminder of what they are unable to give back. They may not lash out, but they may hurt deeply inside and feel like they're not giving enough, even when you've already decided that they are.
I don't know, I just get incredibly anxious about making vulnerable people feel more vulnerable and ashamed. I'm speaking from experience on this feeling, when you know how much someone usually charges and how little they're charging you, it can often make you feel like you're just a taker who isn't contributing enough. It can be a heartbreaking feeling.
I feel like those people already value what I give them enough to not have to prove it on paper, however I understand the cold hard logic of why I would need to give that line item to everyone to show people the value of what I am giving them.
posted by deadaluspark at 12:55 PM on November 16, 2021 [14 favorites]
I've been freelance for 15+ years and everything tom_r says is spot on.
Another thing to remember is that even when you quote your freelance rate as double (or triple or more!) what you would make as an hourly employee to cover your overhead+benefits, you are still saving the client money. Think about how many hours of other employees time it takes to hire, onboard, and payroll someone vs. you showing up, getting it done, and having accounts payable cut a check.
Having someone tell you you are too expensive is a good thing. Losing jobs because you weren't the cheapest is a good thing. Dropping previous clients when you raise your rates is a step forward for your business. It means you're weeding out clients who's sole consideration is the price, who tend to be the neediest and most frustrating clients to deal with IME, and making room for people who value you and your actual skills and are willing to pay for them. You want clients who view you as the rockstar who parachutes in to solve all their problems on their most important projects, not a cost saving measure or a way to shore up their over-worked or under-trained employees.
You can always go lower, or quote lower rates for clients that you share values with, but it's extremely difficult to do the opposite and later raise your rates for the same work. Excellent advice above to always document your actual full asking rate. I do this on my invoices by charging my full rate and a separate line item for the discount. Never once had anyone feel "intimidated" by this what they are is grateful for you being flexible/giving them a deal. Freelancing is about relationships but you're not your clients therapist (unless of course, you're in the therapy business, in which case disregard :). If they can't afford you they'll hire someone within their budget, no harm no foul.
Which is another thing: Raise you rates on a regular basis. If you are feeling burnt out and too busy, it is way past due for you to raise your rates and you probably need to make a significant bump. IME every client lost because I raised my rates was offset pretty much immediately by the increased revenue from existing clients who I had then more availability for to bill at the new, higher rate. And then you have time to seek out new clients, and pretty soon you are too busy all over again, rinse and repeat....
posted by bradbane at 1:57 PM on November 16, 2021 [27 favorites]
Another thing to remember is that even when you quote your freelance rate as double (or triple or more!) what you would make as an hourly employee to cover your overhead+benefits, you are still saving the client money. Think about how many hours of other employees time it takes to hire, onboard, and payroll someone vs. you showing up, getting it done, and having accounts payable cut a check.
Having someone tell you you are too expensive is a good thing. Losing jobs because you weren't the cheapest is a good thing. Dropping previous clients when you raise your rates is a step forward for your business. It means you're weeding out clients who's sole consideration is the price, who tend to be the neediest and most frustrating clients to deal with IME, and making room for people who value you and your actual skills and are willing to pay for them. You want clients who view you as the rockstar who parachutes in to solve all their problems on their most important projects, not a cost saving measure or a way to shore up their over-worked or under-trained employees.
You can always go lower, or quote lower rates for clients that you share values with, but it's extremely difficult to do the opposite and later raise your rates for the same work. Excellent advice above to always document your actual full asking rate. I do this on my invoices by charging my full rate and a separate line item for the discount. Never once had anyone feel "intimidated" by this what they are is grateful for you being flexible/giving them a deal. Freelancing is about relationships but you're not your clients therapist (unless of course, you're in the therapy business, in which case disregard :). If they can't afford you they'll hire someone within their budget, no harm no foul.
Which is another thing: Raise you rates on a regular basis. If you are feeling burnt out and too busy, it is way past due for you to raise your rates and you probably need to make a significant bump. IME every client lost because I raised my rates was offset pretty much immediately by the increased revenue from existing clients who I had then more availability for to bill at the new, higher rate. And then you have time to seek out new clients, and pretty soon you are too busy all over again, rinse and repeat....
posted by bradbane at 1:57 PM on November 16, 2021 [27 favorites]
If they can't afford you they'll hire someone within their budget, no harm no foul.
Missed the edit window but meant to say that in my line of work, I see this as an opportunity to refer the client/job to a colleague who wants the experience, has more availability than myself, or is new to freelancing. It's an opportunity to mentor someone and discuss a lot of things mentioned in this thread, still help your client out, and build your own network. It's also just basic solidarity with my fellow freelancers to let people new to my industry know that, for example, if a client cancels with less than X day notice you should do Y, the going rate for whatever service is a minimum of $$, or client Z is notorious for paying late, etc.
Can't count the number of times a former assistant or colleague of mine has gone on to become the decision maker on the client side... always treat people with respect, when you freelance your reputation is all you have.
posted by bradbane at 2:10 PM on November 16, 2021 [7 favorites]
Missed the edit window but meant to say that in my line of work, I see this as an opportunity to refer the client/job to a colleague who wants the experience, has more availability than myself, or is new to freelancing. It's an opportunity to mentor someone and discuss a lot of things mentioned in this thread, still help your client out, and build your own network. It's also just basic solidarity with my fellow freelancers to let people new to my industry know that, for example, if a client cancels with less than X day notice you should do Y, the going rate for whatever service is a minimum of $$, or client Z is notorious for paying late, etc.
Can't count the number of times a former assistant or colleague of mine has gone on to become the decision maker on the client side... always treat people with respect, when you freelance your reputation is all you have.
posted by bradbane at 2:10 PM on November 16, 2021 [7 favorites]
There's also a bit of if the client is shopping around and you're priced too low they'll assume you're not as good as those that charge more. To a certain point they'll pick you because you're not the cheapest quote. Gotta pay for quality....
posted by zengargoyle at 2:14 PM on November 16, 2021 [3 favorites]
posted by zengargoyle at 2:14 PM on November 16, 2021 [3 favorites]
Because yes, I've dealt with customers who need to be reminded of the value of the work I do, but I also have a lot of sad, lonely, ashamed customers who would look at that big number at the top and see the discount and feel like a failure and feel like it's some reminder of what they are unable to give back. They may not lash out, but they may hurt deeply inside and feel like they're not giving enough, even when you've already decided that they are.
I feel like this sort of thing can become a bit more above-board when you have a discussion with someone about your rates beforehand, start from a higher rate and let people either state or imply that this would be a stretch for them. Because, sure, people maybe won't do that. But I also think it's a bit like all other etiquette issues: do you accept something that isn't what you want (the amount you feel you're worth based on XYZ information) or do you want the other person to not feel bad about themselves because of their own issues about what they can pay? I mean, those feelings are real and they're worth being polite about, but work isn't therapy (in most cases) and it's important to have this be one of those work/life boundary things. Not speaking to you specifically, deadaluspark, your compassion is admirable, but also speaking to myself, it's worth me also sticking up for me, as a freelancer and saying "This is what I am worth, but I can be flexible"
In most cases, you can't have both (get paid what you should and also have the other person paying exactly what they can) and I think one of the points of this article is that it's sometimes a thing that (some) women do, to accept less because they don't want to make others uncomfortable. And I agree, it's awkward, no matter what your decision is. I have a form letter, which I tell people is a form letter, which outlines my rates and the few axes on which I have wiggle room. This gives people some affirmative choices which they can make--it will cost more if I wrote a new talk but I am happy to give one I've already given for less for example--that don't always have a blaring "I CAN'T PAY" sign above them but can also mean we're having a negotiation not me just making some determinations about what I think people can afford.
