Get Your Clients to Stop Comparing Rates

moneyYou are the best at what you do. No other freelancer can do what you do as well as you do it.

The problem, however, lies in getting clients to understand this. This is particularly hard if you’re still in the start-up stage, where you’re having to find the clients, instead of them coming to you.

In certain industries, like design, it’s easier to get the client to understand the difference in quality and rates (although designers still get rate-comparing clients), but if you’re a developer or writer, it’s tougher to get the client to understand the difference.

So how do you convince the client that your $100 an hour services are better than the other guy’s $30 an hour services?

Think Like a Consumer

We are all consumers of products. A client-freelancer relationship is much the same as a consumer-product relationship.

When the consumer (the client) shops around for a product (the freelancer), several factors are taken into account before the consumer purchases anything. What are these factors?

Let’s pretend our consumer is shopping for a car. All cars are essentially the same in that they have four wheels, some seats, a radio and a windshield. They all get your from Point A to Point B in the same amount of time. So what makes a consumer pay $60,000 for a BMW when they can get a Yaris for $8,000? Perception.

  • Perceived Value–A consumer generally believes that the more expensive product is of better quality.
  • Perceived Status–A consumer generally believes the more expensive product makes him better looking, cooler or more accepted by society.

So how does this apply to a freelancer? You must make a client believe they are going to get a lot more with your services (the BMW) than the other guy’s (the Yaris).

Of course, perception is nothing without reality. If consumers found out that the BMW breaks down every week, uses cheap materials and was missing seat warmers, a premium stereo and other gadgets we’ve come to expect from luxury cars, the BMW would quickly lose its “luxury” perception.

Make sure you, as a freelancer, really are providing your clients with “BMW” services before you start charging that premium price.

Get Clients to Come to You

The best way to get clients to stop rate-comparing is to get them to come to you. This can be done several different ways.

  • Referrals–If your client tells a friend that your work is super-awesome and that friend comes to you for some work–they’re less likely to haggle prices. This is because they already know you do awesome work and there’s no one else to compare your rates to, since they’re probably not shopping around. They’ve already seen the product and know how it awesome it is.
  • Testimonials–Testimonials work similarly to referrals, but are less effective. Testimonials are especially effective when they can be tied to actual pieces in your portfolio.
  • Through the grapevine–You hear other freelancers and experts talk about the importance of social media–and they’re right. If a client sees you active on Twitter, with lots of followers and professional conversations, and then sees that you have a popular blog, they’re going to know that you’re one of those experts. And they’ll pay more for that.

Don’t Use an Hourly Rate

Hourly versus set rates have been debated plenty of times before, but if you want to set yourself above other freelancers, you need to stop using hourly rates. This is important for several reasons:

  • If you’re faster at what you do than most other freelancers, you can shortchange yourself by completing projects too quickly.
  • Clients like to know what they’ll have to pay up front. What sounds better? “I charge $50 an hour and it will probably take me 10 to 20 hours to get that done.” Or, “That project will cost $1,000?”
  • Hourly rates can be limiting. When you tell a client that you charge $100 an hour, a client only sees that hourly number. They don’t see that while you charge twice as much as the other guy, you’ll get it done in half the time (and do it better).
  • There’s a cap to how much you can set your hourly rates–certainly no one will pay you $300 an hour for your services, but you can charge a $300 flat fee for something you know will only take you an hour to complete.

Go Above & Beyond

Don’t just offer your clients a design, development or writing service. Give them more and don’t charge for it. For example:

  • Offer business or web-related advice.
  • Deliver your product ahead of schedule.
  • Tweet or blog about the clients’ site or business.
  • Always answer the phone and emails with a smile on your face. It shows.

Make sure you’re giving them those luxury features to remind them of why they’re paying you more.

Focus on Benefits, Not Prices

A client once told me that although I charge a lot more than other developers, I was worth it because my work was great and I was easy to work with. This is the kind of response you want from all your clients.

Unfortunately, you’ll always have those low, or no, budget clients that always choose the cheapest freelancer, irregardless of the quality of services you provide. But, the great clients that you really want will recognize the quality you provide and are willing to pay more for it.

Don’t be sneaky about your prices, but try not to focus on it. State your price, but then talk about the benefits and ROI you can give that client. Why should he hire you and not the other guy?

