The Trick of Charging More

Posted on 06. Oct, 2009 by in Essentials

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The Trick of Charging More

There is a somewhat subtle reason as to why some can charge more than others and it is not that they offer a better quality of service. It is obvious that I look for quality when I shop at Zara but why would a person buy clothes from Marks and Spencer’s when you are charged more for quality not worth every penny? It’s because they ask for it and other shops don’t.

Freelancing is much the same. I have advised many freelancers who are overly undervalued due to a lack of confidence in testing new waters. I can sympathize with you and I know how daunting it can be to charge more for your freelance projects.

The underlying fear stems from the thought that people will not hire you because of your prices being higher. This is actually an upside-down thought. Clients may actually hire you for a higher price, unless you charge stupid prices.

I took my family to an expensive restaurant recently and the food was as nice as another restaurant in the same area, but by charging more they gave value to their food and the skill of the chef. Personally, I never mind paying extra for quality, which is why I become disheartened when I see a freelancer who has exceptional skill and undervalues himself (or herself).

The Advantage of Charging More

If you pay peanuts, you get monkeys

The majority of your potential clients will approach you with this mindset. If you are cheap, they will expect a cheap job, and if you do an outstanding job it is a bonus for the client. Apart from being a good Samaritan, I can hardly see any advantage in charging less for good work.

On the other hand, by charging more, the client is expecting good work and when you deliver good work they will have expected it. The client is happy with the work, you have put in the same effort as before, but made more money.

If you were selling a product for $5 and made 5 sales an hour and sold for 8 hours a day you would be making $200 a day. Now if you change your price to $12.50 and made 2 sales an hour you would make the exact same. If this is not a service and we are talking about hourly rates then you can do less work.

Again, an example. If you charge $10 an hour and get lots of work and are doing 10 hours of work a day, you are making $100 a day. If you change your pricing plan to $50 an hour and lose 80% of your clients, you will do 2 hours of work every day and make the exact same. If you didn’t lose so many clients then you could even work 5 hours and therefore get $250 a day. A clear advantage being less work.

The trick however is that by rising the price, I have found that if you give yourself a respectable value, the client will value your work the same. I believe you will get more work if you hike your prices a little higher.

Research the Market

You ought to have a nose around at what your competition are charging. You may find that they are charging more than twice as much as you are per hour. If this is the case, I would suggest that you revisit your calculator and work out how much you should be charging an hour.

If another freelancer is getting better business for offering a similar service then you can do the same. There is usually not much difference except that the other freelancer asked for more.

calculatingRe-calculate

Go back to the drawing board and figure out how much you want to actually make. If you work out you want $xx,xxx.xx a year then divide that by 52. Now you know how much you need to make a week and therefore can work out an hourly or fixed rate for incoming projects.

Conclusion – Test the Waters

When you have made amendments to your pricing plan, try it out. See if you are earning what you wanted. If you lose too many clients, then you have gone up too much and vice versa.

Keep your fire alive and test and check yourself. Never think ‘this is it’. If you learn new skills and progress in your expertise, you will definitely find the right balance eventually and make extra cash.

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13 Responses to “The Trick of Charging More”

  1. Luke Jones

    07. Oct, 2009

    Great article. I wish I knew who my competition were and how much they charged…

  2. Stuart Meredith

    13. Oct, 2009

    What a great resource this website is for freelancers!
    It can certainly be advantageous to raise your prices to a sensible level. Personally I used to do cheap prices for people who would get in touch saying they needed something like a ‘quick logo’ designing just to ensure I got the work. Those jobs always turned into nightmares with me spending loads more time than I was quoting for. I now use higher prices to put off this sort of potential client, and people who I do work for clearly now put value in design. I’m not looking to work with the sort of people who reluctantly employ a professional designer because their printer told them that Microsoft Word was not an appropriate format for their brochure artwork!

  3. [...] The Trick of Charging More [...]

  4. Sergio Ordonez

    18. Oct, 2009

    I think the Zara & Marks and Spencer’s analogy is not valid here, when you buy expensive clothing there is the quality factor there is another key factor you are missing: I want to wear expensive clothing because people know the brand is expensive, so there is a social desirability factor.

    Most of the clients won´t credit their designers no matter how expensive they are, quite the opposite, if they can hide their sources much better. So here is not the social desirability factor.

    Another key factor is the popularity of the brand, if nobody knows the brand, surely an high price won´t mean making more profit because the lack of demand. So this “charge more to get more profit” principle won´t work until you have a reasonable level of demand.

  5. Andy

    19. Oct, 2009

    Great article. As a freelance web developer I find it difficult to price an accurate hourly wage.

    One quick question, I currently have a small handful of clients I do work for on an ad-hoc basis. Do you have any advice on how to tell them i’m putting my prices up?

  6. [...] The Trick of Charging More [...]

  7. [...] The Trick of Charging More [...]

  8. Agustin

    30. Oct, 2009

    I so much agree with you!!!

    I has happened to me that even when charging stupid prices (because I don’t want to do the job) some clients DO say yes…

    OR you could look it from this way.
    If you charge more you can spend more time and effort making ONE brilliant job instead of a lot of secure mediocre jobs.
    Also you can be and have to be very strict about the working and payment conditions… if you say NO to a client you are also saying you are an equal.

    but always be careful of what comes out of your mouth…

  9. clippingimages

    01. Nov, 2009

    Awesome article. Very informative . Thanks for sharing this nice post.

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  12. stretch mark removal

    12. Feb, 2011

    This blog does tell me to charge more. Being a freelancer is not easy its not because their job is permanent but I believe pricing high rates per hour is just fair enough for a good work. Thanks for putting this up mate. I really have learned many lessons here. =) I’m gonna tell my friends online about this.

  13. mole removal

    14. Feb, 2011

    Many freelancers are charging less expecting to be hired and yet does wanting to have an increase seeing that their work is really satisfactory. The sad part is there are many competitors as to the job posted and most of them freelancers who did applied does charge low and the employer wants to get a cheap employee yet he knew that those ones are really good. Only thing is a good job – salary increase.

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