posted by jessamyn at 3:02 PM on November 16, 2021 [9 favorites]
I feel like this sort of thing can become a bit more above-board when you have a discussion with someone about your rates beforehand, start from a higher rate and let people either state or imply that this would be a stretch for them. Because, sure, people maybe won't do that. But I also think it's a bit like all other etiquette issues: do you accept something that isn't what you want (the amount you feel you're worth based on XYZ information) or do you want the other person to not feel bad about themselves because of their own issues about what they can pay? I mean, those feelings are real and they're worth being polite about, but work isn't therapy (in most cases) and it's important to have this be one of those work/life boundary things. Not speaking to you specifically, deadaluspark, your compassion is admirable, but also speaking to myself, it's worth me also sticking up for me, as a freelancer and saying "This is what I am worth, but I can be flexible"
In most cases, you can't have both (get paid what you should and also have the other person paying exactly what they can) and I think one of the points of this article is that it's sometimes a thing that (some) women do, to accept less because they don't want to make others uncomfortable. And I agree, it's awkward, no matter what your decision is. I have a form letter, which I tell people is a form letter, which outlines my rates and the few axes on which I have wiggle room. This gives people some affirmative choices which they can make--it will cost more if I wrote a new talk but I am happy to give one I've already given for less for example--that don't always have a blaring "I CAN'T PAY" sign above them but can also mean we're having a negotiation not me just making some determinations about what I think people can afford.
posted by jessamyn at 3:02 PM on November 16, 2021 [9 favorites]
Advice I was given years ago that stood me well when I was doing it: A freelancer, especially one whose work is based on a set of trained vocational skills, is a tradesperson. You never see electricians or carpenters playing these bidding-against-your-own-anxiety blind-auction games. Ask yourself how a tradie would negotiate these questions—and then take out, or leave in, the swear words according to taste.
posted by Fiasco da Gama at 3:02 PM on November 16, 2021 [35 favorites]
posted by Fiasco da Gama at 3:02 PM on November 16, 2021 [35 favorites]
With the caveat that I've been out of the consulting game for the last few years, my two pieces of advice are: Charge by the day instead of by the hour and always negotiate business-to-business with accounts payable, never HR. You're a vendor not an employee. Don't let them treat you like one.
posted by ob1quixote at 3:49 PM on November 16, 2021 [13 favorites]
posted by ob1quixote at 3:49 PM on November 16, 2021 [13 favorites]
I'm just getting started with selling words for money, and I want to thank everyone in this thread for what they're saying. I know next to nothing about freelance writing, only that it's been a revelation that I can actually get paid money for something that I like to do and am sort of not terrible at. So, yeah, thank you all.
posted by Ghidorah at 4:06 PM on November 16, 2021 [7 favorites]
posted by Ghidorah at 4:06 PM on November 16, 2021 [7 favorites]
When I was doing corporate work I somewhat arbitrarily based my hourly consulting rate on what a decent lawyer would get for the same amount of time, because why shouldn't I get paid what a lawyer gets paid. When a potential client would say "wow, that seems like a lot," I would say, "yes, it is," and then say nothing else. Either they would pay the rate or they wouldn't. Usually they did, because most of the time, if they had got to me, someone had fucked up, and they needed me to fix it, and getting it fixed was worth more to them than what I was charging them.
These days, I have on my site a base rate for writing, which is currently $3.25/word. This serves two purposes. One, it dissuades a lot of writing solicitations, which is fine because I'm busy enough, thanks. Two, if someone is willing to pay that amount without arguing with me about it, then they're probably serious, and I will at least listen to the proposal.
Now, let me state the obvious, which is at this point in my career I'm not exactly wondering how I will pay my bills. That said, even when I was wondering how I would pay my bills, I still charged a lot. I figured it was better to charge a lot, and work a little, than charge a little and work a whole lot more, for what would be the same amount of pay. Through luck, privilege, and, yes, actually being good at what I do, the "charge a lot" plan worked out for me.
posted by jscalzi at 4:10 PM on November 16, 2021 [36 favorites]
These days, I have on my site a base rate for writing, which is currently $3.25/word. This serves two purposes. One, it dissuades a lot of writing solicitations, which is fine because I'm busy enough, thanks. Two, if someone is willing to pay that amount without arguing with me about it, then they're probably serious, and I will at least listen to the proposal.
Now, let me state the obvious, which is at this point in my career I'm not exactly wondering how I will pay my bills. That said, even when I was wondering how I would pay my bills, I still charged a lot. I figured it was better to charge a lot, and work a little, than charge a little and work a whole lot more, for what would be the same amount of pay. Through luck, privilege, and, yes, actually being good at what I do, the "charge a lot" plan worked out for me.
posted by jscalzi at 4:10 PM on November 16, 2021 [36 favorites]
Start with market rate, and adjust up or down based on how your experience compares to a typical market participant. If you can’t sell work at that rate, cut your rate. If you can sell a good amount of work at that rate, raise your rate for new clients, but grandfather old clients for the most part.*. I first set an hourly rate in mid 2016 and have raised it 8-9% a year on average, and it’s now about 60% higher than it started.
Also - once you learn how to sell work - hire people and sell their work too!
posted by MattD at 4:30 PM on November 16, 2021 [3 favorites]
Also - once you learn how to sell work - hire people and sell their work too!
posted by MattD at 4:30 PM on November 16, 2021 [3 favorites]
However, what about customers who might feel intimidated by this line item? Is it reasonable to try to talk to them like a person (say, outside of email) and let them know that the line-item isn't necessarily about them as in their case you're reasonably sure the value to them is priceless?
deadaluspark, that's a good question, and I definitely understand the concern. I think what you suggest is completely reasonable. I also think it's worth saying that there's nothing unusual about discounts -- they're used all the time in all kinds of contexts. It's not like this client is the only one who has ever paid less than sticker price.
Overall what I would say is, make the rate (and discount if there is one) about you, not about them. You want to document the fair value of your work, but you also have flexibility to accommodate clients you want to work with.
posted by tom_r at 4:54 PM on November 16, 2021 [5 favorites]
deadaluspark, that's a good question, and I definitely understand the concern. I think what you suggest is completely reasonable. I also think it's worth saying that there's nothing unusual about discounts -- they're used all the time in all kinds of contexts. It's not like this client is the only one who has ever paid less than sticker price.
Overall what I would say is, make the rate (and discount if there is one) about you, not about them. You want to document the fair value of your work, but you also have flexibility to accommodate clients you want to work with.
posted by tom_r at 4:54 PM on November 16, 2021 [5 favorites]
Wanted to take this opportunity to agree with a few other pieces of good advice on this thread. If a job you're bidding on turns out not to be a good fit for whatever reason (they can't afford your rate, it doesn't match your skills, you have too much worked already, etc.), recommend someone else if you know a good person for the job. This is good for everyone -- the other freelancer gets a new gig, the client gets someone good for the job, and both may send work your way in the future.
I also 100% agree with Fiasco da Gamma's point about viewing yourself as a tradesperson. Can literally anyone walk in off the street and do the job you do? No? Then you had to train for it. Maybe not with formal schooling, but somehow you had to gain the experience that makes you valuable. Nobody questions the fact that an electrician needs years of training so they can work on your wiring without killing themself. So why do we accept it when people question the fact that a designer needs training to produce a good logo?
Anyway, I'm trying not to belabor the point too much :) but I identify so much with what the author of this article is saying. It was mind-opening when I realized how much I was undercharging. And now I just want to shout it from the rooftops so all the freelancers hear it: RAISE YOUR RATE!
posted by tom_r at 5:20 PM on November 16, 2021 [5 favorites]
I also 100% agree with Fiasco da Gamma's point about viewing yourself as a tradesperson. Can literally anyone walk in off the street and do the job you do? No? Then you had to train for it. Maybe not with formal schooling, but somehow you had to gain the experience that makes you valuable. Nobody questions the fact that an electrician needs years of training so they can work on your wiring without killing themself. So why do we accept it when people question the fact that a designer needs training to produce a good logo?