Share Your Experiences

How did you get your clients to pay your higher rates? Are you still stuck trying to accomplish this?

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Comments

  1. says

    I’ve made it a habit not to work with people who cannot accept my rates. My rates are right now VERY low compared to what I provide, but it was the way I wanted to get my foot in the freelancing’s door so I accepted the situation.

    If they cannot accept that I have a price based on 8 years of 10 hours/day of learning/working, then they’d better buy a monster template with 70 dollars and be happy. I was more interested in the past in “any” work, now I am getting selective. The moment your client accepts you are doing a specialized job and treats you as he should, the entire process will be pleasant. I have no problem in doing a bit of extra work for them, supporting in some aspects, being there for their questions, when I know my time is respected and my work does get me the payment I consider appropriate at the time.

    Better to lose a “stingy” client. They tend to be overdemanding. Never could understand this, but I keep away from them :)

  2. says

    For me my biggest issue is not as much related to price, as it is to clients wanting advice they don’t want to pay for. Let me see if I can explain.

    I come from a background of 20+ years of doing strategic marketing/branding. When I started working for myself that was of course what I wanted to offer. But I also was the VP of marketing for 6 years (in my last job) at an email marketing company. Therefore I had a lot of experience in email and PPC marketing. I found people wanted those services. But I ran into a problem. Working with small businesses they often had sites, where even if I did drive traffic, I couldn’t convert them to sales. So I couldn’t show results a current client then would quickly become an ex-client.

    Cause I can handle HMTL/CSS coding I started doing sites (which I do charge for of course) to support the email/PPC campaigns I put in place. Of course the goal was to get these things in place, show results, and move them more a strategic market planning that hit on PR, interactive, print, direct mail, etc. My primary area of expertise and where I can make the most money.

    Well I have not gotten there … and now most of my billings are web site development and email/PPC related.

    What I’ve found is I end up giving out pretty high-level strategic marketing/planning ideas for free. And in many instances, basic business planning and/or sales training. I can’t seem to get my clients to grasp that planning (like a lead generation/fulfillment) is really separate from setting up a Google AdWords campaign.

    I hope that makes sense, and I guess it could be worse, but I feel like I am giving away services and not sure how to correct the situation.

  3. says

    This is an important discussion and you have some great tips here.

    As far as the hourly vs. flat fee goes, I nearly always charge a flat fee (although I have an hourly rate in mind when I quote).

    One thing to be extra careful about when charging a flat fee is scope creep. If the scope creeps too much and you don’t point it out to the client and negotiate an additional payment you can end up working way below your desired rate.

    I absolutely do agree with the focus on benefits.

    Nice post Amber!

  4. says

    Excellent points.

    I almost always price per-project–even though my calculation is based on an hourly rate.

    Another way to avoid pricing hassles: Whenever possible, I ask clients to identify project budgets from the start. Then I try to deliver what they need with modifications that allow me to price decently. E.g.: If they allocate $XXXX for website copy, I tell them I can edit and revise existing copy. If they budget $XXXXX, I can create content from scratch, etc.

    I also second your suggestion of going “above and beyond” for clients. You justify fair–or what some consider “high”–pricing by adding value to your work: In addition to copywriting–or whatever–your fees include strategic planning, project management, project communications, on-deadline delivery every time, etc..

  5. Mairo Vergara says

    Since I work for translation agencies, they set up the prices. I guess it’s time to look for some direct clients:)

  6. says

    Great points. My rate structure varies – it all depends on the client and the project. Sometimes an hourly rate goes over better than a set rate, and vice-versa.

    Laura mentioned scope creep when it comes to set rates.

    The way I get around this is that I provide the client with a detailed works order when it is time to sign the contract and terms of service (this is why proper planning is so essential, right from the get-go).

    I stipulate in the terms of service that any items outside of the scope of what is agreed upon in the works order (i.e. the final price estimate), will be charged on an hourly basis, or a set fee as appropriate.

    These measures have really been helpful in avoiding ‘scope creep’, in my business at least.

    Clients know what they’re getting, and they also know that if they want more than what was already agreed upon, it will of course cost more, which is only fair.

  7. says

    I wish this article, especially the “Don’t use an hourly rate” section, had come out two days ago before I sent out my first price quote as a freelance web developer. But it may not be too late! Thanks for the insight.

