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vozzz

Are you undercharging?

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It started with a simple enough question on slack, and then a couple of people expanded, i said the simple:

 

 

Aleksey:

if you're asking the questions " am i charging enough?" 99% chance you are not charging enough, so start charging more.

 

But then Others contributed more valuable info:

 

 

Zickart:

Sometimes when you are starting out and you don't have a firm ground of clients to stand on pricing is your only selling point or maybe how many weekends you are willing to work ... It is not how things are supposed to be but it is how they become
Sadly the prices and expectations being thrown around lately are too unrealistic and although the client will eventually find someone to do it it will not be worth it for the one doing the work
I have my day job and I only partially freelance .. last month I took the conscious decision to stop on taking over demanding projects .. I have my monthly salary to fall on .. I will only take projects that are worth it
so now I already doubled my daily and hourly rate and when I am asked for a quote I add even more to that .. I want to work more on my stuff and get to the point where I will be approached because only I can do what the client wants to do
that will give me leverage and power to be more than just an expense .. I will be added value

 

and

Coppersoffit:

The funny thing is (in my experience and others' anecdotes) is when you think you are being risky by upping your rates, that's when you start getting busier. It's like the complete opposite result of what you've been scared of.

 

 

I thought i'd just post this here if people are searching for this info. And just to add a bit more from myself.

 

This is how i learnt the hard way that i was undercharging. I was working on a stressful poor paying gig, when i was contacted by someone else to do a job, but i said i couldn't because i was already working for the next 2 weeks and was on site. This has happened before, but unlike those times, where the people just left me alone, this guy kept offering me more money. The next day he emailed me offering me 3x what i was getting at this current job and it would've been WAY more fun. I of course still didn't take it, but i realized these are the jobs i would rather be doing. And by raising my rates, i was increasing my availability, so i both had more free time, but i also had more opportunity to turn down shitty jobs, since i had extra money from the higher rates. and then i used that free time to get better at what i do, learn new things and explore possibilities, which just leads to me being better, and more valuable to my clients.

 

so moral of the story: "Raise your rates" :)

Edited by vozzz

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here is some more encouraging words from Noah:

 

 

My experience on putting out a high quote is that the people that never call you back, you didn't want to work with them anyways. Usually the ones that value what you do will get back in touch and say hey this is way over my budget or even I find this pricing to be a bit ridiculous, and that starts the conversation/negotiation where you can adjust scope or schedule to get the price down. In my experience never arbitrarily slash your prices a lot for a client or they will always think your pricing is arbitrary and they can negotiate you down on every future job, client always has to give up something to get price down (reduce scope, give flexibility on the timeline, less included revisions, anything really) to get price down. Sometimes in these conversations I realize that I was the one who misunderstood scope of what they wanted and it's easy to adjust. Don't think any of this really applies to day rates, more for flat quotes.

Edited by vozzz

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I've read stories from and know some people who bid low because they don't feel 'qualified' to charge higher rates but I think a lot of freelance people think about their rates the wrong way. Your rate, whether we're talking hourly, day rate or fixed bid is for a package that includes more than just you making money in exchange for working some hours and then putting that money in the bank to feed the family. You are a business. You should always think of yourself as a business and should absolutely form an LLC for your company of one. Your rate includes overhead costs, your personal fees that you take away from the job for the physical labor / time you spend on it that job, and profit margin.

 

Even if you are employed full-time somewhere and have great benefits provided by that employer, when you freelance, you client doesn't know this and it shouldn't be any of their business. You don't need to justify why it costs what it costs. If the client is only interested in getting the work done as cheap as possible that is a huge red flag and you should move on. You aren't missing out on anything but you are taking yourself off the market and potentially passing up good opportunities.

