Is Charging More the Right Thing to Do?
Note: This post is our personal opinion and will most likely set our blog on fire with heated debate and criticism for its controversial content. We ask that all comments remain polite and respectful at all times, no matter what your views may be.
“That’s all you charge?” The startled words came back at me. “You’re kidding me.”
A peer and I were playing ‘I’ll show you mine if you show me yours’ with our rates. She’d been sure we charged far more for our services. She was shocked to learn the truth.
This surprised me.
Rates for web services like design, writing and more are often an area of great debate. Many people (including ourselves) encourage low-paid web workers to set better rates.
But what is the ideal rate? What should we all be charging?
Some people suggest a minimal rate, stating you should accept nothing less. Some suggest doubling rates out of the blue. Just like that. Just because. Some propose flexible rates and some propose rates based on who your client is and the person’s ability to pay.
Now, I’m all for people charging what they feel their skills are worth. I’m all for earning a good living and having equitable compensation for the work we perform.
But the shocked reaction of my peer and her concern that we were selling ourselves short found me defensively muddling over the rates we charge.
Putting Yourself Out of Reach
I am not – I repeat, not – for high rates. I never have been. Since day one, Harry and I have had a vision for our business based on our personal values and beliefs.
We want fair compensation for our work based on our skill levels, abilities and experience. We also want to offer people quality services at affordable rates.
“But you’re the Men with Pens! You could charge way more than that – easily,” my peer stated, and I found myself blinking in reaction. We could charge more, yes.
But why would we? Is that right? Is that fair?
Harry and I aren’t new at this business. We aren’t rookies. We just fell into high demand because we became somewhat of a celebrity duo – nothing else about us has changed.
Does our popularity allow us to jack our rates and set ourselves out of people’s reach? We’re the Pen Men, after all – we can almost start our own trademark. I can just see it now: “A Men with Pens Design”.
Hold on. Promoting an “Original Men with Pens Design” does sound nice, but does that mean we should raise our rates accordingly?
No. I don’t think doing so is right or fair. Part of what sets us apart is that we understand budgets. Not everyone can afford expensive work. I don’t like to pay extra just for a name brand myself.
We take pride in finding the middle ground and solutions that let us earn a good income but that also put our services within reach. People shouldn’t have to spend a small fortune to have a site that looks good or content that reads well.
What’s wrong with that?
Nothing. But I suddenly find myself defending lower rates instead of higher ones. Am I in the minority? If you had the chance to triple your rates because of sudden fame or popularity, would you do it?
I’m not sure popularity justifies high wages. Sure, we’re Men with Pens. We do rockin’ work. We’re good at our jobs. We’re conscientious, caring and friendly. And we have fair wages.
Those who just jack their rates because they can get away with it seem to be dabbling in an unethical business practice.
The Alternatives: McDonalds
When Harry and I began working on the Web, we needed to set our rates. The wide range of fees for similar products and services out there left us scratching our heads. Are 500 words worth $5 or $150? Is a banner worth $20 or $200?
We looked to authorities such as www.writers.ca and used online salary tools. We examined the rates those sites suggested and what other workers received for the same services.
We took a look at the alternatives, too. The web may be international, but our local economies drive our financial needs. So where would we work and what would we earn if all this dried up and disappeared tomorrow?
That raised interesting questions. What do other people earn? What’s a good salary? What isn’t? What income do I need to live well? What does Harry need? What are our local, regional and national economies? What’s a good salary in Ontario? In B.C.? In Las Vegas? In Florida?
The Canadian minimum wage is around $8.50 and in the United States, it fluctuates from between $5 and $8. A middle-income family in Canada earns about $25,000. In Nevada, $20 an hour is pretty good.
And yet on the web, you have prices that range from $2 to $2,000 for the same work we do. Puzzling? You betcha.
We decided to choose rates that met our financial needs and that stayed within suggested industry guidelines. We also tried to price our services to meet market value. We set our ‘don’t go below’ rate, and we remembered to price ourselves within reach of most people.
Sleeping Well at Night
During our number crunching, we looked at how long it took us to complete a project based on our personal speed, skill levels, experience and talents. We know that pricing by the hour is bad for our business, but we still had to figure out our hourly income to know where we stood at the end of the day.
Both of us felt quite strongly about taking an ethical stand. We needed to feel comfortable with the rates we charged. We needed to know that we’d done the right thing, not the lucrative thing.
But we can, indeed, do the lucrative thing if we so choose. We find ourselves in the position of being able to raise our rates if we’d like – easily. We’ve looked around, too, to see what others are charging for the same services we provide.
We’ve noticed that some services worth about two hours of time are going for $250 – and we charge one fifth of that amount. What is justifying the huge difference in rates? Not skills, not experience… what?
Personally, both Harry and I feel sick at the thought of charging so much for so little. We both felt that demanding that kind of money for our services was unfair to clients and compromised our integrity, values and beliefs.
Does that mean the person charging $250 is unethical? Not at all. But it does make me wonder where the person’s values lie.
Who Do We Think We Are?
When the subject of rates comes up, I often think of my sister. She’s a crown prosecutor and spent years studying law. She has decades of experience putting war criminals behind bars – and she earns less than many writers and designers.
There’s something very wrong with that.
Who the hell am I to demand higher wages than a lawyer? Are my services worth more than an accountant? A doctor? A teacher? A firefighter? All these people are paid less than many web workers out there.
I’m a writer, for god’s sake. Yes, I’m a very good one, but let’s be realistic. I won’t die on the job or save lives or put war criminals behind bars. Who am I to be paid so much for my work?
Harry feels the same way. He flatly told me that he has a ‘don’t go below’ rate and that he also has a ‘don’t go above’ rate as well. He wouldn’t accept a job that pays more than he feels is right.
Neither would I.
Value for the Customer
“You have to look at the value for the client,” my peer argued. “It’s worth a lot to them. Your work lets them make more money. Charge accordingly.”
It’s a valid argument, but I disagree. It is not about what my work is worth to someone else. It is about what it is worth to me and what I feel is fair compensation.
She suggested that I charge more, because corporate clients have more money to spare and needed to reach more people. She mentioned that I could offer discounts to those I felt deserved a break.
I disagree with that as well. Should a corporate client building a website pay more for my words than the hobbyist blogger who wants a nice welcome page?
Having different rates based on your client’s ability to pay is price discrimination. It’s not an ethical business practice. When you walk into a grocery store, you aren’t scanned for your background and income history to see whether you should pay more for your apple.
But do you scan clients like that? Be honest. We all have “annoyance tax”, don’t we?
We try to maintain a policy of “all people are equal in our eyes”. We don’t take bribes from a client so he can move to the head of the line. We don’t charge corporate clients more than hobbyists. If Microsoft came knocking at our door and asked us to work for them, they would pay the same rate as John Doe who lives next door.
This is right. This is business integrity.
Paying for Premium
We aren’t saying that those who do command double and triple our rates aren’t ethical. Let’s get that clear, before someone torches our blog. Some providers set justifiable rates based on their skill levels, experience, abilities, talents and beliefs.
That’s good. I am not challenging these people and their rates. I wish them very well and congratulate them on their monetary achievement.