Anyway, I'm trying not to belabor the point too much :) but I identify so much with what the author of this article is saying. It was mind-opening when I realized how much I was undercharging. And now I just want to shout it from the rooftops so all the freelancers hear it: RAISE YOUR RATE!
posted by tom_r at 5:20 PM on November 16, 2021 [5 favorites]
Lots of wisdom on this thread, and it came at a very good time, considering the fact that I've been internally stewing over the fact that I know I should raise my rates again, but it's awkward.
Does anyone have any thoughts about treating existing clients differently, or not doing so, when it comes to raising rates? Or a benchmark for what is reasonable in one year? Assuming this is a client you would prefer to keep. It's definitely easier to tell a new person my rate is $X than tell an existing client I'm raising my rates 20%...but even though I'm not massively undercharging anymore, it really would be reasonable for me to be charging 20% (or 50%) more.
posted by Squalor Victoria at 6:07 PM on November 16, 2021 [3 favorites]
Does anyone have any thoughts about treating existing clients differently, or not doing so, when it comes to raising rates? Or a benchmark for what is reasonable in one year? Assuming this is a client you would prefer to keep. It's definitely easier to tell a new person my rate is $X than tell an existing client I'm raising my rates 20%...but even though I'm not massively undercharging anymore, it really would be reasonable for me to be charging 20% (or 50%) more.
posted by Squalor Victoria at 6:07 PM on November 16, 2021 [3 favorites]
Maybe existing customers get ramped up more slowly? For every year they’ve been your customer, they get a few percent off?
posted by clew at 6:23 PM on November 16, 2021
posted by clew at 6:23 PM on November 16, 2021
Does anyone have any thoughts about treating existing clients differently, or not doing so, when it comes to raising rates?
I think "fair" is somewhere between the inflation rate and the S&P500 gains. 10% per year isn't out of the question, and January is a common time to send out your annual rate adjustment. And to be clear: raise your rates every January so it doesn't get Weird. Two months notification is best, but you're still at 6 weeks right now, which I think is still reasonable.
For big leaps, it's a judgement call depending on the turnover of your clients. You can probably do one big adjustment per client "in line with market rates" with the understanding that you've never raised your rates with that client before, then get on the annual program. My therapist just gave me a 33% jump for next year with exactly that line, and it worked on me. If it's 50%+ (try doubling sometime!) it's probably best left for new clients, but if you don't turnover very often, the one-big-leap is probably best and you can cast it additionally as something everybody is getting. Like the saying goes, if they don't blink you aren't charging enough. You can always negotiate down.
The only time I recommend a discount is for fast payment. 5% off if they pay you within a week of the invoice. Some companies who normally would put you off for 90 days are required to take a discount if one is available, so you can short-circuit that long AR cycle.
posted by rhizome at 6:36 PM on November 16, 2021 [9 favorites]
I think "fair" is somewhere between the inflation rate and the S&P500 gains. 10% per year isn't out of the question, and January is a common time to send out your annual rate adjustment. And to be clear: raise your rates every January so it doesn't get Weird. Two months notification is best, but you're still at 6 weeks right now, which I think is still reasonable.
For big leaps, it's a judgement call depending on the turnover of your clients. You can probably do one big adjustment per client "in line with market rates" with the understanding that you've never raised your rates with that client before, then get on the annual program. My therapist just gave me a 33% jump for next year with exactly that line, and it worked on me. If it's 50%+ (try doubling sometime!) it's probably best left for new clients, but if you don't turnover very often, the one-big-leap is probably best and you can cast it additionally as something everybody is getting. Like the saying goes, if they don't blink you aren't charging enough. You can always negotiate down.
The only time I recommend a discount is for fast payment. 5% off if they pay you within a week of the invoice. Some companies who normally would put you off for 90 days are required to take a discount if one is available, so you can short-circuit that long AR cycle.
posted by rhizome at 6:36 PM on November 16, 2021 [9 favorites]
It's definitely easier to tell a new person my rate is $X than tell an existing client I'm raising my rates 20%...For what it's worth, a lot of very successful non-freelance businesses work their arrangements the other way around. Phone companies, streaming services, insurance companies etc. encourage new clients with discounted prices, and raise them for existing clients (who have signalled, by the fact of staying clients, happiness with the arrangement). Who wants to spend more time than they need to getting quotes, comparing bids, testing offers?
Remember that for your existing clients there's a rate they pay for work, but there's also real money value to the existing relationship and intangibles—like knowing the quality of your work, not having to reintroduce yourselves and build expectations, your familiarity with their requirements, and so on. There's a cost to a lot of clients to change providers.
Don't let people pay you in 'flattery' or 'loyalty', you can't take those to the bank.
posted by Fiasco da Gama at 6:41 PM on November 16, 2021 [3 favorites]
There's a systemic issue here, too, that I learned about from Fernand Braudel that goes back to at least the Middle Ages (and probably much earlier): Hidden prices.
The medieval ideal was the open marketplace where everyone could see what was being sold and for how much. People who tried to make private deals were penalized. At the time it was recognized that hidden prices were against the spirit of an open market, and that people who were hiding their prices were trying to fuck other people over.
But over time, merchants and capitalists learned to meet the farmer on the road to the marketplace and buy up all the produce at an unknown price, and then sell as much as they could off to the side of the market at an unknown price, and then lobby city governments to give them leeway on the whole "open markets" thing. Over time, they gained control of the market because they were the only ones who knew for sure the price of everything.
And over an even longer time, we've arrived at a place where keeping your prices private for many kinds of sales is considered a moral and legal imperative. It's business-critical confidential information. You can be fired for releasing pricing information to a competitor.
Somehow we lost the moral knowledge that trying to fuck people over by hiding prices is a bad thing.
posted by clawsoon at 6:43 PM on November 16, 2021 [19 favorites]
The medieval ideal was the open marketplace where everyone could see what was being sold and for how much. People who tried to make private deals were penalized. At the time it was recognized that hidden prices were against the spirit of an open market, and that people who were hiding their prices were trying to fuck other people over.
But over time, merchants and capitalists learned to meet the farmer on the road to the marketplace and buy up all the produce at an unknown price, and then sell as much as they could off to the side of the market at an unknown price, and then lobby city governments to give them leeway on the whole "open markets" thing. Over time, they gained control of the market because they were the only ones who knew for sure the price of everything.
And over an even longer time, we've arrived at a place where keeping your prices private for many kinds of sales is considered a moral and legal imperative. It's business-critical confidential information. You can be fired for releasing pricing information to a competitor.
Somehow we lost the moral knowledge that trying to fuck people over by hiding prices is a bad thing.
posted by clawsoon at 6:43 PM on November 16, 2021 [19 favorites]
For what it's worth, a lot of very successful non-freelance businesses work their arrangements the other way around.
They definitely don't do this for business to business contracts. I would say in general you shouldn't start off negotiating your rate by immediately giving a concession. Decide on your rates and say them with confidence. If I come down off my asking rate, I ask for the scope of the job to be limited in X, Y, or Z way in return.
You can't freelance and be squeamish about discussing what you charge. Someone upthread said electricians and painters don't go through all this anguish, they charge a rate and it's take it or leave it. That is excellent advice.
Somehow we lost the moral knowledge that trying to fuck people over by hiding prices is a bad thing.
My professional organization is forbidden from discussing pricing directly because freelancers are small businesses and small businesses in an industry can't all get together and collude on pricing or set rates together. That would be anti-competitive price fixing.