  8. says

    I recently had a prospective client to me through a recommendation of another client. I was told up front that the prospective client was a tad, ahem, frugal with his cash (even though he has a $250K generator for his custom-made wine cellar). I put together my first-ever proposal for a 30-page ebook that was going to be part of a big, multi-arm PR launch for his firm. As expected, he balked at the proposal, which was based around an hourly rate and even stated that in the various numbers. So I sent a second proposal for copyediting of the book, with three different price structures based on the type of editing he may need (which of course he doesn’t know yet since the book isn’t even written).

    Lessons learned strictly for myself?

    - No hourly time or rates mentioned except possibly as research, further changes beyond original scope of the projects, etc.
    - Get budget restrictions whenever possible.

    I don’t know if the way I did the proposal was the best for myself, but it was the best for this particular client. Whether he hires me or not remains to be seen. But doing the two proposals was a big learning process.

  9. says

    This post touches some very good points.

    I totally agree with you have higher chances to charge you rates when the client comes to you from a referral and the freelancer should mostly quote the fixed price instead the hourly rate and the approximation of the hours.
    Hourly rates are good for small tasks and to figure out the fixed price you need to quote, based on your experience.

  10. says

    Thanks, great article! I find that I’m very happy using an hourly rate. It is true that if a project is fairly easy, you could make more money by using a set price. But it can also work the other way. A project could end up more difficult than anticipated, even without scope creep. So that possibility of short changing myself worries me more. And this isn’t as much of an issue if you have plenty of work to do. If you finish the project quickly, then the client is pleased and you can move on to the next project.

    Also, most of my projects have been long-term site development with lots of enhancements and maintenance. I did start my rates pretty low at the beginning, so I have had to raise my rates with clients over the years. I found this wasn’t too hard. I sent them a nice email saying that I’ve decided to raise my rates approximately 10%. I hope that they’ve found my work to be of high quality and well worth the new rate. I had one client ask if we could incrementally make the increase over several months, and I said that was fine.

    Thanks again!

  11. says

    It’s good to see everyone has had similar experiences with the hourly vs project rates thing. I know that’s normally a huge debate topic, but my experiences have been that I’m able to charge more and not limit myself by charging project rates.

  12. says

    As a book designer/page layout artist, my initial discussions with a prospective clients include my asking for his proposed budget for book design and layout. Hardly anyone comes back with an actual figure. So I move on to making a proposal that concludes with one price for the book desig and layout.

    I outline what I will do on the project, how, and in what order. I calculate my price from within my range of rates, always going higher the less info I’ve been given by the prospect. I don’t reveal the price I use for these pieces of the project, but just the whole price at the end. And my calculation includes a little wiggle room so that I can come down a bit if there’s hesitation, but still stay within the range I want.

    That said, there’s no deal with some prospects. Like the posting I read recently from a “world famous illustrator” with tons of work out there, by his own admission, who couldn’t, however, offer any real payment for the “opportunity” to work with him. I always wonder what’s more likely with someone like that: whether he’s lying about his experience and success or he’s simply a successful parasite.

  13. Farul Ghazali says

    Excellent post. I work mostly in Asia where comparing rates and haggling is the culture so this article was particularly meaningful. I do quote per project although I’m happy to go lower if it means repeat business where I can charge higher for a future project knowing that I’ve already built a reputation with that client.

  14. says

    I always tell my client, when he ask why I charge so much (in fact I don’t charge so much :)), that I’m the best. I show them point after point what he gets from me and my service.

    I have ten year experience, I studied computer engineering – that why I my fee is higher. And I tell my clients that.

    I always use set rates – and show client what he will get, nothing more, and I always put it in the contract.

  15. says

    Brilliant Info you have shared.. And you have save me a lots of time and money. Am not complaining about my clients but few of them are very hard to crack. In rare cases takes hrs to convince them about ROI.

  16. says

    Great article, Amber.

    The way Paper Leaf Design operates is that we quote a project fee, and control scope creep by allowing a set amount of revisions. Any revisions above & beyond the agreed-upon amount results in additional charges billed at our hourly rate.