Many people charge premium rates for special work. There’s nothing wrong with that, either. I get that you pay more for something exclusive, something special. I know why my Nike running shoes cost me a lot and I know why I pay that amount, too.
I’m also fully aware of the law of supply and demand and the issues of pricing around that. I understand that perception and pricing go hand in hand.
I know full well that we could charge premium rates – and for some things, the special things, the things only we can do, our rates are higher to reflect that uniqueness. There are reasons and strategies for everyone’s pricing, our own included.
But there are many services we perform that are banal. They are truly nothing. Many people offer the same service. Why should we inflate the price just because the Pen Men are doing the job?
There is no reason. There is nothing special about these tasks. Sure, the skills are special, but they’re not that damned special.
There is nothing shocking about not jacking our prices. We’re something of a small superstar and could get away with it, but we choose not to.We don’t have rock bottom rates, but there’s something right about refusing to increase our prices for certain tasks just because we’ve become the hot thing of the moment.
I think it’s completely arrogant to say, “If you want a piece of me, you gotta pay the price.” I’m cocky, but I’m not that much of an arrogant ass.
Abusing the Situation
We see people setting high rates arbitrarily – they see their buddies doing it. They see other providers doing it. Unfortunately, buyers don’t always know the difference and they agree to pay high rates.
We don’t feel that just because you can get away with high rates doesn’t mean you should.
What also bothers me are the many providers that are just plain greedy. They’re taking advantage of a situation. They screw people. They’re about the money – that’s all.
You wouldn’t believe the amount of remedial work we receive from clients who’ve been burned. Over half of our clients –50% of people who contact us – were taken for a ride by someone who overcharged and who did shoddy work.
And we have the joy of cleaning up their tangled mess.
Even worse? These clients come to us needing help, and they’ve had their wallets drained. They have no money left to correct the situation.
This isn’t right, people.
Another problem? These clients who’ve been overcharged are mistrustful and they’re gun shy. Deep down inside, they’ve lost faith in people. They just want to learn to trust again. We retain more clients because of our honesty than anything else.
I feel very strongly about providers who set high rates for a service that takes a couple of hours, especially when that service isn’t anything artistic or special. Nothing justifies those kinds of high rates.
It’s like Sears selling an MDF sofa for 3 million dollars – something’s wrong with that.
I think clients – no matter who they are – deserve the respect of fair treatment. They shouldn’t be gouged by high prices. They should be told up front that a job is a small one or an easy one or that it’s not a big deal.
There’s something to be said for honesty and transparency.
I also think that Harry and I deserve the respect of making the decision to be an affordable service provider. The fact that we specifically refuse to jack our rates should reflect on us positively, not negatively.
We want to make money, yes. But we want to be an accessible business within reach of those who want or need our services. We believe in honest and integrity. We believe in balanced values, strong morals, and practicing good business ethics.
There’s not a damned thing wrong with that.
109 Responses to “Is Charging More the Right Thing to Do?”
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I agree: good business ethics are important. At the same time, shouldn’t someone who’s famous for providing great customer service and delivering beyond expectations to a tough deadline command a higher price than their peers, even though they’re offering the same service on paper?
Famous writers and designers normally attribute their fame to having offered something above the competition. Whether they give a better customer experience, write in an excellent style that’s unique to them, or are simply a well-respected source in their field doesn’t really matter; in all cases, they’re not charging you for their fame — they’re charging you for the extra value that made them famous in the first place!
So while I agree that fame and high rates shouldn’t necessarily go hand-in-hand, I don’t feel there’s anything wrong with raising them if you can attribute that fame to added value and not simply blind luck.
On the split rates front, I think it’s important to evaluate both the return-on-investment for the customer and the amount of work involved. My accountant charges more to do the annual accounts of a business turning over £1,000,000+ than he does for a company turning over £20,000 — there’s much more work involved in the former, so the higher cost is justified, even though he’s filling in exactly the same 5-page form in both cases.
Likewise, companies famous for their branding work often evaluate clients based on their turnover — charging Betty’s Cafe on the corner the same as Nike for a brand image simply wouldn’t be fair. The ROI from Betty’s new brand image isn’t going to be anywhere near as much as Nike, so split pricing seems justified in this case.
And yes, you guys really do offer great value for money. I couldn’t believe how realistic your prices were!
Pen Men, I was impressed, but not surprised, to read this post. Judging from everything else you guys write, I already had the impression that you were fair, ethical, and (to borrow an Aussie expression from my father), “good blokes”.
It’s very refreshing to hear from people who aren’t trying to make the big bucks. I try to live (or work, I should say) by the same philosophy and as long as I’m making enough to pay my share of the mortgage then I don’t go around telling my clients and editors I’m going to charge more, even though I probably could. I’ve negotiated a few increases in my rates when I felt it was fair, but never more than fair – I couldn’t sleep well if I thought I was ripping people off. I’d much rather that some editor somewhere had a guilty conscience and I didn’t (not that any of mine are doing that!).
I’ll be very interested to see what other people say on the subject, but I’ll just use one more Aussie favourite: “good on ya, mate!” (that is to say … well done!). More of the same, please.
Amanda Kendle’s last blog post..Fiction writer’s over-inspiration ? a good problem to have
Though freelancing for me is part time right now, I have the same feelings about my day job, or any job for that matter. Does popularity justify abondonning one’s integrity just to have higher pay? I don’t think so, if anything, it should make a person more humble and approachable not so far up the ladder that the person is “untouchable.”
Great post James and Harry, I agree whole heartedly.
Jenny Burr’s last blog post..Meniere’s Disease: Part One
I’m somewhat with Nick. If someone has a proven capability to deliver, that takes a good deal of the risk out of the project and a higher price is justified. The risk premium becomes money in your pocket, because you’ve taken the trouble and the time to prove your abilities, get the processes down pat, and deliver according to (above?) the expectations of your clients.
OTOH there’s the celebrity problem. How many of use have raced out to buy the latest Rolling Stones CD only to discover it’s crap (I’m talking mid 90′s here, people – no flaming please). Same with celebrity anything. If someone gets paid the same regardless of the quality of their work, there’s a subtle but persistent pressure to not bother with quality at all. This is not an ethocs issue, it’s a human nature issue. The inevitable end result is high prices hand in hand with crap deliverables.
None of this really adds to the discussion, though. The points I make are all in the original post. But I lean with the Men – I do SEO for a living, my rates are a bit more than a plumber (but not by much, here in Australia) and I get by. Yet others boast about their sky-high hourly rates, and – I suppose – good luck to them. But when the surf’s good, I go surfing. And I sleep well at night.
Mark Dowling’s last blog post..The AWStats Dashboard: Period and Summary
@ Nick – Thanks for your thoughts. I appreciate them. A quick reply:
That’s something I mentioned, I think (maybe I didn’t?). There is more effort involved in a corporate client than in a hobbyists’ gig, and price reflects that time and effort involved. Hands down. That isn’t unethical.
It *is* unethical to say that all corporate clients pay more because they can or because they’re corporate. I have a client who sends me requests for 10-word headlines – for me, there’s little time and effort involved, so I can’t honestly charge him a whack for that. Make sense?
No argument there either. If you offer something special or of added value, there is justifiable reason to offer higher rates. But say you and I offer the same service to a client: coding three lines in a blog to create a line.
