Stop talking after you’ve said your fee, otherwise you’ll just talk yourself right out of it. Sometimes I use that on people if I want to pay less. I don’t say anything after they’ve said their fee, and then they get nervous trying to fill the silence and start saying “well, but I could do this price, or maybe we could lower it, I’m will to work with you on the fee…” If they would just be quiet, and they have something I want, I’m most likely going to pay the first fee they quote me.

What a great post to start the new year. When it comes to pricing and quotes people are hesitant. I already pitched a couple of companies and I found that if I’m direct instead of dancing around, it can save time and anxiety on both sides.
Also as a native New Yorker, I can appreciate that this post was written on the train.

Great post Peter. It is always a fine line to walk trying to be affordable enough that people can pay you but high enough to get what you are worth. One other factor is to know who else is in your field and what they charge. While negotiations area always part of the game you at least have to be at a reasonable price to be considered “professional”. If you are getting eye surgery do you really want to go to the place that offers a discount? Some things are worth paying for and my bet that one of them is having you keynote.

Jerry Weinberg in Secrets of Consulting says, “set your fee so that you are happy either way”. Best advice i’ve used. I have a friend who thinks she has ton”win” every contract she is offered. I’ve seen her accept the tiniest of rates, even when the work is not worth it. It means she has to turn down other better offers, too.

Starting off at a premium price is absolutely a great practice. In doing so, you should be prepared to turn down about 80% of what other people are willing to take, and hold out for those willing to pay what you charge. Attitude is everything in getting paid what you’re worth.

This is consistently one of my biggest challenges. Over time I’ve learned through experience that the real trick is to simply ask for higher fees. If you know you’re worth it, you don’t need to use formulas to justify it.

Peter,

You’re right on the mark here…. read a book one time about a guy who started a very profitable agency that now charges $1MM as a MINIMUM on any project.

He said the hardest thing he ever had to learn how to do was after hearing about a project scope, he had to write a big number on a piece of paper, push it across the table and then not blink.

Guessing it was the not blinking part that we have the most difficulty with….but it’s certainly a skill we should all work on don’t you think?
@TomMartin

I usually have a proposal detailing what I am offering for the fee. That way if they want to look at someone else they have an apples to apples comparison. I know that when I consult its time away from my own business and/or my family, so if they turn it down, there is no hard feelings…I have yet to hear a no.

@BButtonBoutique

Great stuff here. I definitely agree with Brandon about starting off at a premium price. It will be difficult to get business at first, but its not nearly as difficult as trying to explain to clients why you’ve raised prices later. Also, any referrals your clients send your way may expect to get the same low rates as your clients if you start low.

I realized that companies were much more willing to pay me for consulting on mom marketing once they knew my “pre-mom” corporate background (Consumer Investment Banking). Now, I always mention it in negotiations. (Although in reality, actually BEING a mom has provided me with much more insight on reaching the market than a gazillion hours of research in a SSB cubicle….) It is what it is!

When I began as a freelance book designer 18 years ago, the temptation was enormous to take any work at any price. And I did take some low-paying work to get started. Then I came upon the admittedly counterintuitive-sounding notion that I’d get more work (and certainly more of the kind of work I want) by upping my rates.

You know what? It’s true. I chalk it up to the fact that, in our culture, we tend not to value inexpensive things. And the othe things that are an outgrowth of higher rates–needing fewer jobs to earn a decent living, having more open time for when other good-paying projects come along, and being taken a little more seriously by potential clients–all proved worth the nervousness at learning to turn down projects that paid poorly.

Timely piece! I was just discussing this very issue with @Louiseasl yesterday.

I am a firm believer that we should never sell ourselves short. We need to place a value on what we bring to the table. If we don’t believe we are worth it, why would anyone else?

I have chosen to walk away from several gigs, because I recognize that in selling myself short and taking a lower paying gig, I am not free to take the gigs that could come along that are more in line with what I am worth.

