Freshbooks recently released a name-your-own-price ebook titled “Breaking the Time Barrier“. It is a pretty quick ~1 hour read about how to price your freelance / contract services and make more money with more and better clients. I figured I’d write a quick review for my own purposes as well as for anyone who might come across this.
The basic premise is that pricing your product / service based on the amount of hours you contribute is not ideal for you or your client, and that ideally you should get away from ever quoting hourly rates or basing your price directly on your hours.
The alternative to the hourly pricing model suggested is to price based on the value you are providing to your client. Upon first reading this, my initial thought was that it just sounds like they are suggesting that you charge clients as much as their budget allows, which isn’t really in line with my values. The second problem that follows this is that if you are charging more than your typical hourly rate, why wouldn’t they just choose someone else who comes in with a cheaper quote?
The answer to both of these is that you can provide a dramatically more valuable service by understanding the value they hope to get out of your work. For example, a typical web client might say that they need a web page created with specified buttons at specific spots and of specific colors. You can figure out how long that will take, which might be for example $1,000 worth of work, and if your quote is competitive and they like your background, you’ll perhaps land the gig. On the other hand, if you ask what value they are hoping to obtain instead of blindly following directions, they might say that their current home page is only converting at 1% and they’d like to increase that.
With the understanding that the client wants to increase currently low conversions, you can now provide more value by providing your expertise, perhaps explaining why they are currently seeing low conversions and how you think you can improve upon their current design even more.
So now you can come in with, say, a $5,000 or $10,000 quote where you suggest doing the page differently because you believe it will increase conversions significantly more than what they proposed, ideally with some data and previous numbers to back it up. Imagine you are the client, and you’ve got a quote or two coming in at around $1,000 to blindly do exactly what you asked, and another one coming in much higher, but from someone who actually understands your goals and has proposed a way to add significantly more value. I can definitely see how those $1,000 quotes aren’t attractive after seeing that you could leap-frog what you originally wanted.
I’ve seen these principals work their way into my own projects, as I realized that I shouldn’t just be doing everything exactly as clients ask, if I think something else would serve them better. Now I’m not afraid to say “Hey, you asked for X, but if your goal is so-and-so, do you think you might be better served by Y instead, because of A, B, and C?” Often times the answer is “Yes, that’s a great idea!”, and my experience agrees with the book that clients are generally quite happy to pay significantly more money, even if they’ve got a much lower quote from someone else, when they believe you are going to add a lot more value than someone else.
The book goes into a lot more specific details about handling conversations, pricing, and timing, so if this is interesting, give it a read. In short, I definitely agree with the premise that you shouldn’t be afraid to charge what you are worth to the client if you can position yourself as being able to add significant value, and that the best way to do this is to ask questions so that you understand why they are seeking this work in the first place.