Should I charge more because oooh ooooh the PEN MAN is going to do it? There’s nothing special or of added value in that, no?
@ Mark – What’s even worse is that we’ll still buy the latest Rolling Stones even after buying one from them that is crap. Surfing – very cool.
@ Amanda / @ Jenny – Thank you
I’m looking forward to seeing what others say, too.
(Nick—percentage-wise, the ROI for both had better be the same. It’s the amount of work—just like the accountant—that’s changing. Different scope, different price.)
James,
I think you are dead-on. Level of “fame” does not have anything to do with value. Perhaps if Nick is correct that your marvelous value got you known, then you were already “worth” more. But if you were happy will a well-thought-out plan for what to charge before groupies showed up, then why would you not be happy now? And what do you say to a client—can you say “I have groupies, I’m worth twice as much,” without feeling slimy?
It is simply not true that rather suddenly being better known make your rates inadequate. Being better (over time) will do that. Maybe in a year (or whenever) it will be time to raise the rates, if you feel like your craft has gained polish, if you feel like the ROI to your clients has increased and you can prove it.
If you chose it, upping those rates would bring in something you probably don’t see a lot of now: price resistance. Right now perhaps you can point to monetary results and demonstrate ROI, but then again you may not measure clients’ results now, and may not yet need to dollarize your value very often. If the rates you charge go up significantly, you’ll find yourself always needing to measure that dollar value, because clients will scrutinize your charges more carefully in every way.
The kinds of clients you can work with would change greatly. (You know that.)
Two rates for two wallets? No way. Two rates for two vastly different scopes? Of course. If Beth says “give me a banner that’s brown,” and Joe says, “do two months of strategic research and use these guidelines and take seventeen meetings in our fine leather chairs and give me a banner that’s brown,” that is NOT the same job.
Increasing is part of doing business. Double or triple in one move is a sin, IMO.
Great article, hope it doesn’t cause too big a fire.
(Did you know which side of this I’d come down on?
)
Regards,
Kelly
Kelly’s last blog post..Is Boredom Killing Your Business?
@ Kelly – The first thing that Harry said when I asked if he’d thought we should increase our rates was, “I don’t want to be paid more. I don’t want the responsibility that goes along with more money.” Higher rates, like you say, change the type of clients you work with considerably and the level of headaches and frustrations increase in correlation.
As for being better…. we already are
@ James: you and Harry provide the best customer experience I’ve had the pleasure of encountering. Bar none. I really think that you do everything just right. And if you are happy with the work you do, the people you interact with, and your lives away from work, then keep on keepin’ on.
We all need a certain amount of money to survive, but after that it can cause more trouble than good if one isn’t careful.
Your comment to Kelly – I was actually going to say that, and then you said it. This shows how much you “get it” and understand yourself, and that is key to being successful. Understanding yourself.
I’ve thought about it before, heck, I’ve talked about it before here. I know I could make a lot more money at my “day job” if I worked somewhere else (Calgary, for instance, I could double my salary there).
But is it worth the extra headaches? Do I want to work 80 hours a week and not see my family?
Regarding adjustable rates, when I have done computer repair work for people in my town, I’ve always been up front about my hourly rate. Every so often, though, you run into a job where it takes quite a bit longer than you expected.
So I’ll sometimes fudge the numbers to keep the final price reasonable. I’m not out to fleece the little old ladies. I just want to give a helping hand, and make some beer money.
Anyway – good job guys. Best in the business, you are.
Brett Legree’s last blog post..do something crazy.
I don’t know.. I’m on both sides of this issue. I charge less for easy work.. want me to talk to you over lunch? Probably free. Talk to you about how to do something? $65 to $95.00 an hour, depending on what we’re talking about. Actually *do* something? $85 to $250.00 an hour, depending on what doing it takes out of me..
I don’t look at it as “what it’s worth to the client”. That’s for them to decide. I look at it as what it costs me in effort.
Tony Lawrence’s last blog post..Bash Brace Expansion by Anthony Lawrence
Hey James,
I agree with most of what you are saying here. However there is one point I disagree with you on.
Hypothetically (I don’t want to comment directly on your rate-setting practices — far be it for me to argue with how you run your business!), if someone takes the time to build up a name with unpaid work like blogs, they should see some profit from that on the other end. After all, people recognize the name — the “brand” — and feel a little more trust in that name. So the premium that the brand owner charges in not taking advantage of “fame”, it’s for the (hard-fought) trust built. People want to spend more to know their projects are in the hands of experienced, reliable writers.
I hear where you are coming from though. It is a characteristically Canadian trait I think, fretting over “ethical” rates. You hit the nail on the head — it is not that those who charge higher rates are unethical by any means. But you do have to live with yourself and if you feel you personally are over-charging (even if you logically “know” that it is simply supply and demand), living with yourself is harder to do.
~Graham
Graham Strong’s last blog post..Document Everything
Well, you did open a fair kettle of fish!
I am also amazed at rates, not only of our profession, but of hairdressers or dog groomers who most often make more than teachers or police officer per hour. Thank God for both of them, I use them and pay without question for the “look” I hope to achieve. But worth noting. In fact, after I got divorced and thought, I think I will go back to school and become a physics professor, I took a peek at the salary range in the US, and decided that maybe massage therapy was a better call.
Or Hockey players, don’t even get me started!
(Note, Hey James, in Vancouver 25K is certainly not middle class! It is sharing an apt. with 3 other people and riding the bus class….) Oh wait, I ride the bus. -)
Price vs value can be addressed in so many fields and certainly ours is no exception. I am also a teacher and professional speaker. In teaching, I find the salaries incredibly low, given the task at hand and the hours required out of class to do the job well. As a speaker, now there is a field with some wide discrepancies…some charge $500 some charge, $5000 and some $50,000 – for the same hour. And I will admit, it can be a reflection of skill level, but usually notoriety drives the market value.
I agree with your main point, or as I understood it: treat others as you would want to be treated in your life when you need a service. We don’t need to charge $5 for a 1000 word article, as some countries offer online, but it comes back to the principle of service and doing what you love.
In the end, I think to maintain the level of personal fulfillment in any profession, we have got to look at it as more than the $$$$ only, and see ourselves as part of a big picture, providing our service to the world. Butterfly effect and all….
Thank you for a stimulating discussion.
Off to the classroom on the bus.
Harmony
Harmony’s last blog post..Coffee Lovers and Meditation Unite
@ Harmony – Good thoughts. Re: the $25k being middle-level income, this was the national average back a few years ago. Considering the difference in economies between the east coast of Canada and the west, the middle point did end up being 25k.
@ Graham – You have intrigued me. I never thought that my views on rates would stem from cultural mindset, but damn, you could be right.
@Harmony: yes, you have to look beyond the money and see yourself as part of the larger overall picture, otherwise it can get to you.
I used to run a facility that makes medical isotopes for cancer therapy. I did not make anywhere near the money that a professional athlete makes.
What job is more important, and who should make more money?
I don’t have the answer. But I got a lot of satisfaction from that work, knowing that I was helping people.
Brett Legree’s last blog post..do something crazy.
Is this just your way of telling us how cheap your services are? If so, you could have stopped after the first 1000 words… Nice article.
