8 Reasons Why You Shouldn’t Discount Your Freelancing Rates and 4 Reasons Why You Might Want to

discount-ratesHas this ever happened to you?

You’ve just had a great phone conversation with a potential client. You’ve typed up a proposal that summarizes everything that the two of you talked about and you’re anxiously awaiting the results–but things look really good. You feel like the proposal is just a formality.

Finally, it arrives–the answer to your proposal that you’ve been waiting for. You’re sure you’re about to add another client, and then you read the reply.

The answer looks something like this:

“We really love your work and would love to have on this project. But since we’d like to do a lot of business with you, I’d like to see your wholesale rate. What do you charge for clients who do frequent business with you?”

What went wrong? Should you cave on your prices, or do you say “no” to this potential client? In this post, we’ll examine the common freelancing request for discounted freelance rates. I’ll provide eight reasons why you shouldn’t discount your freelancing rates and four reasons why you might want to.

8 Reasons Why You Shouldn’t Offer a Discount

Are you thinking about discounting your freelancing rate? Read this first:

  1. Prospects who claim that they will give you a lot of business often don’t. The promise of future work is a well-known “carrot” in the freelancing world that often never materializes. The client takes your work at the lower rate, and then changes his or her mind about offering more work in the future. This is often a bigger problem when there is no contract.
  2. Discounting rates sets a bad precedent with the client. If you don’t stand firm on your rate, the client will expect that everything you offer can be changed. If you tell the client you need a week to complete the project, they’re likely to think that’s just a guideline and ask for it four days. You may end up haggling over every project.
  3. You’re not a commodity. Your work is created individually for each and every client. No matter how much work the client gives you, there are still only 24 hours in the day. You’re not a factory that mass-produces freelance results–you don’t have a bunch of completed projects sitting in a back room that you can just ship out when a client asks for them.
  4. Clients who request discounts are often difficult to deal with in other ways. This is an odd fact, but in my experience it’s proven to be true. You’d think that a client who asks you to work for less than your going rate would be more likely to cut you some slack on your projects, but often they are the most demanding and the most critical clients you will have.
  5. You may start to resent the client for paying less than you feel you are worth. It never fails. If you agree to a contract at a reduced rate, another prospect will materialize who is willing to pay your full rate. But now your time is committed to the low paying client. You either have to over schedule yourself or turn down the better paying client–not a good choice.
  6. The client may view you as less professional. The client may think of your work as substandard if you charge less than other professionals in your field. This happens even when your work is top-notch. The more someone pays for advice or a project, the more they tend to value it. Don’t devalue your worth by charging less than you are worth.
  7. Accepting a lower rate may cause financial problems for you. Let’s face it, you’re trying to earn a living. When you charge a lower rate, you earn less. When you earn less, you have less to spend on your living expenses and less to put aside for emergencies. And you never know when an extra expense might occur. Don’t let yourself be sucked into financial problems because you don’t charge enough.
  8. Your rates are probably already too low. Many freelancers, even those with experience, charge far less than they are worth. Sometimes this is because the freelancer really doesn’t know what to charge. Sometimes it happens because the freelancer lacks confidence. Other times, the freelancer undercharges for a project because they underestimate the amount of time and effort the project will require.

If you’re tempted to offer a client a discount, look at the preceding list and think again. Still, there might be some instances when you really do want to discount your freelancing rate.

4 Reasons Why You Might Want to Offer a Discount

We’ve presented some pretty compelling reasons for sticking to your freelancing rate, but there are always exceptions. Here are a few:

  1. The project is something you really want to do. You’ve never done anything like this and you just know that the project would like great on your portfolio.
  2. The client is one you really want to work with. Adding this prestigious company to your portfolio will enhance your reputation and attract other clients.
  3. You don’t have any work at all. You’re desperate for work and you don’t have any income coming in. (Although, you also need to adjust your marketing strategy.)
  4. You’ve already done a lot of work for this client. You know this is a good client who pays well and on time. You’re willing to help them out on this project.

Your Turn

Did I miss any reasons? Share your reasons in the comments.

You’ll find another helplful post on freelance rates on FreelanceM.ag, 7 Pricing Resources to Help You Set Your Freelancing Rate.

Image by ericskiff/

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Comments

  1. says

    I had this happen to me in few occasions and, as you said, 99% of these clients DO NOT COME BACK. I made a HUGE discount for a client in 2010, as I was just getting my footing on Elance and really needed the work. He asked for a small price and I agreed to do it (needed the money and also some history on the site).

    After one year the client came back and claimed he’s again strapped for money and if I could give him a good price. I gave him my regular price (which had increased, since I finished at least 30 more projects with raving reviews from my clients. I didn’t need any work anymore, I was earning quite nicely and could now refuse to work for pennies. He was shocked at my price and told me I gave him such a good deal one year ago. What he failed to remember was that back then I CLEARLY told him the price is around 25% of what I usually charge.

    Needless to say he wasn’t pleased at me being ‘so mean’, so he looked for someone else to do the job. Lesson learned for me: I always save money, so that I am never strapped for cash anymore. This means I am never desperate for work, so I can ask for a fair price. Right now, if the client can afford my services (which are actually not as expensive, since I don’t live in the US), I’d love working together, if not, that’s it. Plenty of other clients who are willing to pay my rates.

