When a Client Can’t Afford You: Why It’s Still Better to Bid High
Posted October 17, 2008 in Business, Marketing 36 Comments »
You want to know what the project’s budget is, but they can’t tell you. Start-ups and small companies often don’t have a set budget for projects like these. They are looking to you to provide a price quote, so they know what they can expect to pay.
Still, your gut is telling you this client can’t afford you. What do you do?
A Case Against Lowballing
In the situation above, you could casually walk in the other direction, saying that you don’t have availability. Or you could refer them to someone else, or simply pretend you never got the message. But if you’re an experienced freelancer, you know that ignoring sales leads, while sometimes tempting, is terrible business.
Instead, if you really want the client, you might provide a lowball estimate, hammer out some quick work at a low cost, collect your twenty dollars and call it a day. But this approach has several pitfalls.
- Even a budget client can turn out to be high maintenance. Your lowball client could easily start demanding more than the inexpensive services you plan to offer. Cost factors for freelance services aren’t always easy to clarify, and they may not realize that you are a Cadillac freelancer charging Chevy rates. If things gets out of hand, you could end up spending too much time with a demanding but low paying client – and that’s no way to make a living!
- Too much for too little is a big problem no matter who you’re dealing with. Even if the client doesn’t start off demanding much, a client you have lowballed in the past is more likely to become a problem in the future. After getting a logo designed for $100, they’ll probably bristle later when creating business cards costs twice that much. They have put a low premium on your work, and they’re not expecting it to get more expensive overnight.
- The client could eventually leave for a more expensive vendor. Once you’ve lowballed a project for a client they might see you as a “starter” vendor and want to “upgrade” to someone more expensive as their business grows. Perception can quickly become reality, and lowballing projects could impact the billable value of your services, with your own clients and within their professional networks.
Just Bid It
Instead of lowballing the project — risking an awkward client relationship and setting the wrong precedents — why not just provide them with a quote like you would any other client? After all, they came to you because they want your professional services and style, and you’re not bargain-basement material.
When creating the quote, make sure it’s balanced, fair, and somewhat realistic for a startup or small company — while also true to what your services actually cost. If you have a bad feeling then don’t spend too much time on the estimate, but still provide something in range of your own professional standards. They’re probably not expecting a glossy, ten-page proposal — but just sending a quick email might look like you’re blowing them off.
Often times, you’ll be glad you bid at your standard rates. Maybe you will get the contract, maybe you won’t. But if you do, it will be on your terms, and for a price you know you’re worth.
If it turns out your gut feeling was right, and they can’t afford you, you might still congratulate yourself — because you’ve made an investment on the future. They may choose someone cheaper, but deep down, they still want you. They may hang onto your business card, check up on your work, and even refer their colleagues your way. And many times, months or years later, they may come back — with a budget you can work with and plenty of respect.
About the author: Christian MacAuley is a long-term freelance web designer and professional writer with two published books. You can learn more about her at www.xiann.com, or visit her company website at www.fabapps.com.
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36 Comments
Scott Clark
October 17th, 2008 at 12:05 pmNicely written and something I face all the time. I’ve learned the hard way that what you’re saying is right. And it is not that “sometimes” they become high maintenance and expectations go amuck .. it ALWAYS happens.
I have stuck to a minimum engagement now for over 5 years and lost a lot of very small clients. But in the dozen or so I analyzed years later, NONE of them had made any progress. I’m not happy they failed, but it enforced the value of my offering.
Dave Navarro
October 17th, 2008 at 12:34 pm100% Agree.
Don’t settle for less than you’re worth.
California Freelance Writer
October 17th, 2008 at 12:37 pmNicely done. I don’t often discount these days–although I do have a “friend rate” I prefer not to use it.
In the past I found that doing discount work ends up being a nightmare. Recently I was asked to submit samples for a project after I had already completed a different one for the same group.
Personally, I feel that when you have a skill and a large bag of experience you should set a rate and then stay with it. I found your summary to be pretty on target.
David Hepburn
October 17th, 2008 at 1:01 pmPoint 1 is so true! It’s worth it in the end to stick to your guns and charge what you’re worth.
Jon Norris
October 17th, 2008 at 1:18 pmAgreed on all counts. In my experience, the low budget client is ALWAYS high maintenance. They want to meet and talk a lot, but don’t understand why that costs money. They ask for changes to things but complain when they get a bill. They want to choose from services a la carte but don’t realize that everything is somewhat tied together — you can’t eliminate wireframes from a web design project just because it will save a little money.