John Hewitt’s last blog post..Game 20: #6 Seed Crime Fiction Dossier Versus #7 Seed The Writing Journey
@John: *chuckles* No, it’s a little bit more than that. And I wouldn’t say we’re cheap. We’re affordable.
Rates are such a personal thing, aren’t they? Everyone has reasons for charging what they do. I get a lot of flack for not recommending a market rate or flat rate for all freelance writers to quote, but how can I? There are so many factors into why we choose the rates we do.
I think I’d wonder why someone charged too low – but a nice reasonable rate will turn on tons of potential clients. That can be way more lucrative than charging a high rate and having only a couple of clients a month.
Nice one.
First of all, I love your website and your posts, but this one is far too long. I got bored after the first four paragraphs and admittedly have not read the whole thing. So if you said what I’m about to say, I apologize. I don’t have the attention span to read an online essay.
That said, I think the most important thing about rates is that you charge enough to cover your expenses and make a profit that covers your cost of living and business goals, in line with what the market can bear. It’s as simple as that. I align it with what I need to make in salary as a direct hire employee, and then add on the cost of overhead and expenses and taxes that I’ll be paying myself. Any less than that and I would be wasting my time.
I’m just getting started in the freelance world, but I’ve been in this business for a long time.
I do like your site and your topics.
Just to be clear, I didn’t mean to advocate doubling rates ‘out of the blue’. The point of that statement was that if you considered doing that, what internal objections would arise?
I wanted people who were reading that article to examine their limiting beliefs, not necessarily raise their rates with no warning.
Yet hopefully, once they DID examine their limiting beliefs, hopefully they will raise their rates. Whether they do that a little or a lot is up to them.
Wendy Piersall’s last blog post..RSS Feed for all of Sparkplugging.com
@ Deb – I appreciate the way you always tell people to charge fairly but that you won’t suggest a rate. As you say, there are way too many factors involved, and who would you be to tell people what to charge? Your objective views have always been well appreciated by me.
@ John – Yes. Hire us.
@ Claire – Sometimes I have a lot to say. Sometimes it’s more about getting it out there and off my chest than figuring out the optimal length for interest. That’s the beauty of owning a blog – I get to decide. But I’ll agree with you that this one ran on long. I promise not to do it often
@ Wendy – I appreciate your clarification. I have to admit being a little surprised at your post. Motivational, yes, but when I hit the part about “double your rates” (not raise – double), I blinked. The post was written too generally to make that suggestion, I feel. The motivational aspect was great, no argument there. It was a good post.
Hey Brett,
You know, we can’t measure the worth of a person by the money they make. It just comes down to that.
Our intrinsic worth makes our wages pale in comparison. I was thinking about this blog post, and read your response on my blackberry as I was driving into town. (I know I know…but It was dead still traffic jam!)
I was thinking about how valuable each contribution is to our world. All these people were crowded into the lanes heading into downtown…going to contribute. Some would be making big exec. dollars, some clerical, others cleaning the lunchroom. Still, what they bring is service.
If we ever tried to pay people what they are worth, it would be impossible in monetary means. Having said that, I am sending out some invoices tonight and let a few folks try.
Thanks for your comments, and to all…enjoyable reading.
Harmony
Harmony’s last blog post..Coffee Lovers and Meditation Unite
Quick answer: Yes.
It’s right for you, you’re worth it.
It’s right for them, they want quality.
Jay Francis Hunter’s last blog post..Manipulating Typography: Helvetica to Hellvetica
I’m not sure what the controversy is. As long as people aren’t underselling services — which devalues the product of ALL providers — then who cares what they charge? On the other end of that, if the market will bear prices double (triple? quadruple?) what they currently charge, then capitalism is working. I’ve got no issues with that, either. If somebody can get those rates, then I say, “Good for you.”
Is that fair? I suppose that’s up to the buyer to decide. They are, after all, the ultimate arbiter in the transaction, yes?
Also, price discrimination isn’t inherently unethical. In a general economic context — such as the one you’re using here — the word “discrimination” is neutral.
For example, discounts for seniors or students is price discrimination. Volume discounting is price discrimination. Sliding scales based on ability to pay — common in the health care industry here in the States — is price discrimination. A frequent customer/loyalty program is price discrimination. Airlines use price discrimination as much as, if not more than, any other industry. Any time a consumer negotiates a better deal for himself, he’s participated in price discrimination.
None of those are unethical. And it’s not unethical for providers in the creative services to do the same.
Of course, this doesn’t mean that price discrimination cannot be unethical (such as pricing based on a person’s race, or gender, or disability, etc.).
Rob in Denver’s last blog post..On being prolific
Money and ethics? Geeze, you Pen Men don’t ease into a week do you?
Back when the Emperor needed fine strong horses for his army he traded silks and porcelains. A little sweat, some traveling, the merchants did fine for a while. Until sailing ships became a faster more favored route. It seems to me an easier more tangible trade concept. Goods for services as needed.
But now trading x number of electronic chips for y number of services, what anchors the sense of true measure? Especially when we are trading intellectual properties in a knowledge based industry. Nobody is exactly crossing Asia Major on camel or on foot are we? Well maybe it feels that way some weeks.
James is saying he and Harry, two horses and they’re good. Maybe a spare. Oh they want the best horses they can find to hold the Pen Men astride. But Harry says, not taking care of anymore. That they enjoy riding , kicking up dust is clear, want us to join in. Is it ethics, or positioning, or lifestyle design?
Is there a Canadian consciousness at work here? From the land of capitalism, I am curious. Is it a plot? Look at the Hollywood exodus to Montreal and Vancouver? Will we all be eating maple syrup tomorrow? Am I unethical because I want more?
Janice C Cartier’s last blog post..The Book Of Tea
@Janice: I’m not Canadian, but I really don’t want any more than I need to be happy. One good horse is fine. If you take care of it, it’ll take you far.
Just a side note about maple syrup. James hates the stuff. I can’t get enough of it. I’ve run out of the good stuff – please send more.
I don’t think it’s Canadian.
May be a Gen X thing, though… previously, get ahead at all costs; afterward, personal freedom at all costs. Not to light another match, but there’s a small bunch of us in the middle who caught the tail end of hippie and keep holding on it, with things like spread good, have just enough, not too much…
HUGE overgeneralization here. Please do not be offended if you are older or younger. It’s just a thought…
Later,
Kelly
Kelly’s last blog post..Is Boredom Killing Your Business?
@ Harry- note to self, send Harry syrup….and one bag of oats.
Janice C Cartier’s last blog post..The Book Of Tea
How much for a banner of hands typing on a computer? I’ve been seeing a lot of that lately. it must be good.
John Hewitt’s last blog post..Game 20: #6 Seed Crime Fiction Dossier Versus #7 Seed The Writing Journey
@Rob – To tell you the truth, I think that discounting for seniors is discrimination. I don’t begrudge frail old ladies their $.95 coffees, but I think that’s pretty ageist. Why must I pay more for being young? Or, why should a student (myself included) pay less, when some of my peers were forced to drop out?
And education costs – now there’s some price discrimination!
What I’m saying is just because people do it, doesn’t make it ethical. I can see and appreciate your point of view, but don’t necessarily agree.