That doesn't mean you can't mentor people, discuss clients or jobs with your colleagues, or show people your estimates or quotes. What I charge isn't top secret.
Main reason I don't publish my pricing is because I charge different clients different rates for the same service depending on the client and the job. It's to my advantage to negotiate those things per client. I'm not selling fungible widgets at market I'm selling my time, and since there is only one of me I can only book so many jobs.
posted by bradbane at 7:09 PM on November 16, 2021 [7 favorites]
They definitely don't do this for business to business contracts. I would say in general you shouldn't start off negotiating your rate by immediately giving a concession. Decide on your rates and say them with confidence. If I come down off my asking rate, I ask for the scope of the job to be limited in X, Y, or Z way in return.
You can't freelance and be squeamish about discussing what you charge. Someone upthread said electricians and painters don't go through all this anguish, they charge a rate and it's take it or leave it. That is excellent advice.
Somehow we lost the moral knowledge that trying to fuck people over by hiding prices is a bad thing.
My professional organization is forbidden from discussing pricing directly because freelancers are small businesses and small businesses in an industry can't all get together and collude on pricing or set rates together. That would be anti-competitive price fixing.
That doesn't mean you can't mentor people, discuss clients or jobs with your colleagues, or show people your estimates or quotes. What I charge isn't top secret.
Main reason I don't publish my pricing is because I charge different clients different rates for the same service depending on the client and the job. It's to my advantage to negotiate those things per client. I'm not selling fungible widgets at market I'm selling my time, and since there is only one of me I can only book so many jobs.
posted by bradbane at 7:09 PM on November 16, 2021 [7 favorites]
I can't speak for freelance gigs, but I've occasionally sold crafts over the years and frankly, if I charged for my labor and time I would be charging people several hundred dollars for something people can pick up at Walmart for $5. Nobody's going to pay for that and nobody buys those $60 scarves I see being sold at craft fairs. I've paid $250 for a handknit sweater, but most people won't be doing that.
There's reasons why I don't have a craft business even though literally everyone tells me I should have one. I occasionally make arrangements with someone, but I have to charge approximately what someone would pay midrange for in a store or else they'd keel over in shock. I get tired of people telling me to up my prices, and I quit working craft fairs when I was only selling $1-2 items.
posted by jenfullmoon at 8:14 PM on November 16, 2021 [8 favorites]
There's reasons why I don't have a craft business even though literally everyone tells me I should have one. I occasionally make arrangements with someone, but I have to charge approximately what someone would pay midrange for in a store or else they'd keel over in shock. I get tired of people telling me to up my prices, and I quit working craft fairs when I was only selling $1-2 items.
posted by jenfullmoon at 8:14 PM on November 16, 2021 [8 favorites]
There is a spectrum, in my mind, between offering a service to a faceless and potentially evil corporate entity, and offering a more personal service to a vulnerable person in need. I think that's related to deadaluspark's comments above. For example, private psychotherapy is, without sufficient insurance, prohibitively expensive for many people who could benefit, and whom therapists might feel some moral obligation to help, even when therapists price themselves on the low end. I'm sure there are lots of other services on that end of this hypothetical spectrum. I don't know how to wrestle with that, but surely it can be done. Not everyone will share my moral perspective.
When I've paid people for piece work, those with less experience, or fresh out of a steady employment arrangement, usually underprice themselves, and correcting that seems to help adjust their "internalized value" at least a little. Tradespeople are much less vulnerable to this, but junior ones not in a union sometimes still seem to quote lower rates than I'd expect. (Most tradespeople's services are pretty expensive, but when I need their help, I really need it.) I'm glad to see pay discussions for things like this in the open. How strange to see anti-competitive legal mechanisms used against individuals who would be protected by a union in a slightly different line of work.
What is the alternative to the client paying you at the higher rate? It probably costs them more. If they trust you and your work, it's risky for them to look for an alternative. Similarly, freelance rates need to price in a lot of uncertainty and a lot of meta-work, not just the dedicated prep and communication time. Depending on what the service is, two or three times what a really good stable job would pay per hour seems like a completely reasonable starting point, using a clear-eyed assessment of how much time the freelance work will actually take, including opportunity cost from scheduling, travel, and impact on other projects. I realize I come from a privileged perspective, because my contract work is steady and at predictable rates, and I have gradually been able to choose the work arrangements I like, at the amounts I want.
posted by sillyman at 8:20 PM on November 16, 2021 [4 favorites]
When I've paid people for piece work, those with less experience, or fresh out of a steady employment arrangement, usually underprice themselves, and correcting that seems to help adjust their "internalized value" at least a little. Tradespeople are much less vulnerable to this, but junior ones not in a union sometimes still seem to quote lower rates than I'd expect. (Most tradespeople's services are pretty expensive, but when I need their help, I really need it.) I'm glad to see pay discussions for things like this in the open. How strange to see anti-competitive legal mechanisms used against individuals who would be protected by a union in a slightly different line of work.
What is the alternative to the client paying you at the higher rate? It probably costs them more. If they trust you and your work, it's risky for them to look for an alternative. Similarly, freelance rates need to price in a lot of uncertainty and a lot of meta-work, not just the dedicated prep and communication time. Depending on what the service is, two or three times what a really good stable job would pay per hour seems like a completely reasonable starting point, using a clear-eyed assessment of how much time the freelance work will actually take, including opportunity cost from scheduling, travel, and impact on other projects. I realize I come from a privileged perspective, because my contract work is steady and at predictable rates, and I have gradually been able to choose the work arrangements I like, at the amounts I want.
posted by sillyman at 8:20 PM on November 16, 2021 [4 favorites]
If you find that you can’t raise your own rates or that you always undercut yourself, then find someone else to be that person. Turns out I am very good at building a quote around people that aren’t me. And I can get paid well as a subcontractor to the right people. But for the life of me I can’t get out of my own way on this issue. There is more to say about looking for those people but for now I just wanted to put this option in the thread.
posted by drowsy at 3:59 AM on November 17, 2021 [2 favorites]
posted by drowsy at 3:59 AM on November 17, 2021 [2 favorites]
tom_r: "#4. If you have enough work, raise your rate"
You can also have a "fuck you" rate that you quote when you don't really want to do the job or don't have time for it. You price it so high that you figure your customer will say "fuck you." You would be surprised how many of them take it without even blinking [which means it's time to shift your going rate to the fuck you rate and jam the fuck you rate up even higher].
posted by chavenet at 4:49 AM on November 17, 2021 [18 favorites]
You can also have a "fuck you" rate that you quote when you don't really want to do the job or don't have time for it. You price it so high that you figure your customer will say "fuck you." You would be surprised how many of them take it without even blinking [which means it's time to shift your going rate to the fuck you rate and jam the fuck you rate up even higher].
posted by chavenet at 4:49 AM on November 17, 2021 [18 favorites]
Now, to get back to doing work for people / organizations who truly can't afford your full rate. This is a tricky issue, but years ago someone (I forget who) suggested a solution that I think works really well. For ALL the work you do, no matter for whom, send an invoice with a top line based on your full hourly rate. For those who can't afford that rate, give a discount (included as a line item on your invoice) to reduce the cost. The discount can be 100% if you're working pro bono, but always document your full rate. That helps establish the value of your time, both for yourself and for others.