I once walked because the hiring director felt my fees were WAY out of line. I held my head high, smiled and thanked her for the consideration. Never once did I consider backing down. Two years later, another director was hired and she contacted me to ask me to consult. Five years later, I am still with that company as a consultant.

We’re only worth as much as we believe we are!

Wendy @Kidlutions

Taking a cue from what sales guys have learned about the power of the written word, a nicely-formatted rate card can add tremendous authority to your verbal offer.

A rate card is also a good place to spell out terms and conditions – start-up/up-front fees, how third-party billables are handled (marked up or not),payment terms (have a credit application handy for them), NDAs, etc. Use plain English, but be businesslike and set expectations.

Your time to aqcuire new business is valuable – reward committment with a discount, but set the bar high on the level of committment needed to obtain exclusivity.

@John re “If you are the cheapest gig around you will find that you will attract cheap clients that will also try to suck everything out”…

Exaclty! How many of us have learned this the hard way? Being the cheapest game in town usually invites more problems than they’re worth along with very low quality clients.

I think I love Leanna (comment #2)

I think consultants from all industries have come to realize, albeit painfully, that time is money. It took me a lot of trial and error to learn just how valuable my time was and which rate was worth my effort. Since factoring travel, effort, brain power, manual power into my work equation I now have two levels of pricing. Gold standard which is slightly negotiable and middle rate which is not. It has been working wonders for myself esteem and my clients are always impressed with what they get for their money. It’s a win-win!

Great article Peter – thank you! Very helpful. There are a few things you mentioned I never thought about.

Brandon U. & John make great points as well.

Great post on one of the big challenges of being an independent contractor.

One of my favorite tips, and I wish I could remember who said it, is, “If they don’t gasp a little when you name your price, then you haven’t asked enough.” And, of course, you can go down from there if necessary.

When someone doesn’t want to meet my fee, I ask what they can do for me instead. So later this month, for instance, I’m gong to speak at a conference on the other side of the country. They are paying airfare to San Francisco, comping me at the Ritz-Carlton for two nights, and not only providing a video of my talk, but two hours of video editing time, which should enable me to get a new speaker video (my old one is totally obsolete). Is it worth it for me to waive my speaking fee? You betcha.

@Karen — spot on! Set the price so that you are equally happy with a “yes” or a “no.”

@Sheila — My firm works with a lot of startup entrepreneurs, like you. Many struggle with pricing, both the amounts and the pricing structure. My advice is to start with your goal: do you want to build a huge business, go IPO, retire early? Or do you want a business that pays you a steady income and enables you to do something you love? Whatever you choose, start there and then you can make proper assumptions on structure to calculate amounts. And remember that all businesses have dips sometimes — always make sure that your pricing allows you to get through these without dropping price (or dipping into that retirement account). Why? If you drop price during a dip, you will not be able to restore prices when you get busy again!

A few comments –

1)Great post and great insights shared. BRAVO, Peter.

2) In relation to one of the posts: Karla T mentions two things that I see very differently. i NEVER want to give a client an “apples to apples” comparison opportunity. My mission is to show how I am NOT a commodity and what value I offer is not easily met by others. That she has not lost one yet points out that she is not charing enough.

3) Chris Shaw – the approach I suggest is to establish a contract/proposal that spells out the parameters of the project. Then, if a “new” opportunity arises, you can “offer” to propose how you can meet the need as it is “out of scope” of the initial agreement, but you would be very willing to help with it as part of a new project.

Having written two books on the subject (“The Quintessential Guide to Using Consultants” and:”How to Succeed as an Independent Consultant, 4th edition”), I have to say that the wisdom above from all of the posters is inspiring!