RLD: Taekwondo Happiness’s last blog post..Whoops!
@ Kelly- I think you touched on something. I read recently that current graduates are looking more at “green” careers, too. Bottom line considerations are only one part of the equation. I am an artist. Art and the taint of money…big controversy. Yet everyone needs money to live. I tend to have a flexibility of rates because I am nurturing new collectors as well as the upper end. I have clients who have wonderful taste, appreciation for the arts and also mortgages,toddlers, and all that goes with. I have clients who are CEO’s and can buy anything they want. So I tend to build in a little wiggle room. And as you know I always give back . Last week’s donation is only one of several. I think if we are in it for the long haul. It is a conscious compass we set.
Janice C Cartier’s last blog post..The Book Of Tea
Janice, that’s perfect. I hope everyone does.
Later,
Kelly
Kelly’s last blog post..Is Boredom Killing Your Business?
Harry,
Maple syrap eh?
What price are you willing to pay?
Big smile,
Harmony
Harmony’s last blog post..Coffee Lovers and Meditation Unite
@Kelly & Janice: And that’s why I chose a picture of a compass for today’s post.
@Harmony: You mean you wouldn’t send me some maple syrup out of the goodness of your heart?
@RLD: No one’s arguing that a price break for seniors and students is not discrimination… it is. Remember, “discrimination,” as I wrote, in a general context such as this is free of negative or positive connotation. Understanding that context, therefore, becomes key here.
But you are going to have a difficult time convincing me that providing a price break to two populations that typically have less disposable income — seniors and students — is in any way unethical.
Rob in Denver’s last blog post..On being prolific
@Harry- Loved the visual. So I am suggestible. Subliminal suggestion of maps, silk road, compass…never notice til after I have traced the thread, sketched the line….ahhhh, I am soooo easy. You two are dangerous in combination. Yeah, I hear you chucklin’…
Janice C Cartier’s last blog post..The Book Of Tea
@Kelly – In Canada, there is a debate that comes up every once in a while about entrepreneurism. In short, there are less (or at least there are perceived to be less) in Canada per capita. Similarly, there is always the debate about why we are a resource-based economy, exporting our raw materials to manufacturing countries like the US when we could simply make them here ourselves. (My argument is that when you have a country of just 35 million people, most of whom live along a 5,000 mile road, it is hard to generate a strong local economy. But then I’m not an economist…)
Part of the argument has been Americans tend to have a stronger drive to make money for money’s sake. This, I think, goes back to Ben Franklin who said that the amount of money that you make is a good measure of the work you do (and, by extension, your own measure of self-worth.)
It’s like the movie Wall Street — how many yachts can you waterski behind? It is a matter of degree when it comes to this vision of an indecent amount of wealth. I suspect the average Canadian is happy to waterski behind less yachts than the average American. (And, perhaps, both would be happy to be on their respective sides of the fence…)
As you said — these are all HUGE generalizations. There have been many captains of industry in Canada, and many Americans who are not driven by the need to make money for money’s sake. Just trying to put some context behind my comment to James…
~Graham
Graham Strong’s last blog post..Document Everything
@Harmony,
You are exactly right on that. We can’t measure the worth of a person by the money they make. The facility I mentioned is operated by 10 highly skilled people, some with 30+ years experience.
Yet, they are the lowest paid people in that whole group. Together, these 10 people manufacture about 60 percent of the world’s cancer drugs.
I guess that’s why they call it fame and fortune. Some people are “fortunate” enough to make more money than others.
But you know what? These guys are happy, they have fun at work, and without them… well, let’s just say I’m glad they are there.
I guess it is a combination of many things. I would personally argue that any one of these people is vastly more important than a big executive or a celebrity or an athlete. But the market doesn’t see it that way.
No matter. The main thing is to be happy with what you do. One thing I do know, these guys go home every night knowing that they made a difference that goes beyond numbers in a spreadsheet.
@Kelly:
Brett Legree’s last blog post..do something crazy.
“35 million people, most of whom live along a 5,000 mile road”
@ Graham- Is that true?
@ Harry- need your shipping address
Really.
Janice C Cartier’s last blog post..The Book Of Tea
@ Janice – That’s pretty damned close to it, yes.
Graham,
I certainly agree that there is a long history here (U.S.) of some very loud believers in $ for $ and plow under anybody who disagrees. The “anybody” who gets plowed under, is anybody who doesn’t believe in that value system.
I don’t have any problem with the generalizations, except about Ben, one of my heroes. What you wrote goes against anything I’ve ever heard of him saying (& before writing this I checked around to see if it’s something obscure I never heard of). He was all about industry, i.e. hard work, and free trade back when that wasn’t quite so controversial, but I’d have to say money as a measure of worth sounds very opposite to his philosophy of lifelong education, work as a judge of character, and tireless self-sacrifice for the greater good. Is there is a particular saying you were thinking of?
Regards,
Kelly
Kelly’s last blog post..Click Here for Details, Honestly
I am beaming with pride and delight at James right now. Thank you.
My two cents is not an argument for or against higher rates, it is a word of encouragement for new writers. Most writers have a tendency to be insecure about their work and undervalue their talent. If your clients are singing glowing praises of your work and you are doing few revisions, chances are good that your skill is above average. Your skills will improve, and your rates will rise accordingly. I started out writing for peanuts and now I make a decent living. I cringe when I read some of those early articles and wonder how I even got paid at all during those first few months.
Hang in there.
We all have changed tremendously in the last year, eh James?
I was talking to my father about this over the weekend and he agreed with everything James said here. He said, “Don’t undersell yourself. Be fair to your clients and yourself.” (yes, Dad’s a Libra).
Right now, I’m most interested in the debate over discounting and price discrimination. I give small businesses and nonprofits a break on price for two reasons.
First, I like to support them. Small businesses don’t get the tax breaks and wholesale discounts that big businesses get and nonprofits are making the world a better place. Secondly, the bigger the company, the more time it takes to do the same project. More requirements, emails, phone calls, etc. Therefore it’s fair to charge more.
I have one client, happens to be one of my favorites, who sends me steady, ongoing work, which I do at a considerably lower rate than I charge my other clients. I do this because the work is steady, some of the admin on my side is minimized, and I enjoy working with them. In a way, I discount just because I like them. Is that discrimination? Should I start demanding they pay the same as all my other clients?
Melissa Donovan’s last blog post..Grammar Wrap-up
@ Melissa, I do the same thing, and no I don’t think it’s discrimination. If the client is la regular customer, pays on time, and rarely asks for revisions, It is my pleasure to provide a discount. Sometimes it’s worth a few bucks for knowing what to expect in this business.
Gods, I have to get up earlier. What TIME zone is everyone in? I keep getting up to Brett all cheery on Twitter saying good morning – SEVEN hours ago. I wake up at 8:30! What is going ON?
Okay, having said that, my actual problem with figuring out my rates:
I work REALLY fast. I used to scare the guy I worked for in-house. He thought I was I Dream of Jeannie. My hourly rate, if we calculated it out, would probably be really high, like, $175 an hour. But if we’re talking about a project that takes someone else ten hours, and they quote it at $500 for the project, and I quote the same $500 for the project and it only takes me three hours, why should I be punished for my efficiency, especially when the work is good?