Absolutely this. I give out discounts for all kinds of reasons, discounts on hourly rates for long projects (helps me keep my utilisation up), discounts for a project where I want to pick up a relevant credential which will drive future sales (like a project in a new country which will open doors), discounts for staged payments (my cost of capital is probably higher than theirs), if my order book is low I'll just make some stuff up, discount for new customer / discount for existing customer. It's all in the game.
posted by atrazine at 5:30 AM on November 17, 2021
Absolutely this. I give out discounts for all kinds of reasons, discounts on hourly rates for long projects (helps me keep my utilisation up), discounts for a project where I want to pick up a relevant credential which will drive future sales (like a project in a new country which will open doors), discounts for staged payments (my cost of capital is probably higher than theirs), if my order book is low I'll just make some stuff up, discount for new customer / discount for existing customer. It's all in the game.
posted by atrazine at 5:30 AM on November 17, 2021
You can also have a "fuck you" rate that you quote when you don't really want to do the job or don't have time for it. You price it so high that you figure your customer will say "fuck you." You would be surprised how many of them take it without even blinking [which means it's time to shift your going rate to the fuck you rate and jam the fuck you rate up even higher].
A thing I learned from a housepainter friend years ago is that when somebody tells you they can get somebody else to do the same job for half the price, you just nod, hand them your card and say, "Yes, you can. Here's my card; if you're not happy with what you get for that price and need somebody to fix it, you're welcome to call me. My rates will not change."
posted by mhoye at 6:06 AM on November 17, 2021 [11 favorites]
A thing I learned from a housepainter friend years ago is that when somebody tells you they can get somebody else to do the same job for half the price, you just nod, hand them your card and say, "Yes, you can. Here's my card; if you're not happy with what you get for that price and need somebody to fix it, you're welcome to call me. My rates will not change."
posted by mhoye at 6:06 AM on November 17, 2021 [11 favorites]
Nobody questions the fact that an electrician needs years of training so they can work on your wiring without killing themself. So why do we accept it when people question the fact that a designer needs training to produce a good logo?
One reason, at least in my location, is it is illegal to perform electrical work without a trade licence. However that barely slows the trunk slammers on the residential level. So much down right dangerous work out there done by people willing to work cheap.
It's way worse for unregulated trades like drywaller or cook.
A freelancer, especially one whose work is based on a set of trained vocational skills, is a tradesperson. You never see electricians or carpenters playing these bidding-against-your-own-anxiety blind-auction games
We really do, especially when things are slow. In some ways it's worse for tradework because there are so many things that cost me money annually (liability insurance, WorkSafe insurance, continuing education requirements, secure storage of a vehicle filled with 30k worth of tools, licencing costs on top of regular business licences, etc.) that aren't a factor when your work requires a computer and an office (which I also need).
posted by Mitheral at 6:50 AM on November 17, 2021 [5 favorites]
One reason, at least in my location, is it is illegal to perform electrical work without a trade licence. However that barely slows the trunk slammers on the residential level. So much down right dangerous work out there done by people willing to work cheap.
It's way worse for unregulated trades like drywaller or cook.
A freelancer, especially one whose work is based on a set of trained vocational skills, is a tradesperson. You never see electricians or carpenters playing these bidding-against-your-own-anxiety blind-auction games
We really do, especially when things are slow. In some ways it's worse for tradework because there are so many things that cost me money annually (liability insurance, WorkSafe insurance, continuing education requirements, secure storage of a vehicle filled with 30k worth of tools, licencing costs on top of regular business licences, etc.) that aren't a factor when your work requires a computer and an office (which I also need).
posted by Mitheral at 6:50 AM on November 17, 2021 [5 favorites]
I make and sell crafts, work as a freelance programmer, and work as a freelance circus artist. I agree with all of the advice given. I remember it used to be really hard if someone asked me for a quote and then ghosted me once I told them a price. But now I see it as a victory: no time wasted on something that clearly was not a good fit for either of us.
But what I want to add is that I enjoy all of my professions, if not all of my projects, and one thing I find difficult is that once I hit a certain level of overall income, I don't care about it any more. Like, if I have enough coming in that I am not worried about day to day money, and I have time for an interesting project someone brings to me, it's hard not to just do it pro-bono. (This is one reason I am a proponent of a UBI.) But a solution I have implemented here is to invoice it and then waive the fee as a discount or donation, which makes sure the value of the work is accounted for, and can often be a tax writeoff.
posted by Nothing at 7:10 AM on November 17, 2021 [6 favorites]
But what I want to add is that I enjoy all of my professions, if not all of my projects, and one thing I find difficult is that once I hit a certain level of overall income, I don't care about it any more. Like, if I have enough coming in that I am not worried about day to day money, and I have time for an interesting project someone brings to me, it's hard not to just do it pro-bono. (This is one reason I am a proponent of a UBI.) But a solution I have implemented here is to invoice it and then waive the fee as a discount or donation, which makes sure the value of the work is accounted for, and can often be a tax writeoff.
posted by Nothing at 7:10 AM on November 17, 2021 [6 favorites]
bradbane: Having someone tell you you are too expensive is a good thing. Losing jobs because you weren't the cheapest is a good thing.
It can be hard to see it that way when you have too little work and were eager to get a specific job. I see lots of good advice that's based on having enough or too much work, but it's different if you have too little.
posted by Too-Ticky at 10:38 AM on November 17, 2021 [3 favorites]
It can be hard to see it that way when you have too little work and were eager to get a specific job. I see lots of good advice that's based on having enough or too much work, but it's different if you have too little.
posted by Too-Ticky at 10:38 AM on November 17, 2021 [3 favorites]
It's probably bc I undercharge, but I've had much more success making clients tell me how much they are willing to pay and then accepting (when it's high enough) or counteroffering.
Sometimes they don't know and will overpay greatly.
It can be hard to see it that way when you have too little work and were eager to get a specific job. I see lots of good advice that's based on having enough or too much work, but it's different if you have too little.
Hear, hear! Another reason why I let the client offer first. If I'm desperate for work, I'll usually take it or make a lower counteroffer than usual.
And yes, I need lots more editorial work. Hire me!
But a solution I have implemented here is to invoice it and then waive the fee as a discount or donation, which makes sure the value of the work is accounted for, and can often be a tax writeoff.
I'm curious about the ethics of claiming work as a donation for tax purposes if you do a job for an org pro-bono that you know they could never pay for.
posted by mrgrimm at 10:52 AM on November 17, 2021 [3 favorites]
Sometimes they don't know and will overpay greatly.
It can be hard to see it that way when you have too little work and were eager to get a specific job. I see lots of good advice that's based on having enough or too much work, but it's different if you have too little.
Hear, hear! Another reason why I let the client offer first. If I'm desperate for work, I'll usually take it or make a lower counteroffer than usual.
And yes, I need lots more editorial work. Hire me!
But a solution I have implemented here is to invoice it and then waive the fee as a discount or donation, which makes sure the value of the work is accounted for, and can often be a tax writeoff.
I'm curious about the ethics of claiming work as a donation for tax purposes if you do a job for an org pro-bono that you know they could never pay for.
posted by mrgrimm at 10:52 AM on November 17, 2021 [3 favorites]
On a retreat where I remember thinking that I’d never heard women, never heard writers, talk about money like this, they convinced me to double (double!) my rates. Which I did. And I still got gigs.
It's incredibly interesting to me that the author doesn't include the actual rates. Talk about "hidden prices!"
posted by mrgrimm at 10:55 AM on November 17, 2021 [3 favorites]
It's incredibly interesting to me that the author doesn't include the actual rates. Talk about "hidden prices!"
posted by mrgrimm at 10:55 AM on November 17, 2021 [3 favorites]
I would love to sell some of my photographs (prints, not NFTs) but I can't get past the idea of what the prices should be. This article gave me a lot to think about.
posted by tommasz at 10:57 AM on November 17, 2021
posted by tommasz at 10:57 AM on November 17, 2021
It can be hard to see it that way when you have too little work and were eager to get a specific job. I see lots of good advice that's based on having enough or too much work, but it's different if you have too little.
The magic phrase is, "What's your budget for this project?"