    The other issue with hourly rates is that there can be issues accounting for the “perceived value” of something. For example, providing a client with a website using WordPress as a CMS (“website A”) doesn’t take me really any longer than providing clients with a 10-page, CMS-free website (“website B”). However, the VALUE of that CMS puts the cost for website A higher than the cost of website B. Hourly rates do not account for this, unless you have varying hourly rates based on the type of work you do – which is suspect.

  17. says

    I recently changed from charging flat rates to hourly. I find more and more people are asking “What’s your hourly rate?” when I would tell them my flat rate. Or more often then not, they ask “Well, how many hours do you think it’ll take you to complete?” With that you could say, well it’ll take me an hr but it would take someone else a couple of hours to do. Then they still feel like they only need to pay for the 1 hr it would take you to do the work.

    Any ideas on how to get around these questions without making them feel that you’re over charging?
    Jessica

  18. says

    Jessica, I tell prospective clients that I don’t charge for my time, but for what I do. I tell them employees get paid for their time, but that employees also get all kinds of fringe benefits that go way beyond paying a price for the project I work for them.

  19. says

    @Jessica I get lots of requests for my hourly rate as well. While I do charge an hourly rate for small changes or simple add-ons, I tell the client I only charge by the project. None of my clients have rejected me or my quotes because of this, and many of them actually prefer it.

  20. says

    Your question is based on a premise where the difference in the rate between quality work and questionable work is $70. That’s too great a spread to overcome in most situations. I would submit a more realistic spread that you could challenge would be $40 or $50.

    You are better off to avoid hourly rates and go to a fee or retainer.

    In some cases, there will be no opportunity to successfully sell quality because the buyer is, for any number of reasons, going to go for the lowest price. It may be nothing more complicated than he doesn’t have the funds available.

    If you are selling quality, you have to look like you practice what you preach. That means you have a website that is first class, a blog that is attractive and compelling, your printed proposal is well laid out and inserted into a clear cover binder, and your business card and stationery project quality. The next step is to bring examples of work that were replaced by your work so the buyer can see or note the difference. If you have metrics or customer testimonials that document the improved results, then include those in your presentation.

    Finally, I would talk about my work that ended up in prestigious or unusual applications such as a leading publication, respected organization or product. The message is, my work or product gained this recognition or exposure only because of the quality invested in my work.

    Keep in mind, most of the buyers who challenge you on price really want quality, but they don’t want to pay for it. However, you only have to remind them what they already know, quality makes a difference. Then you will make the sale.

  21. says

    Thanks for this post!

    I have already stopped to work at cheap and quite agree with Amber. I don’t try to quote at hourly as project may takes more times. secondly, sometime total hourly rate become so high for small job, client feels uncomfortable too.

  22. says

    This is great advice! We’ve always found that focusing on delivering a great experience to the client and keeping the focus on quality will make any price well worth it.

  23. says

    @John my hourly rates were just examples, I was just throwing $100 and $30 an hour out there ;) But I do believe there is a difference in the quality of work and the type of client you attract with both though.

  24. Leslie says

    I usually charge per hour and then have a client by a set number of hours. It allows my client the benefit of me doing work quickly, but doesn’t shortchange me for the quick work.

  25. says

    I always use flat rate as opposed to hourly. Much better. I wrote an article on my blog about the most annoying things which I client can do and comparing rates was one of them…I think everyone would agree.

  26. says

    I always used to try to figure out hours, but awhile back I decided I would just charge what the time is worth to me for the project while also taking into consideration the value to the client. But then when I would bill the client on my invoice in freshbooks I would always break down the total I told them into an hourly cost, like if the job is 300 bux for a logo depending on the client, the invoice would say 10 hours at 30/hr equals 300 bux, and for some clients who I assume value the service less I would state 20 hours at 15/hr which would put it into perspective and also the client would assume that I would be taking about that many hours in a week before the delivery date to complete their project thus also giving the illusion i was busy working on their project while I obviously had time to work on my other work during the week managing the time in my own fashion. Because I would tend to get clients that pay 300 total and they would start to bug me with questions and other things they try to add on to the project without paying for them or over anxious because I said so many hours. But I see now that it makes sense that when I put an hourly rate even when I quoted a set price, I am devaluing my service. If I finish it early, the client will feel ripped off and if I finish it late, the client is also pissed because I said this many hours.

    Great advice. Thanks.