This is rapidly becoming an ethical problem when clients want me to calculate projects based on an hourly rate. If I tell them I charge $75 an hour, I’m put in the awkward position of either lying to them about how long it took me, or taking less money for doing high-quality work in a shorter time frame. I’m still wondering how to figure that dilemna out.
Especially since I’m working for non-profits and other do-gooders (the environmental sector, education, health, small and local business). I love my clients. I think they’re amazing in the work that they do. I want to charge them a good rate and I don’t want to lie to them about how long it takes me. And I DO charge a good rate, but I often find myself lying to them about how long it took me. I have clients sending me emails that say things like, “Great work, can’t believe it took such a short time to turn around, thank you so much for the non-profit discount!” and I feel a little skeezy inside, because even though they got a good price, fast turnaround time, and a well-written project, I still LIED to them. I lied to someone whose industry is medical care for impoverished children. That’s got to send me right to the special circle of hell.
Tei’s last blog post..Strange Beast: The Networker
@Tei,
Eastern, but it helps that I’m insane and don’t sleep… too much coffee
I’ve had people who I knew couldn’t afford too much ask me about the math, and I’d say stuff like, “oh, I just charged you for the time it took me to start up the automated tools, and then sat back and watched”…
Don’t worry, I’ll be right down there with you, in that special circle. We’re good people, really. Just misunderstood…
Brett Legree’s last blog post..do something crazy.
Interesting discussion!
Personally, I don’t think that there will come a time when every freelance writer will agree on rates. The variables are just too great.
No matter how little I charge, there will always be someone in a third world country who can afford to charge less. No matter how much I charge, there will always be someone who claims I am undercutting them and charging too little.
One statement that caught my eye: “A middle-income family in Canada earns about $25,000. In Nevada, $20 an hour is pretty good.”
Living in a large U.S. city, as I do, a family earning about $25,000 would be considered to be struggling and would be eligible for all kinds of government aid. The bottom layer of middle income here begins at $45,000, according to census figures.
Of course, everyone who looks at those figures will probably come up with a different answer based on where they live – which really just goes to illustrate my point that there will probably never be a standard rate.
Laura Spencer’s last blog post..It’s Okay to Be Yourself (Web Content Thursdays)
While I find this post an admirable position, I agree in large part with Mark Dowling. I believe it is correct to charge a price commensurate with the value provided.
I’ve also found that this is what corporate clients (which is my client base) expect to pay. That is, similar to Tei’s “confession,” a corporate client will be quite happy paying what some may consider top dollar. In fact, anything less and they will become suspicious that you aren’t skilled or experienced enough to meet their needs. This, of course, only applies to the non-famous.
So, I think a differentiation needs to be made between hobbyists and Microsoft. I do this by specializing, and therefore I don’t have the price discrimination issue.
By the way, I have to say that I laughed at the Microsoft example in a post about ethics. I know a lot of people who would charge them triple!
-Kellye
@Laura, I think you and I might be neighbors!
Melissa Donovan’s last blog post..Grammar Wrap-up
Well Pen men,
as someone who is saving up budget to work with you soon as I can, I am really glad to hear you are hanging on to your rates
20 years owning a family beauty shop, this is how price increases panned out.
When you get so busy that you are turning away business, keeping people waiting for an unreasonably long time, or are no longer able to do do the quality work that you were able to do because you are shoving them all in, its time for an increase of reasonable means. Not a gouger, just one to rebalance the time/work ratio. Also, once in awhile you have to examine cost of living and P/L statements( sorry- Profit/loss) to be sure you are actually running a business and not a charity. After that….heck, it’s nobody’s business how charitable you want to be.
You guys are the good guys. You have integrity, work ethic. and talent. They are going to come to you as long as you have those three things going for you. Don’t be AFRAID to raise prises if you need to when the time comes. But don’t feel you have to if the indicators aren’t there. Ego never did anyone a favor.
Wendi Kelly’s last blog post..The Garden Gate
I can’t POSSIBLY read all those comments, so if I’m redundant, please forgive me..
I’ve been a lot of things in my time – sailor, actor, driver, etc.. and I’ve learned a lot of lessons. What I’ve learned is that you’re absolutely on the money (har!) with this assessment. People who find their personal value in what they charge for their services have been looking in the wrong place. I knew a guy who sold RVs; actually he was (still is) the top RV salesman in the US. He made a crapload of money, and never tired of reminding anyone who’d listen. One time I complimented him on the nice wheels on his Escalade.. “they oughta be nice, they cost me six grand!” He’d always tell you how much something cost, if you were dumb enough to compliment him on the object. This included his ties, cars, lunch, tickets to next weeks game (best seats, of course) and pretty much everything else.
What people didn’t know about the RV salesman is that he’s a miserable sot.. divorced and drunk most of the time, he can barely get any respect from his two teen sons and his ex hates him passionately.
He’s not the only man I’ve met who’s in this state of being. A huge bank account and cash flow is not necessarily synonymous with personal worth, but many think it is. To me, and it’s just my opinion, it’s in WHAT you do and how you do it. Monetary recompense should be a much lower priority, but we all know it’s not. I may be off the money here (HAR!) in talking about self-worth rather than precisely what should be charged for services, but I think it all ties in. Charge what you need to, and not a penny more, whether it be a national bank chain or Billy Bob Smith from Alabama. Therein lies your personal worth.
On a final note.. years ago when I was performing with a theatrical troupe, we all went to Edinburgh for the Festival Fringe one year. We were backed by someone who’d invited us and, not being there to make money, we didn’t charge for the first night of performances during out two week run, and we had about ten people in the house.
Someone suggested that people must think it’s a really crappy show if it’s free, so we started charging the equivalent of five dollars a head, and the next night we had a full house, which continued for the rest of the run. But we didn’t charge fifty dollars a head, even though it was a damn good show.
Balance – and perception.
RhodesTer’s last blog post..Sunday Snapshots
@Melissa,
I don’t know if we’re neighbors, or not. You can leave me a message via tweet if you want to find out.
I think what I listed actually applies to a lot of U.S. cities. In fact, for a few cities such as New York City, I think that the middle class would start even higher.
It’s an urban lifestyle thing…
Laura Spencer’s last blog post..It’s Okay to Be Yourself (Web Content Thursdays)
@Laura: I grew up in NY and that was one of the reasons I left. I tried finding an apartment and the best I could afford would have been a very small, cramped studio apartment (read: one room), probably in somebody’s attic or basement.
When I left there, I was making close to 30K a year. It took me 6 years here in Vegas to get back to that rate again before I started working with James. Pricing was difficult for us because his cost of living was so much different than mine. He couldn’t believe that $25 an hour was the low end of the scale for most designers.
@Rhodes & Kellye: Yes, perception plays a big part. Some people see a low price, or even “free” and think it’s not worth it. I tried to say this to James in the beginning, and it took him a long time to understand it – even though he’s the type of guy to be easily impressed by expensive items.
@Wendi: We try to work with everyone’s budget. Nothing makes me happier and at peace than knowing someone who doesn’t have a lot to spare is pleased with the product’s end result and they’ve gotten quality. That feeling is priceless.
I’ve always lived by the rule “Don’t go cheap, don’t go expensive either. Buy the very best you can afford at the time.” Quality is everything.