Can you deliver what they're asking with their budget? Then estimate it accordingly and take the job. If it's not possible for you to do it and make a profit, negotiate with them to reduce the scope of the project to better match their budget.
I don't think any of the advice here is telling people they shouldn't take jobs if they need the work/money/experience. Only you can decide if it's worth it or not, but if you at least go into it knowing what your ideal rate is you can do the math yourself.
Talk about "hidden prices!"
I said this upthread but the reason for this is simple. As a freelancer you do not produce fungible widgets, you produce a custom solution tailored to the project. Since all projects are different, how could you possibly give someone a blanket quote? If you publish your rates, people will just look them up and go "oh they're too cheap/expensive" and never actually contact you. You miss the opportunity to discuss the specifics of the project, the client's budget, and estimate a solution for them accordingly.
Even if I perform the exact same service for two clients the price may be drastically different. For example, a large corporation will derive more value out of my work than a local small business run by an individual owner, even if the deliverables are essentially the same. I would charge the large corp a lot more to take that into account.
Lots of people in this thread seem confused about how you can set a worthwhile rate but also have a sliding scale to be flexible for different kinds of clients with different budgets. Publishing your rates takes away your ability to negotiate or to be flexible in that regard. Every project is different, so every estimate is different. I want people to contact me and give me the chance to put together an estimate.
I guarantee if you contact any freelancer and say something like, "Hi I'm new to the biz and really admire your work, I was wondering if I buy you a coffee / take a minute of your time on zoom to ask your opinion about this estimate I'm working on." they would be happy to give you specific advice on rates or business practices. Rates aren't top secret but it's also not something you want to box yourself in on before you even talk to a client.
I'm curious about the ethics of claiming work as a donation for tax purposes if you do a job for an org pro-bono that you know they could never pay for.
There's no "ethics" about it the IRS doesn't allow deduction of services, only actual costs. Ask your accountant.
posted by bradbane at 11:37 AM on November 17, 2021 [8 favorites]
The magic phrase is, "What's your budget for this project?"
Can you deliver what they're asking with their budget? Then estimate it accordingly and take the job. If it's not possible for you to do it and make a profit, negotiate with them to reduce the scope of the project to better match their budget.
I don't think any of the advice here is telling people they shouldn't take jobs if they need the work/money/experience. Only you can decide if it's worth it or not, but if you at least go into it knowing what your ideal rate is you can do the math yourself.
Talk about "hidden prices!"
I said this upthread but the reason for this is simple. As a freelancer you do not produce fungible widgets, you produce a custom solution tailored to the project. Since all projects are different, how could you possibly give someone a blanket quote? If you publish your rates, people will just look them up and go "oh they're too cheap/expensive" and never actually contact you. You miss the opportunity to discuss the specifics of the project, the client's budget, and estimate a solution for them accordingly.
Even if I perform the exact same service for two clients the price may be drastically different. For example, a large corporation will derive more value out of my work than a local small business run by an individual owner, even if the deliverables are essentially the same. I would charge the large corp a lot more to take that into account.
Lots of people in this thread seem confused about how you can set a worthwhile rate but also have a sliding scale to be flexible for different kinds of clients with different budgets. Publishing your rates takes away your ability to negotiate or to be flexible in that regard. Every project is different, so every estimate is different. I want people to contact me and give me the chance to put together an estimate.
I guarantee if you contact any freelancer and say something like, "Hi I'm new to the biz and really admire your work, I was wondering if I buy you a coffee / take a minute of your time on zoom to ask your opinion about this estimate I'm working on." they would be happy to give you specific advice on rates or business practices. Rates aren't top secret but it's also not something you want to box yourself in on before you even talk to a client.
I'm curious about the ethics of claiming work as a donation for tax purposes if you do a job for an org pro-bono that you know they could never pay for.
There's no "ethics" about it the IRS doesn't allow deduction of services, only actual costs. Ask your accountant.
posted by bradbane at 11:37 AM on November 17, 2021 [8 favorites]
I have not freelanced for money for more than 10 years, I don’t have what it takes to manage the uncertainty. The closest I do is the occasional exchange of services.
But when I was still freelancing as a graphic designer and web developer (different business cards, different client portfolio) I did some coding work for a relatively well known graphic design firm. I had access to their data and could see how much they charged clients and what their margins were. I expected them to charge half as much to twice as much as what I did as a graphic designer. They were charging 5 to 12 times as much. (Yes, i was naive)
I tripled my rates for new customers and was very worried when a few potential ones walked away, but after a couple of weeks clients started biting. I could work Ferrer hours, make more money, and the quality of the relationship with clients improved.
I talked about this with my friends, about how no one taught us how to charge for our work. Years later one of my classmates became a professor in my university and started a “How to charge for your work” class. I believe this class should be available everywhere, but there is still some weird taboo around the subject.
posted by Dr. Curare at 12:40 PM on November 17, 2021 [5 favorites]
But when I was still freelancing as a graphic designer and web developer (different business cards, different client portfolio) I did some coding work for a relatively well known graphic design firm. I had access to their data and could see how much they charged clients and what their margins were. I expected them to charge half as much to twice as much as what I did as a graphic designer. They were charging 5 to 12 times as much. (Yes, i was naive)
I tripled my rates for new customers and was very worried when a few potential ones walked away, but after a couple of weeks clients started biting. I could work Ferrer hours, make more money, and the quality of the relationship with clients improved.
I talked about this with my friends, about how no one taught us how to charge for our work. Years later one of my classmates became a professor in my university and started a “How to charge for your work” class. I believe this class should be available everywhere, but there is still some weird taboo around the subject.
posted by Dr. Curare at 12:40 PM on November 17, 2021 [5 favorites]
In keeping with what bradbane says, I do actually publish a range for my services and then get down to specifics when I am actually emailing people. This way people can see if they're in the right ballpark before we talk. In cases where people are getting fat grant funding (not infrequent in the library world), they've actually told me "We can pay $XXXX" and that is a kindness.
But, there have also been times where they want me to give them a "one and done" cost and that is always agony for me because it means, in short, if I find a cheaper hotel, then I get paid more and I hate making those calculations. That's the sticky wicket for me, sometimes places need a person who can give those kinds of "I will do the entire thing for $YYYY" bids and if that is the case, I always aim super high because a) I hate doing those calculations b) something always comes up and I don't want to wind up netting a teeny amount because the cost of flights went up. I literally had one library conference in a state I really wanted to go to quote me a flat fee and have me run the numbers and determine--because I lived in a rural state and they were a not-nearby rural state, that it would cost a ton to get there--that I would have been paying money to speak there. I won't lie, I considered it but said no. (also, that state was not Hawai'i). I will backchannel tell anyone how much I get paid for anything, if people ask.
I also make sure I explain which expenses are included and not included (I require mileage if I am driving but I do not require a per diem for food for example) in my initial discussion, that way no one is surprised when they learn how much my airport parking costs, for example. My last finicky requirement--besides not working before 11 am which is what really loses me business but whatever, it's non-negotiable--is that I will not get paid less than any man at the same event who is doing essentially the same work as me. This is often a "What??" point in my negotiation, but I basically say this has happened in the past, it's unacceptable, and certainly they wouldn't do that right? OK then.