  27. says

    Hi everybody, great discussion. I usually give quotes by charging per project and none of my clients complained about that. But, since I work in Italy, they always try to get a discount on my quote (does anybody have tips about this problem?).

    In my experience, it’s more difficult to charge per hour, because clients have no idea of the time it takes to complete their projects. In most of the cases they would think “since you are an expert it would take you a couple of hours to completely redesign and code my wesite”, thus charging per hour will not be a good idea :-)

  28. says

    I like the point you made about perception, and I think thats quite true, also it works in reverse that if you charge less you may be over looked because the perception could be that you’re not as good quality.

    Also I think its a good point about charging hourly as apposed to a set price, as unless you can guarantee you’ll be finished in set hours then it doesn’t give your client much confidence (you may like to take your time).

  29. says

    I always charge a flat rate for a project. It really helps identify the scope of the project, and helps make sure the client can commit to everything they’re asking for. I’d rather lose a project in the beginning with a large price, than get halfway through only to realize their budget is gone.

    BUT, it is still very important to track your hours, and let yourself know how much you’re saving or losing on every step. I know my hourly rate for every part of the project, and make sure I hit that, but I don’t price anything by the hour.

    Besides, you don’t get your checks by the hour, you get the lump sum. So don’t worry about sticker shock, they’ll see it eventually. It’s better for you and the client if you’re both open about costs at the beginning.

  30. says

    A client I had put me in contact with another potential client who ask for a logo design, when I give him my proposal inmediately he mades the comparison “your offer is four times the cost of the last logo that other designer done to me two years ago” I explained him that I will not give him just a jpg but a real logo with all his version (RGB, CMYK, grayscale, lineart, in vector and bitmar formats) and he say “hope that you deliver as muy as you cost” when he has his logo was delighted talking about how profesional was my job, now I am the refference point, and he has reffered me to other potenhtial clients, is the quallity that you deliver the most important thing you must preserv, when the comparisons arise don’t go low cost nor lower your quality just for say yes to a work, you want a quality reputation not a cheap reputation.

    About the hourly rate vs fixed price, in my expirience if you charge hourly the clients rush and puts more presure because they don’t want to pay more than their budget allows them and sometimes they think that you deliverately slow the process to charge more, for that I always charge fixed prices and always say to the clients “want it fast, cost more. want it good, takes time. want it cheap, then you must wait.” I alway deliver the same quality, and I offer quality, if the client insist in doing comparisons to lower the price and reduce quality politely I refuse the job.

  31. says

    For application developing, I prefer hourly rate. If you use odesk you’ll see hourly payment is guaranteed but fixed price job is not guaranteed. So if the buyer is fraud you may or may not get your payment.

  32. says

    I get from time to time people saying well why do you charge 700$ when others do 200$ …

    I answer i’m not other people i have experienced i’m honest and hard working that comes with a price …

    Regards

  33. Saffron Scott says

    I agree completely with you! I’ve been building websites since 1997 – both freelance and for other design houses – and I still meet potential clients that balk when I say maintenance/tech support and a-la-carte starts at $45-50/hr. Those are the ones you just need to walk away from.

    In fact, I find the ones who balk at paying that “starts at” price, then go to someone else who charges less and two/three years later come back to me anyways because the cheap guy is now out of business and the project is just sitting there like a lump on the ‘net.

  34. sunshine says

    I came across this article by accident, well almost. I am a professional hairstylist who also teaches cosmetology and i freelance my services as well. I’ve come in contact with some crazy clients who want a great style with great service but continually want to ask for a discount…Who does that. My service are higher because I have self worth, the education and I truly believe in my work. So you may have to get rid of a few bad apples but there’s always a bunch more that will make a delicious apple pie.

  35. says

    This is a tough challenge in the post-recession economy. I find that comparing rates is the first thing new clients do when I submit a proposal.

    Tips I can offer to get around this situation are

    a) don’t come down on rates as the first action
    b) emphasise the quality vs cost aspect, particularly referencing past endorsements
    c) say to the client that my interest is in helping the client obtain the right solution; if they choose not to go with me then I will gladly kick the tyres of the other solution (without charge) to ensure that it meets all their requirements at the desired quality.

  36. says

    Hi, Christina, a project could end up more difficult than anticipated, even without scope creep. So that possibility of short changing myself worries me more.

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