I like your approach very much, Men. Paying the bills, and eating nutritionally sound meals a couple times a day, and sleeping under a solid roof – these are good things, yes. These good things cost money, yes. But when you’re self-employed for the long haul, money is just one of many necessities for survival. Those who price themselves out of reach of the majority, for example, are likely to lose out on a chance of truly interesting jobs – the kind of jobs that make you feel like you’re justified in sucking up your share of the world’s oxygen for another day. Highly paid treadmill work or living-wage work that interests and challenges you, and has the bonus of feeling like you’re standing shoulder-to-shoulder with the ‘little guy’ to create something of worth? I made my choice.
Okay just to stir it up a bit, here’s a little article on the Veblen effect. You are talking about services for the most part in this post , not goods, but some of you may find this interesting. It is a real factor in pricing strategies. (Don’t read the comments following. They are dull and boring).
http://www.theartnewspaper.com/article.asp?id=7645
Janice C Cartier’s last blog post..The Book Of Tea
@Janice – Yes, I can’t find the exact stats right now, but it is something like 80 or 90% of the population live within 100 miles of the border. And all along that border runs the Trans-Canada Highway from BC to Newfoundland.
@Kelly – The parenthesis is my interpretation, not a quote from Ben Franklin directly. You might have misread my comment as well — money is not a measure of “worth” but “self-worth” — an important distinction in this case.
If money is a measure of personal industry, then by extrapolation the more money you have made, the more industrious you are (according to his theory). Ben Franklin constantly measured how “good” he was by measuring how industrious he was. He kept his own weekly ledger (of sorts — it’s been almost 20 years since I read Franklin so you probably know better what he called it — a diary?) marking down not only how much he made and spent, but also times he was lazy, times he committed one of the seven deadly sins, etc.
Since this was all done in the spirit of self-improvement, I take that to mean he was measuring his own self-worth. But I could be wrong — again, entirely my interpretation.
~Graham
Graham Strong’s last blog post..Document Everything
Setting rates is a difficult matter. For example, I look at your $25 drive-by service, and I thing “man, what a bargain.” Since I have been running this Writing Blog Madness tournament of mine, I have been reviewing site after site, and it takes me about four hours to evaluate and write about two competing blogs. Logically then, it would take me about two hours to do a similar evaluation of a single site. If I decided to do this as a service, and charge what you charge, I would make about $12.50 an hour. I don’t want to discuss my pay, but suffice to say that this amount is far below my hourly pay at my current full-time job. So, as a potential customer, I am glad that you charge so little, but as a potential competitor, the price is too low for me to compete with. I guess that works in your favor.
John Hewitt’s last blog post..Game 20: #6 Seed Crime Fiction Dossier Versus #7 Seed The Writing Journey
Graham,
I see where you were going with that thought. I’d still say work was the yardstick of worth to him, and that money was a byproduct, but now I’m being picky. Thanks!
Until later,
Kelly
Kelly’s last blog post..Click Here for Details, Honestly
@John: It is a difficult matter. The drive-bys are what we do everyday because we constantly have to evaluate the sites we’re customizing. We’ve gotten pretty fast with all the practice.
I think your tournament is a stroke of sheer genius and just wish we had thought of it first! Hope you can do it every year.
The thing is, we’re just looking at the cosmetics and functionality of a blog, and not digging as deeply as you are into content and community. If a client does ask about those aspects, we help them out with it too, but it’s really a whole other kettle of fish.
I appreciate everything you’re doing with the tourney, there’s some great stuff going on there.
Wow, everyone – such fantastic comments with plenty of thought behind them. *This* is the type of discussion I live for. I’ve been reading every single one and found myself nodding with most.
It’s a tough debate and I don’t think there’s a right or wrong answer – except, I feel it’s wrong to arbitrarily set a price just because without the skills, experience or know-how to back it up.
I also lean with Graham. I think most of my uncomfortable feelings have to do with the Canadian mindset. And I agree with Kelly – it’s a Gen X thing and even more so with Gen Y (and I sit smack between those two generations). Local economy factors in, and voila – we have one squirming Canadian when he sees sky-high prices for stuff that takes minutes.
I will say one thing: I don’t work with people who overcharge.
@ John – We charge far more for a full blog consult that involves in-depth analysis (and a lot less gun shooting and more diplomacy) because yes, they take a few hours.)
@ Janice – I hate maple syrup and live in the world’s largest producer of the stuff. Go figure.
@ Harry – Yes, but I’m a very picky connoisseur. I *like* my expensive stuff, but it had damned well better be justified. Like my Nikes. And I do tend to buy cost-effective over luxury. Sometimes.
@ Larry
I understand your argument, but I see two people doing the job, so even if you only do an hour apiece, the rate remains equivalent.
John Hewitt’s last blog post..Game 20: #6 Seed Crime Fiction Dossier Versus #7 Seed The Writing Journey
@ James
I would love to see a sample of what you do for a full consult.
John Hewitt’s last blog post..Game 20: #6 Seed Crime Fiction Dossier Versus #7 Seed The Writing Journey
@ John – Check your email. Sent.
Well, thankfully the blog was not torched.
I’ve been on the opposite end of charging too little and I can tell you it is a disservice to yourself and your clients. When I got smart I charged fair and competitive prices that made me feel good and helped clients value what I was offering. When you charge too little for GOOD work it is as bad as charging too much for average or good work. Some people charge $20,000 to write a sales letter but they also provide guarantees that ensure clients will get a fair ROI. At face value that $20k seems ridiculous but once you dig deeper the clients are getting more than a well written letter. There are also those who charge higher rates as demand increases allowing them to spend time only on “high-paying” jobs. I don’t judge any of those people but I also don’t charge that way. 
Fair, competitive, sane is my pricing model, and I’ve got no plans to change that…even when I become super duper famous and Oprah has me on speed dial. 
Karen
Karen Swim’s last blog post..The Long Hot Race
Fascinating piece, thrilling discussion. Nothing gets people’s cranks a-turnin’ like a discussion about rates, eh?
Obviously, you guys are good at what you do and have a passionate following. So you’ve cleared the all-things-being-equal hurdle.
Once that’s happened, I say all bets are off. Or perhaps “Whatever works for you.” I’m very, very careful about saying what I think is “right” or “wrong” for anyone but myself.
And for me? I’ve settled on what I think are comfortable rates. I prefer to work less on paid gigs to have more time to do the kind of thinking, researching, training and outside writing that I feel makes me a better, more useful person to the world. I could make a lot more cashola for my work—I did, back when I wrote TV ads, and the one pilot. What I learned was that a price was exacted for that work far, far beyond what I was being paid. We’re talking far beyond PITA charges: we’re talking “I’m getting paid by Lucifer himself for snacking on tasty morsels of my soul.”
I always try to accommodate artists where I can; in turn, I find the ones I end up accommodating add to the process immeasurably, enriching my life and knowledge bank. They are also appreciative of the work.
That said (the part about charging a reasonable amount for my services), I’m probably incapable of price gouging. And I’m not Canadian, and I live in a major metro area (L.A.–not quite as dear as NYC, but not cheap, either.) I live modestly, and enjoy it.