I love #4, and especially this statement: “I asked to be paid.” I work with a lot of speakers who are just getting started and of course how to start getting paid is a big issue. ASK to be paid – brilliant! :-)

It’s also good if you can save the price discussion until as late in the conversation as possible. Prior to that, find out exactly what the client’s needs are/what their “pain” is (beyond just “I need a speaker/consultant/etc.”) and then you’ll be set up to outline the benefits you offer, which will help to justify your fee. If I say, “My fee is $10,000″ with no context, then my fee might sound high and you might just say “no” without giving me a chance. If I say “My fee is $10,000″ after I’ve just explained how much time and energy I’m going to invest in the project and what kind of results you can expect by engaging me, it changes the conversation a bit.

Great article – and excellent points! I was recently at a training event where the seminar leader said that if someone wants you to take a lower-than-normal fee (and he was talking specifically about speakers) then negotiate for something else of value – the ability to sell products in the back of the room, a contact database of all attendees, etc. That way you are exchanging value for value and it doesn’t look as if you are just dropping your fee because you don’t believe in yourself.

How dangerous is pay-what-you-think-is-reasonable as it relates to freelancers under/overcharging? Does that balance out? Is it a better or worse strategy for someone who is starting out in their field and trying to acquire legitimacy? Would that have a deleterious effect on how people perceive the value of your time? Do the answers to these questions change if we include a veto option is someone proposes something unreasonable?

Looking forward to hearing from anyone!

Great thoughts on everyone’s part. I’ve been speaking/training for 13 years now (paid that is) and pricing is by far the most intriguing issue for anyone who is providing a service of any sort. It all comes down to sales. You have to prove your value above everyone else. My friend Robert Bradford, who is an amazing strategic planner calls it your “island of profitability”. Why should I pay you as opposed the them? Answer that question and you will be well on your way to figuring it out.

I do think you have to take into account the financial situation of the group interested in your speech. Some groups have flexibility, others do not. In the end, you have to have a rock bottom price in your mind and be prepared to walk away if necessary. Say something like, “Thanks for the interest. I am sorry you don’t have the budget for my presentation. Please pass the word to those who might.”

I have frequently struggled with my pricing … costing it didn’t necessarily help with the pain … i recently put up a picture of something I really wanted to do in my life … such as a large trip or having teh time to write my book … and am realizing that others do “it” all of the time! Much of the pain is gone!

Great article … thanx for the support… Dawn

Thank you for such an insightful post. I certainly struggle with this. I recently discounted my fee to for a big project as it has the potential to turn into a long-term relationship. But I think I discounted a little too deeply – I’m still getting the work though, thank goodness. Chalk it up to a good learning lesson.

Chris, re the issue of offering your advice free in hope of signing the client for paying work, I had the same problem with ghostwriting consultations. A potential client would take up 3 hours of my time telling me their ENTIRE story, then ask for my advice on how to proceed. When I presented them with a written proposal on writing their book, they’d say the price was way higher than they’d thought it would be (this despite the fact that it was about 1/4 of what top ghostwriters charged), & usually ask if I could do it on spec “for a portion of the sales”. (NO, I could not, since most first-time authors’ books lose money!)

How I handled this was to start charging for ghostwriting consultations. Whether in person or over the phone, they’re now $200, up front. If they hire me to write their book, I deduct it from the retainer fee. Anybody unwilling to pay that consultation fee is never going to be willing to pay what I charge for ghostwriting. It’s taken care of the problem by at least compensating me a little bit for the time I take to meet with someone & analyze their project for them. And I also went way up on my ghostwriting fees! Now I get clients who value what I do & are willing to pay for it.

I liked #4. I asked to be paid. The biggest headache of my business was collections and feeling like I was be taken advantage of when clients would give excuses about why I wasn’t being paid. I give my rate and then with the caveat that I require 50% upfront. I have walked away from business when told that was not possible. It has been so much better for me emotionally and financially. The other thing I don’t participate in is full on spec work. I’ll give you an outline but I am not giving away my skills. After all this is what I do for a living.

http://www.whatsmyspin.com/soc.....are-worth/

Thanks for this post, Peter, a lot of great points. The most significant change I made in pricing and fees for clients was getting away from hourly rates and focusing project rates and flat fee along with that. That way, I’m more relaxed because I don’t have to concern myself with numbers of hours, and the client is also more comfortable. With writing assignments, by the word payments are from what I’ve seen rarely lucrative to be worth it, unless you’re writing for the top mags or similar.