The most compelling reason, for me, about having some hard lines about these things--I generally refuse to be on all-white panels as well--is that I've been fortunate enough (and put in the time/work) to have a certain status within my profession. And while the difference between two price-points will likely not make or break me, it may very much matter to other people who are getting the benefit of my stronger negotiation tactics when they have to do similar things.
posted by jessamyn at 12:45 PM on November 17, 2021 [13 favorites]
But, there have also been times where they want me to give them a "one and done" cost and that is always agony for me because it means, in short, if I find a cheaper hotel, then I get paid more and I hate making those calculations. That's the sticky wicket for me, sometimes places need a person who can give those kinds of "I will do the entire thing for $YYYY" bids and if that is the case, I always aim super high because a) I hate doing those calculations b) something always comes up and I don't want to wind up netting a teeny amount because the cost of flights went up. I literally had one library conference in a state I really wanted to go to quote me a flat fee and have me run the numbers and determine--because I lived in a rural state and they were a not-nearby rural state, that it would cost a ton to get there--that I would have been paying money to speak there. I won't lie, I considered it but said no. (also, that state was not Hawai'i). I will backchannel tell anyone how much I get paid for anything, if people ask.
I also make sure I explain which expenses are included and not included (I require mileage if I am driving but I do not require a per diem for food for example) in my initial discussion, that way no one is surprised when they learn how much my airport parking costs, for example. My last finicky requirement--besides not working before 11 am which is what really loses me business but whatever, it's non-negotiable--is that I will not get paid less than any man at the same event who is doing essentially the same work as me. This is often a "What??" point in my negotiation, but I basically say this has happened in the past, it's unacceptable, and certainly they wouldn't do that right? OK then.
The most compelling reason, for me, about having some hard lines about these things--I generally refuse to be on all-white panels as well--is that I've been fortunate enough (and put in the time/work) to have a certain status within my profession. And while the difference between two price-points will likely not make or break me, it may very much matter to other people who are getting the benefit of my stronger negotiation tactics when they have to do similar things.
posted by jessamyn at 12:45 PM on November 17, 2021 [13 favorites]
I'm always happy when somebody tells me "we didn't hire you because you're too expensive". I'm always a bit sad when a client accepts my proposal immediately because it means I undercharged them. I'm happiest when they tell me "there were other proposals, yours was the most expensive one, but we still want to work with you".
posted by signal at 12:46 PM on November 17, 2021 [3 favorites]
posted by signal at 12:46 PM on November 17, 2021 [3 favorites]
bradbane: The magic phrase is, "What's your budget for this project?"
That works when you are working for a business. But when you are working for the public, it usually does not go over well.
posted by Too-Ticky at 12:50 PM on November 17, 2021
That works when you are working for a business. But when you are working for the public, it usually does not go over well.
posted by Too-Ticky at 12:50 PM on November 17, 2021
Obviously everyone's business and clients are different, I don't work for the general public in my own line of work. But a thing to keep in mind when you freelance and provide a service is that the reason they are calling you in - whether it's a business or a regular consumer - is because they don't have the expertise to do whatever is they need doing. Often times that means they have no idea what the scope of the project is to begin with or what that would cost, and part of your job is educating them, or putting together an estimate that allows you to explain your solution to their problem.
What solution I provide is highly dependent on what the actual scope of the project is (not what the client imagines it is) and what their actual budget is (not what the client imagines it will cost). IME the best way to thread this needle is simply to ask, so I don't waste both my time and theirs bidding on a project that's not a good fit or too poorly defined to put together a good quote.
posted by bradbane at 1:19 PM on November 17, 2021 [1 favorite]
What solution I provide is highly dependent on what the actual scope of the project is (not what the client imagines it is) and what their actual budget is (not what the client imagines it will cost). IME the best way to thread this needle is simply to ask, so I don't waste both my time and theirs bidding on a project that's not a good fit or too poorly defined to put together a good quote.
posted by bradbane at 1:19 PM on November 17, 2021 [1 favorite]
What solution I provide is highly dependent on what the actual scope of the project is (not what the client imagines it is)
This is a very good point, and I wish I were better at telling people when what they imagine the scope of the project is, is probably off base.
Because somehow, anytime anyone wants to arrange a flat rate, they believe it's something that will only take a few hours and only requires X, Y, and Z simple things. And then somehow, when I tell someone I charge hourly now and turn down a flat rate (a transition I have not 100% made, but they don't need to know that), they are very concerned that I want to charge hourly for such an intensive, time-consuming project.
(In my field it's generally understood that hourly is better, which doesn't seem to be the case for other freelancers necessarily.)
posted by Squalor Victoria at 7:04 PM on November 17, 2021
This is a very good point, and I wish I were better at telling people when what they imagine the scope of the project is, is probably off base.
Because somehow, anytime anyone wants to arrange a flat rate, they believe it's something that will only take a few hours and only requires X, Y, and Z simple things. And then somehow, when I tell someone I charge hourly now and turn down a flat rate (a transition I have not 100% made, but they don't need to know that), they are very concerned that I want to charge hourly for such an intensive, time-consuming project.
(In my field it's generally understood that hourly is better, which doesn't seem to be the case for other freelancers necessarily.)
posted by Squalor Victoria at 7:04 PM on November 17, 2021
I've wanted but haven't secured full-time employment in 14 years. I've done hundreds of phone screens, first interviews, second interviews, third interviews, coding challenges followed by almost that many rejections. Always a contractor, never an employee.
I had a brief stint as a real estate broker and tried to start my own businesses 3 or 4 times.
I've learned many things about getting paid for my work and there are many great answers in this thread.
It's incredibly interesting to me that the author doesn't include the actual rates. Talk about "hidden prices!"
Start with market rate
- I'm newish in my current city so when I'm asked what hourly rate I want I usually say something vague along the lines of, "well, a couple years ago I worked for Nuke and got $85/hour. I moved here from the Bay Area and I'm not totally familiar with the going rates here." I'm both transparent about a recent hourly rate but plead ignorance to the "market rate" except as it pertains to $85/hour.
There's also a bit of if the client is shopping around and you're priced too low they'll assume you're not as good as those that charge more. To a certain point they'll pick you because you're not the cheapest quote. Gotta pay for quality....
- Yes, raise your rates! For awhile I tried to sell at craft fairs a very bespoke bag that I designed and made. It took me literally 8 hours to make one of these bags and I was charging $50 for them. I eventually realized that me undervaluing my work was leading potential customers to undervalue it too. I never sold a single bag. Pull up your sisu socks and get what you want.
- I saw a video a few years ago where a local developer was talking about how to get the best offer in a salaried role. First, never bring up money before the company does (I learned a very hard lesson this way.) Second, when you get an offer say, "I'd be much more comfortable with offer + $15K, can we do that?" (I've also said, "is there any wiggle room in that amount?") The reasoning behind that is that since the company has spent x hours and x money on going through the hiring process with you, they're willing to negotiate.
And I'm cognizant that this comment is remarkably insensitive to a huge many people reading it and I wish it wasn't and I'm infuriated that we don't all get paid a living wage by default. I can only speak about my own experiences and random employers who think a gallon of milk costs $125.
posted by bendy at 9:18 PM on November 17, 2021 [6 favorites]
I had a brief stint as a real estate broker and tried to start my own businesses 3 or 4 times.
I've learned many things about getting paid for my work and there are many great answers in this thread.
It's incredibly interesting to me that the author doesn't include the actual rates. Talk about "hidden prices!"
Start with market rate
- I'm newish in my current city so when I'm asked what hourly rate I want I usually say something vague along the lines of, "well, a couple years ago I worked for Nuke and got $85/hour. I moved here from the Bay Area and I'm not totally familiar with the going rates here." I'm both transparent about a recent hourly rate but plead ignorance to the "market rate" except as it pertains to $85/hour.
There's also a bit of if the client is shopping around and you're priced too low they'll assume you're not as good as those that charge more. To a certain point they'll pick you because you're not the cheapest quote. Gotta pay for quality....
- Yes, raise your rates! For awhile I tried to sell at craft fairs a very bespoke bag that I designed and made. It took me literally 8 hours to make one of these bags and I was charging $50 for them. I eventually realized that me undervaluing my work was leading potential customers to undervalue it too. I never sold a single bag. Pull up your sisu socks and get what you want.