 

Think about when you buy a new retail product that is a little expensive but not an item you buy very often. Let's say I'm a client searching for a new vacuum cleaner. They come in all shapes and sizes and the price range is vast. I'm not an expert on vacuum cleaners. I know I want one that works great and won't choke on my dog's fur every minute. Because I don't know much about what's what, but I do know the max I'm willing to spend on a new vacuum, I'm going to go to the webbernet and see which brands / models get the best reviews. I'm also going to ask my trusted friends for recommendations. I'm also going to compare various models side-by-side to see which has the features closest to what I want. Am I the client you want to sell your vacuum to or that guy over there that came in in and said: "just give me the cheapest one you've got. If I don't like it after I've used it I'll bring it back and demand a full refund."??

 

My point is: You provide a valuable service and people want it. If you're talented and easy to work with, they will want YOU more than just the service you provide. How much should you charge? Don't care who you are or what level you think you're at - Nobody in freelance who is running their own business should be charging less that $500 a day - period. This is for any type of work. If you're freelance, you made a choice to do things your way and this is a career move, not "can't find a job so..." move. That's $500 day to cover your pay to yourself for the hourly work while working on a specific project, covering your non-productive time which is a part of any business, covering your overhead expenses such as software licenses, renewals, upgrades, computers, printers, ink, paper, fees for training services, dental plan, health plan, vision plan, marketing (identity, website, video hosting, memberships, time writing emails and replying to job ads, etc.), office space, furniture, electricity, and the list goes on. These are all costs of doing business and most of us are in a line of work that is shifting more and more and more to a freelance base. Price all this stuff out over a year and divide by the number of weeks YOU want to work in a year and then number of days per week YOU want to work and subtract that from $500. If the result looks good to you and you are able to sustain steady work day to day throughout an entire year then go with it.

 

Even the best out there can go over a month without paid work so that isn't a realistic number. Looking for work and uping your game is still work and part of the package. The clients should pay for it indirectly. It's not a per-project line item, but it is built into the hourly / day fee since your fee covers non-productive time.

 

Larger studios may have a handful of permanent employees but from what I've seen, it's very talented senior levels or partners and entry level workers and they pull in really talented freelancers per project needs. It's the smart thing to do.

 

One more thing: trash your hourly rates if you've got 'em and just charge a day rate - everything takes at least a day and you DON'T want to overbook so pace everything based on a day rate. I charge a day rate and keep track of time in half days (3 to 5 hours) and full days (6 to 10) productive hours. If the number of days until deadline is greater than quoted days of work, then I may mix in other work. It makes the math easy, you do the work you say you're going to do and meet the deadlines. Working a half-day on one project and then giving it some time to breath is a good idea. Creativity takes time.

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Awesome insight dude

Totally agree , I just tried this today .. The client asked me straight out of the bat what I will charge with this , I went with my gut and thought of the highest realistic number I could think of and then just added more to it .. It might still be lower than what others might charge but it's roughly 2x what I used to charge and this is a recurring client so I wanted to do this a bit gradually

Question though .. do you negotiate your rates ? and how far do you go ? I have been given a price a but lower than what I am asking but still refused it .. I explained why I priced it that way .. I added in the costs of online rendering , the time I will be spending after my full-time job and thus no sleep as well as possible weekends and the rushed nature of the project

Client was more understanding than I though

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Question though .. do you negotiate your rates ? and how far do you go ? I have been given a price a but lower than what I am asking but still refused it .. I explained why I priced it that way ..

 

 

A much better tactic if pricing become the main point of interest is to briefly divert the conversation toward the scope of work. If you already have a clear understanding, then just rehash and make sure you and the client are on the same page. Lead that conversation. After you have reiterated everything that will be involved or what the client is expecting, then go back to the pricing. Explain that you believe your quote is fair and accurate for what is expected. If the client hasn't divulged a target budget, then now is the time to just ask. "What number are you trying to hit / stay under?" If they can't tell you then it's a stalemate. If they say something like "We want it as low as possible", then this is an opportunity for you to start trimming at the scope. Instead of simply adjusting your rate or providing a discount on top of a discount, reduce the amount of work. Ask the client what they can do without. If they can go down a bit on expectations then you should be willing to go down a little bit on pricing to meet in the middle. A good negotiation is when all parties feel like they are losing a little on something!

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