I always ask about a price point before preparing a proposal. My proposals are client and budget specific. In the document there is a specific sentence in bold that says
“If you cannot afford a publicist, please don’t hire one.”

In the music business particulary, someone always wants something for free. While I’m all for helping people (I think it’s an important part of doing business in this market), there are those who will take advantage of good will.

So many good comments, I just have to weigh in again. One of the hardest things I had to learn was that it’s okay to turn down a project because the price offered is too low. In the beginning it caused me great angst, as if I’d be punished by never working again. Over time I lost the tendency to feel that way.

Better to turn down a job than accept it and fume over not being paid what it’s worth. I usually ask a potential client what there budget is for my part of the book. Ofttimes they hesitate, if they tell me at all. But I actually tend to show a bit more flexibility to people who are straightforward, as it makes it easier for me to avoid wasting time if I havoc clear idea what they’re willing to spend.

What a great post. thank you and everyone who also responded with some great tips, suggestions and ideas. I have been dealing/struggling with this issue and am currently moving in the direction of more corporate seminar programs. It’s an issue for me since I have been finding that companies definitely want the health and wellness programs that I offer, but often don’t want to pay for them. I got some great ideas from this post to really ramp up my proposals for this year. Thank you.

I have stopped using the words “fees” and “contracts” altogether. I now talk about “investments” and “agreements”. I have also started saying that I am “currently accepting interviews for…” instead of “please, please…please call me…” (You know what I mean.) And I put a huge range of fees in print, increasing my high end.

Almost immediately following, I had a phone interview that concluded in the prospective client asking: “So, do you think we are in your price range?” I didn’t really know what she was even talking about. So I didn’t say a word. The client said (in the silence) “You know: x to y?”. I said “Oh, yes, definitely!” And then I quoted an “investment” that was higher than my usual quote, but lower than the highest end of my range. Then I hear: “Do you think you could send us a contract?”

Love this post. Often the people who want you to lower your price are the pain in the neck horrible clients you’ll be eager to get rid of as soon as possible. :-D Sticking to your prices/fees gets rid of the lookie-loos and bad clients. Hold out for the quality clients.

Thanks for this post. For someone who offers “intangible” services that are hard to measure in quantifiable terms (ROI) the question about the fee has more to do with does the client understand and believe that they will get value or that we will help them solve a problem or create a positive outcome. If they believe any of these they will pay the fee without complaint (or with little negotiation). My challenge is to assure them of the value and follow through on that. Additionally, when we get the fees we charge it allows us to over-deliver on our services and to do the extras that inevitably come up without feeling like we need to charge additional fees. I hate that nickel and dime-ing stuff. The fee allows us to be fully at service without worrying about our bottom line. The focus stays on serving our clients which is where it should be.

I am finding that as my prices are going up, my “ideal clients” are begging ME to work with THEM! You can imagine how much easier that sales process is than the process of me begging anybody with a pocketbook to pay me. I am also finding that other professional vendors are coming out of the woodwork to talk about us. Suddenly we are developing an air of being exclusive and highly desirable. We are attracting the clients who know what it takes for me to do my job well; and they are willing to pay for the talent and expertise that lead up to “show time”.

I knew that I was on track when, last week, a client referred to my creative writing process as “Designing the new Ralph Lauren Collection”. (This client works in New York for Ralph Lauren’s high-end line…) Is it like that? “Exactly!” THIS is the kind of client I want in my referral pipeline!

I love this Peter: “You can always come down, but never go up.” That ought to be your next book! Good stuff. Thanks!