Upping Your Rate
Getting a higher rate for your work is a goal for every small shop and solo operator. When you’re starting our it can be frustrating to figure out how to make a good rate.
Financial security is the biggest source of stress for freelancers. Cashflow is one of the biggest reasons small companies fail. Both these problems have 3 main solutions:
- Make more money
- Reduce operating costs
- Generate good, consistent leads
So let’s talk about the first one on the list.
If you look at your work history and honestly assess the quality of your work in relation to everyone else, I hope you see that you are pretty good. You care about what you do, you believe it has value, and you pay attention to it.
If you go to any community site like Behance or GitHub you might find people that are similar to you in terms of capabilities. You might also find that some charge more than you, some less. But if you do pretty much the same quality of work why can they charge more?
Why can some people charge $1000/hour when
others can only charge $25/hour for similar work?
Understanding Clients is About Understanding Their Risk
The main thing you need to do in order to improve your rate is to understand what motivates your clients. And their main motivator is risk.
Risk comes in two flavours:
- Personal – the individual(s) that are hiring you might be putting their jobs and reputations on the line.
- Corporate – the company itself is taking on a lot of risk. They are engaged in some sort of change to their business, and change always carries risk.
These two are obviously related. The greater the corporate risk, the greater the individual risk for each stakeholder.
Assessing Client Risk
This is where you put your sales hat on. A lot of people open conversations with potential clients by drafting a spec doc – I know I used to do that. If you are trying to improve your business by productizing services and automating for efficiency that’s totally fine. But if you’re trying to increase your hourly billing rate then I would suggest you start by investigating your client’s level of risk.
Larger companies typically have more risk than smaller companies. They’ve spent more on product development, they have more corporate inertia, and every time they change something they consequently have to change lots of other things.
Imagine doing a rebrand for a company like FedEx. That’s not just a logo. It’s stores and vans and planes and uniforms and advertising and websites in pretty much every country on earth. It’s most certainly important to them that any rebrand doesn’t explode in their face. The investment and value of their existing brand assets is enormous, the cost of change is high, and risk of damage through change is also high.
Every business takes on risk when they hire you, so assessing their risk is critical. Find out about their business:
- Do they operate out of a physical location? More than one?
- How many products do they sell?
- Are there new products coming?
- Do they sell nationally? Internationally?
- What is their supply chain? How do they get products/services to customers?
- What sales channels do they use? How do potential customers find out about them?
- Where do they see new opportunities for growth?
- Where do they see threats from competition?
Depending on the size of the job a lot of this is stuff you should know going in. The idea behind this is to start a conversation that will help you qualify each other. Will they see your value and pay your rate? Are you a fit?
There are a number of strategies that you can use to take off some of the risk for your clients. Some take longer to implement than others, but I think it’s prudent to have these as part of your business strategy.
- Be Verifiable: Potential clients should be able to find out about you easily. They should know if you’ve won awards, they should have heard about you through friends, they should have an idea of your working relationship before you even speak together.
- Be Proximate: Be close to them and their industry. Physical proximity still matters. So does industry familiarity. If you are part of their industry ecosystem you will be easier to trust.
- Be Relevant: Your track record dealing with companies like them will be a huge component. Make this part of your business. Know who you want to work with and carve out that niche.
- Be Stable: Whatever you do, people want to know that you will be around for a while to support it. A lot of companies go as far as running credit checks on vendors.
Know When to Walk Away, Know When to Run
If you aren’t a fit for them, or they aren’t a fit for you, make a graceful exit. If they don’t want to pay your rate, offer to make an introduction to someone who might be able to help them if it makes sense. There are times when you want to see a bid through for the sake of crafting new relationships. But always make sure it’s a good fit – I’ve seen a lot of companies go down because they took on a job that was too big, or many that were too small. Even did that myself once or twice. 😉
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