Here is the big difference between low budget clients and big corporate clients: in most cases, the little guy is paying for the work out of his own pocket. He may be trying to start a business on the side and is dipping into his family’s savings to fund things. Knowing that, it makes perfect sense when he nickel and dimes you. A big corporation, on the other hand, is just spending a budget that’s already been allocated to the project. It isn’t anyone’s personal cash, so they aren’t always so tight on the purse strings.
BryanG
October 17th, 2008 at 1:27 pmI agree. You serve no one by under bidding a contract. For one you will end up being resentful, and when your resentful you won’t do your best work or you may not give the client the best service. When those things happen the client will end up being resentful and in the end you may get some negative PR against you and the services you provide. Been there done that.
I would like to know how people have been dealing with outsourcing though and how it’s effecting them and the downward pressure outsourcing has on their prices.
Arron Lock
October 17th, 2008 at 1:35 pmGreat article and 100% true! I have learned (the hard way) over the past few years that just because you need the $$$ doesn’t mean you should sell yourself short with low-budget clients. Good work!
Brandon Cox
October 17th, 2008 at 2:20 pmGreat thought! One thing I’ve done is give my confident estimate and if I truly believe the client can’t afford to get started, I can downgrade my estimate later or offer an alternative plan to save them money, which builds gratitude and good will while still establishing a high standard. Just be careful what and how much you downgrade because it may set a precedent.
Jacen Nicely
October 17th, 2008 at 2:50 pmThis is excellent! Just in time too since I have a meeting with a start-up artist this evening. Thanks so much!
Sonali Agrawal
October 17th, 2008 at 3:20 pmSuch a true post, about which I always think. I get so many queries regarding my design prices, and most of the time, I need to go through negative response because they can’t afford me. But, I still quote them what I normally charge. I guess, this is the reality of freelancing.
Jennae Petersen
October 18th, 2008 at 11:48 amI unfortunately had to learn this the hard way, and I’m still learning to some extent. I have a few clients who I know would stick with me no matter what I charge, and a couple of others who would jump ship in a heartbeat if I raised my prices. The latter are usually the more difficult to deal with and the ones who make unreasonable demands.
Don’t get me wrong — most of these are smaller clients who have small budgets. But I’ve been lowballed and nickeled and dimed by a huge corporate client with deep pockets too. It surprised me and hurt me, to say the least, but I understand that it is business and any client will walk over you if you let them. Experience is the best teacher, though. It won’t be happening again.
JudyAnn Lorenz
October 18th, 2008 at 12:41 pmWhat Jon said and more. Any client to whom I’ve tried to give a break nearly broke me in more ways than money.
Give them the right bid. They need accurate facts to work with on their budget. Maybe they aren’t as ready for services like yours as they thought. A lowball bid is a business lie. A turndown is a business snub that they didn’t get. If they take you on and you like them, you can always discount the invoice, but don’t lie to them.
Your services are a privilege, not a right for them.
Sean
October 18th, 2008 at 11:22 pmWhat to do when you are just starting out and are not sure what to charge or even what is too high or too low? My first two clients (currently working on second) were low balls to get the job and experience and jobs added to my portfolio.
Melek
October 19th, 2008 at 3:37 pmWhat i’ve also discovered is that oftentimes i’ll go lower than normal bc i don’t have a lot of work going on at the time. But, it never fails that the client will sit on it for a while, then by the time we do start their project, this low-ball gig is right in the middle of a huge workload. Then i don’t want to work on it bc i’m not getting paid as much as the others. So, it rarely works out to go low…. I don’t remember a single instance where it worked out well for me.
evertt de sousa
October 21st, 2008 at 9:12 amvery nice this post
Jill Anderson
November 1st, 2008 at 1:01 pmNice article! I also agree with Jon about finding clients that aren’t spending there own money. They usually have larger budgets and appreciate your services more.
I get a lot of requests from start-ups with low budgets for logos, websites, packaging, etc., so I’ve put some practices into place to save me time. First, use standardized estimates. I use FreshBooks for my invoicing/estimating. The system makes it super easy (takes less than 1 minute) to pick from your preset services/fees and send an estimate. Obviously, for larger clients or for work I really want, I spent more time writing a detailed proposal.