    I might give some discounts to clients with whom I worked for 3-4 projects, weird enough most of them DO NOT ask for this, since they understand they are paying for a service, not a bag of carrots. They are pleased with my work and my rates and already consider it’s a discount.

    Clients who are trying to squeeze you for every dollar usually are hard to please, disrespectful and a pain in the end.

  2. says

    Dojo–You bring up an interesting point.

    If you do “cave” make a deal, usually these clients are shocked when you try to charge your regular rates. I don’t think you’re alone in your experience with that.

    I’ve always found that the clients who aren’t willing to pay what I’m worth are pickier and more difficult than those who pay my regular rate.

  3. says

    More clients than not ask for a discount. So I decided to turn my discount into a benefit for myself by offering a prepay discount off of my rates. Clients enjoy the happiness of a discount and I get the relief of knowing I don’t have to chase people down to get paid. Since creating that offer, I’ve only had one client not take me up on it.

  4. says

    Kristi Hines,

    A prepay discount–what a brilliant idea! That’s definitely one to add to the second category. Like you said, it also reduces the stress of not. Thanks for the suggestion. :)

  5. says

    Number 4 – bingo! The most difficult, least desirable clients are the ones who ask for a discount.

    Like the passive aggressive SEO who kept asking to rewrite his articles (with a new writer), each time adding new criteria that I had “missed” previously.

    Like the lady who asked for a cover letter, then expected her CV to be edited and when she found two commas missing and one sentence that ran on too long for her, demanded a full refund of her discounted price – and took me two rounds with the BBB even after I had given her the missing commas and the extra period.

    If someone asks for a discount – run for the hills!

  6. says

    @David – Isn’t it ironic that the people who ask for the biggest discount so they can pay the least amount of money turn out to be the biggest hassle? I’ve gotten to the point that if a potential client asks for more discounts from the start, I find a good reason to become unavailable.

  7. says

    Great article, and I agree, as a rule no discounts.

    HOWEVER, I personally do offer package discounts if clients sign on for a variety of projects, like a logo, business card, and website. Like the prepaid discount, this incentives them to purchase more, and overall it’s less work for me since initial research was already done.

  8. says

    Right on #4! A client asking for a discount does not fully appreciate the work that you do. If a client, even a friend, knows that your work is worth your rate, they will pay you without hesitation. Someone who knows you personally and values your work might ask for special favors but they’ll never ask for a discounted price. A client that asks for a discount is also likely to request changes to the project at the most inefficient times because they don’t respect your process.

    @Dojo Good call. Save money so that you’re never desperate for work. The power to turn down clients who want a discount will surely lead to you being able to raise your rates.

  9. says

    Hellow,

    actually lots of freelancers don’t like asking for more money or even to ask for the going freelance rate. They feel like they’re not qualified or experienced enough. If that’s the case, continue building your portfolio, but if it’s not, don’t be afraid to ask what you’re worth.

  10. says

    If I had £1 every time someone said they had multiple websites they want me to work on!

    It’s a common technique and I have learned to call people out on it by making the statement above.

    I let them know I’ve heard it many times before and that in my experience it rarely materialises so I dont budge on price until they actually become a regular customer.

    If people really want to use your services they will pay your prices. Dont fall into the trap of being used to barter with a number of different competitors in order to get the lowest price.

  11. Bill says

    I have given discounts to 2 clients over the years:

    One a client who NEVER paid bills until at least 90 days and several phone calls. So since he refused to pay a “late fee,” I negotiated a 10% “discount” for paying within 30 days. I also inflated his bills (I worked hourly) by enough to cover my “discount.”

    I have another client – a repeat client who I’ve worked for at two other ventures – to whom I have given 20% off this time – in return for equity that is parceled out in small amounts monthly & also vests monthly. He has a successful track record & I hope to profit, or at least break even, at the end.

  12. says

    In my working life (I”m now retired after 20 years of freelancing) I had a published rate card that covered every aspect of the services i offered. My specialties were radio, tv, film, video, and I also functioned as an advertising consultant, having earned those stripes in leading ad agencies before I went freelance. I always positioned myself at the top of the market, in services offered and rates charged.

    Any time I was approached by a possible new client, we sat down and I reviewed every aspect of my 9-page rate schedule that applied to their needs, so they’d know up front what I charged, and there should be no surprises. I say “should” because occasionally, a client would be shocked at a high bill. I’d haul out the rate schedule we’d agreed to.

    If they asked for discounts, I said, “Sure…sign a contract guaranteeing me a definite dollar volume of work quarterly or annually, and I’ll discount my rates. The bigger the guarantee, the bigger the discounts.” Worked for me.

    But offer discounts just because a client asks? Nope.

  13. says

    @Sheila, excellent observation and tactic. It’s a good idea to place a ‘package’ deal sometimes, especially if you do consider it will benefit the client. I would rather offer free hosting for 1 year to my web design clients (which I actually do), than accept to haggle on my prices. This way I do get paid my regular fee, the client understands the VALUE of my work and he/she also gets a nice bonus, the hosting which is actually not expensive, but a nice ‘freebie’ to receive.

  14. says

    Sometimes we underestimate how many hours it will take to complete a project. So a lot of times we will overestimate. This results in overpricing sometimes. Not terrible, but sometimes we wind up pricing ourselves out.

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