- I saw a video a few years ago where a local developer was talking about how to get the best offer in a salaried role. First, never bring up money before the company does (I learned a very hard lesson this way.) Second, when you get an offer say, "I'd be much more comfortable with offer + $15K, can we do that?" (I've also said, "is there any wiggle room in that amount?") The reasoning behind that is that since the company has spent x hours and x money on going through the hiring process with you, they're willing to negotiate.
And I'm cognizant that this comment is remarkably insensitive to a huge many people reading it and I wish it wasn't and I'm infuriated that we don't all get paid a living wage by default. I can only speak about my own experiences and random employers who think a gallon of milk costs $125.
posted by bendy at 9:18 PM on November 17, 2021 [6 favorites]
I got the milk price backwards - it should be $00.0125.
posted by bendy at 12:03 AM on November 18, 2021 [1 favorite]
posted by bendy at 12:03 AM on November 18, 2021 [1 favorite]
I can't speak for freelance gigs, but I've occasionally sold crafts over the years and frankly, if I charged for my labor and time I would be charging people several hundred dollars for something people can pick up at Walmart for $5. Nobody's going to pay for that and nobody buys those $60 scarves I see being sold at craft fairs. I've paid $250 for a handknit sweater, but most people won't be doing that.
Omg this. I've always made whimsical crochet plush type things and hopped on the cat couch craze. I made one for my cat and another as a gift to a friend. The friend immediately asked why I didn't sell these, and then her face started going gray once I broke down the labor cost alone!
Same thing with pottery. I've started getting halfway decent at making things, and everytime I post a photo of something I'm proud of, everyone jumps on the, "You should open an Etsy store!" refrain. I've encouraged them to support other local artists who are so much better than I am, and people struggle to understand why I'm so against monetizing my hobbies. Sigh.
posted by astapasta24 at 6:07 AM on November 18, 2021 [6 favorites]
Omg this. I've always made whimsical crochet plush type things and hopped on the cat couch craze. I made one for my cat and another as a gift to a friend. The friend immediately asked why I didn't sell these, and then her face started going gray once I broke down the labor cost alone!
Same thing with pottery. I've started getting halfway decent at making things, and everytime I post a photo of something I'm proud of, everyone jumps on the, "You should open an Etsy store!" refrain. I've encouraged them to support other local artists who are so much better than I am, and people struggle to understand why I'm so against monetizing my hobbies. Sigh.
posted by astapasta24 at 6:07 AM on November 18, 2021 [6 favorites]
I've occasionally sold crafts over the years and frankly, if I charged for my labor and time I would be charging people several hundred dollars for something people can pick up at Walmart for $5. Nobody's going to pay for that and nobody buys those $60 scarves I see being sold at craft fairs.
This is the experience of people who sell crafts only *occasionally*, I think, not people who do it regularly, as a committed side gig.
You're right that we are unlikely to just randomly saunter into a craft fair and buy a $60 scarf from someone totally anonymous (unless we're... weird rich hipsters/crunchy granola type folks I guess?). But that scarf is going to get sold to someone for whom this seller is not an anonymous entity and that scarf - that particular scarf - has more meaning because they've been following along the seller's social media story of how that scarf was made.
About a dozen people whom I personally know have businesses where they sell their crafts priced tens of times above Walmart. From an outsider's perspective they seem to be thriving... in that they often sell out their specials and their pre-order lists fill up quickly. I don't know their bottomline or exactly how profitable they are, but their high priced things are most certainly selling briskly! All of them do things like building a brand, telling stories, sharing frequently about their process of crafting, keeping their social media followers feeling like they are part of the journey, etc. It's not at all like an anonymous craft from a stranger at some random fair you happen to walk past on your way home from work.
Many of the people I know rely on patreon subscriptions for sales. They send boxes of crafts to their subscribers, like, you subscribe at the $10/month level and every four months you get a small box containing a tea towel, a candle, and a couple of printed bookmarks featuring their art. Subscribe at the $25/month level and you get a scarf and a matching hand-stitched mask on top. I can see the appeal because from the buyers' end, there's less sticker shock, and from the sellers' end, there's a lot more stability in their income stream. IDK what the seller is making as an hourly rate on their work, but I can plainly see that they have 30 people subscribed at the $25 level, folks who are happily paying $100 for things they could buy at Walmart for $15.
Some crafters I know also go to events to sell their things - not craft fairs but fan conventions. I know this guy who sells his hand-painted pottery at fan conventions, like one time he put out Ready Player One themed butter dishes for $50 apiece. They all went easy. Again, I don't know what his bottomline is like, but I'm just saying, the price of butter dishes at Walmart simply doesn't matter here.
These folks tell a compelling story about themselves and their crafts, or at least they hook their crafts to some compelling story told by someone else, and that story is what sells their crafts. Building that story around their craft takes time, though, time that an occasional craft seller doesn't have and can't afford to invest. The people who sell $60 scarves are the ones who have the means to treat the business like a proper part time job.
posted by MiraK at 8:56 AM on November 18, 2021 [3 favorites]
This is the experience of people who sell crafts only *occasionally*, I think, not people who do it regularly, as a committed side gig.
You're right that we are unlikely to just randomly saunter into a craft fair and buy a $60 scarf from someone totally anonymous (unless we're... weird rich hipsters/crunchy granola type folks I guess?). But that scarf is going to get sold to someone for whom this seller is not an anonymous entity and that scarf - that particular scarf - has more meaning because they've been following along the seller's social media story of how that scarf was made.
About a dozen people whom I personally know have businesses where they sell their crafts priced tens of times above Walmart. From an outsider's perspective they seem to be thriving... in that they often sell out their specials and their pre-order lists fill up quickly. I don't know their bottomline or exactly how profitable they are, but their high priced things are most certainly selling briskly! All of them do things like building a brand, telling stories, sharing frequently about their process of crafting, keeping their social media followers feeling like they are part of the journey, etc. It's not at all like an anonymous craft from a stranger at some random fair you happen to walk past on your way home from work.
Many of the people I know rely on patreon subscriptions for sales. They send boxes of crafts to their subscribers, like, you subscribe at the $10/month level and every four months you get a small box containing a tea towel, a candle, and a couple of printed bookmarks featuring their art. Subscribe at the $25/month level and you get a scarf and a matching hand-stitched mask on top. I can see the appeal because from the buyers' end, there's less sticker shock, and from the sellers' end, there's a lot more stability in their income stream. IDK what the seller is making as an hourly rate on their work, but I can plainly see that they have 30 people subscribed at the $25 level, folks who are happily paying $100 for things they could buy at Walmart for $15.
Some crafters I know also go to events to sell their things - not craft fairs but fan conventions. I know this guy who sells his hand-painted pottery at fan conventions, like one time he put out Ready Player One themed butter dishes for $50 apiece. They all went easy. Again, I don't know what his bottomline is like, but I'm just saying, the price of butter dishes at Walmart simply doesn't matter here.
These folks tell a compelling story about themselves and their crafts, or at least they hook their crafts to some compelling story told by someone else, and that story is what sells their crafts. Building that story around their craft takes time, though, time that an occasional craft seller doesn't have and can't afford to invest. The people who sell $60 scarves are the ones who have the means to treat the business like a proper part time job.
posted by MiraK at 8:56 AM on November 18, 2021 [3 favorites]
not working before 11 am which is what really loses me business but whatever, it's non-negotiable--is that I will not get paid less than any man at the same event who is doing essentially the same work as me.
Reasons 1 and 2 that you perpetually rock the casbah.
posted by bendy at 7:51 AM on November 20, 2021 [1 favorite]
Reasons 1 and 2 that you perpetually rock the casbah.
posted by bendy at 7:51 AM on November 20, 2021 [1 favorite]
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