Second, if you feel like someone might just be “kicking the tires” for a quote, make them perform some extra work like filling out a project questionnaire or online estimate request. Include questions like who’s their competition, target audience, project goals, etc. People who take more time to get information from you are often more serious about your services and fees.
mark
November 1st, 2008 at 2:42 pmafter being in budget trouble time and time again i made up the rule to at least charge what it would cost me to outsource the job completely. it works pretty well.
Alek
November 1st, 2008 at 3:31 pmThis article is spot on. The cheaper the client the HIGHER maintenance they usually are. Gotta always respect your time and the value you provide and treat everyone the same way.
Calvin Froedge
November 3rd, 2008 at 11:11 pmThis is something I’ve had to battle with myself, I hate losing clients, as I try to see every client as a source of money but I had to make myself realize that the cheap clients were ALWAYS more demanding, and it just wasn’t worth my time when I could be making more money with someone else.
Luke
November 9th, 2008 at 2:32 amThis is a valuable article, and has informed me (or reinforced the reasons with regards to) being sure to quote a reasonable amount for work, even if it may be “high” in the eyes of the client.
The problem is, and I am sure I am not the only one here, trying to adjust the rates for a repeat client to a more reasonable level, after having made the mistake of undervaluing your time the first few contracts.
In my case, I freelance in a moonlighting capacity, and I have one client who represents most of my work. I have done a number of jobs for this client now, but I realise that my initial quote was under what I should have been charging (I should be looking at doubling my rates), and I also made the mistake of charging the client per hour, rather than per job, which means that I am constantly being asked to validate the amount of time each job I am given has taken – stressful for me, and I believe, distrustful on the client’s part.
How do I go about adjusting my rates to a more reasonable level, and/or transitioning from a per-hour arrangement to a more static per-job rate instead. Or, alternately, how to answer to the questions about the amount of time used retrospectively after the work is done.
One of the other aspects which leads to this situation, is the fact that I am normally being used in a remedial fashion – to fix problems with existing sites/frameworks or extending functionality rather than building from scratch.
An article pointing me (and workers like me) in a situation like this would be appreciated.
Bellatrix
November 23rd, 2008 at 2:45 pmThis is definitely true. Sometimes you need to learn how to say no. Some projects are not the right ones and you end up spending too much time in something that either does not pay you well or you just do not enjoy doing. Another thing, sometimes you start up charging x amount per hour and then time passes by and this rate becomes a very low one, then how do you raise your rates? there should be an article about that too :)
Josh
June 8th, 2009 at 9:45 pmLuke:
The best advice I can give is to look at a few resources that discuss pricing your services.
I am a Freelance IT consultant and learned a lot from author Weiss entitled “Million Dollar Consulting”.
The major lesson I learned was that you start at a good price for your service. Then every year drop your lowest 10-20% of client base. Yes, you heard right, drop your clients (recommend them to other or new consultants is the best strategy.) You then raise your rates yearly across the board and offer payment plans that you can scale with your clients.
Check out the book, it’s worth it. I’m not making millions of dollars, but my business has matured and is getting higher paying and quality clients as a result!
personal finance blog
August 14th, 2009 at 2:01 amLooks very reasonable.
Nic loves languages
September 19th, 2009 at 7:53 pmOften in consulting the best marketing you can do is to set the price ridiculously high.
In the case that people know you already for something else, think politics or minor celebrity status, then charging ridiculous prices makes it look as though you are genuine. Paris Hilton charges (charged?) over the top prices to go to parties. That means that the party organisers who invited her always portrayed the image that they were serious about whatever it was they did, which was good for them.
Our ex-mayor here in Auckland, NZ now does consulting and charges through the roof but is always busy because the prices give the image that he does a good job.
Nic at CrossLingo
Monique Smith
September 30th, 2009 at 4:34 pmWhat I do is give my client options. I give four choices with four different price figures and let them decide what they can price for. A la cartes work well for me.
brett
January 29th, 2010 at 8:29 amhi,
thank you for the article….i wish i had come accross it early….point #2 is something i could relate to by experience….people think if we charge less, it means we are either not Skilled enough or we are not having any work.
your article will help me further down the road to freelancing,
thanks,
brett.
Shreemani
February 5th, 2010 at 3:48 pmYeah sure… it no use working for less pennies, if you do then you’ll be the one suffering. It is better to work for free or work for the best of professional services. There is no use working for less.
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