I will add one last thing to an already overly-long comment: I also am very free about passing people along to other excellent service providers who, for whatever reason, can charge lower fees. This is also karma. Everybody wins!
Wow, that was like reading a novel, or maybe two chapters of one.
I can only add that being in business for myself has allowed me to ascertain when someone is charging too little, making me wonder, “What do you do to pay the bills?”
If the fee is too low, then I know he or she must be subsidized by a day job, or a spouse.
Part of knowing what to charge is also knowing how much it costs to run your own business (rent, equipment, training, depreciation, insurance, permits, taxes, etc., etc.)
One great tool that helped me verify my own rates is the rates calculator over at Freelanceswitch:
http://freelanceswitch.com/rates/
It takes into account where we live, and how much our expenses are for each particular area — that’s the real way of arriving at a rate that’s right for you!
Then you can decide whether you want to be fair, fairer, or the fairest one of all when you give a potential client a quote.
Nez’s last blog post..Word Wonders
I just answered that question for a freelancer who has been charging just three cents per article:
http://thearticlewriter.com/blog/2008/04/21/the-article-writer-mailbag-take-15/
Obviously, this person isn’t charging enough and he should raise his rates. However, he is in a bit of a dilemma — how to raise rates for bargain buyers. I suggested he wouldn’t be able to and would need to eventually replace these price resistant customers with those who are willing to pay more.
@ Matt – Agreed. $0.03 a word is crazy, and most people won’t change their rates from fear of losing work. They just have to realize that they’re switching target market and that they’ll have work – just with different clients.
@ Nez – Agreed. Too low isn’t the way to go.
@ Communicatrix – Agreed. Sky-high rates equals big expectations and a lot of sweat. Many times, it isn’t worth it.
@ Karen – Ha! Fair, competitive and sane… well said.
James,
Money can’t buy me love, but how about happiness?
http://goodexperience.com/2008/04/does-money-buy-happin.php
Look where Canadians are on the chart. Cultural stuff IS at work, darnit, so I’m moving to Toronto immediately.
Later,
Kelly
Kelly’s last blog post..This Is No Occasion for Doing Nothing
Great post, James.
You know, one of the worst things a company can do that is experiencing rapid growth is jump the gun. You’ve only just begun this growth and if you immediately jacked up your rates you could run into problems. Of course if it were a necessity because of the new growth, that’s one thing.
This post makes me proud to call you guys friends. I live by the same mentality. In fact, for most of my life I’ve been doing things for free simply because I like helping people in areas I know about.
The one argument that I could point out in regards to how much you make vs. a lawyer is that life ain’t fair. Damn rap stars that shoot people and are thugs make more money than all of us put together. Also, sometimes in tip positions (like a waiter), it’s the waiter that makes more money than the manager.
Is it right, no. But it’s life.
John Hoff’s last blog post..The eVentureBiz Community Forum
James, you ignorant slut.
(Really, there just wasn’t enough heated controversy in here.)
I like this post and I like this approach, and at the same time this way of thinking is fatal for me. I’ll always overprovide, I’ll always overdeliver, and I’ll always undercharge, so I don’t need any help there. I tend to go to the other direction and put a price tag on that makes the customer think the product must not amount to much, if that’s all I’m charging for it.
All that said, though, it’s so damned refreshing to read someone who’s not all about finding suckers and squeezing every nickel out of them. I’m right on the verge of unsubscribing to Dan Kennedy’s stuff because that mentality just disgusts me.
At the end of day, for me it’s about value. Do I give more value than I take? If so, I feel good.
Sonia Simone’s last blog post..50 Things Your Customers Wish You Knew
@Sonia – well said. In connection with that, I also hate it when entrepreneurs try to make a buck and don’t really give a crap about anything else (like the environment, people’s welfare, etc.).
I have a friend who’s a different type of entrepreneur than I am. He’s always telling me, “John, you don’t have to save the world.”
Agreed – but I tell him it’s nice to know someone is not trying to take it for everything it’s worth and then some.
John Hoff’s last blog post..The eVentureBiz Community Forum
@Sonia you touched on my pet peeve. One of the reasons I never bought into the “Millionaire” movement is it was all about money and nothing about people, life, and what you value. I’m not motivated by money so it just didn’t resonate me. Of course I want to have a good life but good is different in my book. I love the quote: “Givers give, takers take.” Some of the “gurus” are takers, they ‘re in it for the money and could care less about you. I’m a giver and darn proud of being in that camp.
@ Sonia – You pretentious beeotch. And usurper of my Copyblogger throne. Show me up, will you? (You’re right. I expected flaming. I got support. What’s up with that?)
That’s my problem too. Overdeliver and undercharge. Well, no, not quite, actually. Overdeliver and charge – but I know I could get more. Is it a Canadian thing? Possibly. I would think more Canadians than Americans have the same line of thinking. But at the same time, I think it’s just a personality thing.
You’re right. It’s about value for ME. Not for the client. Me. Me, me, me. (Hey, I like the sound of that!)
I am so sick of people being arTEESTes. Speaking of which, did anyone read the Freelance Switch post today that I was SURE would bring that blog down after the crowd ravaged the post to shreds for daring to say, “Get over it.”?
@ John – I love you too, buddy. And yes, I’m a sucker for stray animals. Bet you are as well.
@ Karen – I missed a movement to be a millionaire? Crap.
@ James, Ha! Yea you missed the movement or more than likely ignored the idiots, ooops experts who told you they had the secret to fast and easy wealth for the very reasonable admission price of $35,000. What, you ignored them? Didn’t you pay attention when they said you would be stupid for not taking advantage of this once in a lifetime opportunity? I mean, really they even highlighted it in yellow for you!
@ Karen – Ahhh, no, unfortunately. They should’ve used more glitter. I like shiny lures.
@ James, lol gillter is good. I like sparkly things. Yellow highlight – not so much.
Whoo-hoo! I’ve been off grid for a bit, and look at the explosive conversation! Another reason to love MwP.
It’s refreshing to be somewhere where people speak their mind, not say what they think will be comfortable to those reading.
Keep it coming –
Dave
@Dave, we’re looking forward to seeing what you have in store for us – and being able to have a comment party over at your new home once it is ready!
Brett Legree’s last blog post..do something crazy.
A fascinating read, and especially so with the comments. My thoughts on the matter are covered well above – as others said: charge a reasonable rate that you can justify – to your client, to the general public, and most of all – to yourself. end of story.
Thanks to all involved for such a great conversation on this.
Karl Hardisty’s last blog post..Slingshot give away 1TB of data
Well thought out and argued points, but I feel there are a few things missing that come in to play when selecting your rates.
Value in terms of return. If you have confidence in terms of what you provide (as I’m sure you do) you know that it will work for your clients. If you write a piece of advertising copy for $500 and it goes on to generate over hundreds of thousands of sales for the company you wrote it for, who’s taken advantage of whom? If you envision and develop a piece of software that will automate a manual process for business that is going to streamline employees work and save the company $10 000 wages in the first month alone what is that worth? The time it took your to build it? What about the unique creative thinking process that enabled you to come up with a solution that saved them a fortune?
Your example of sears selling a sofa for three million dollars struck a very very negative cord with me. A sears sofa is a commodity. We (as an industry) don’t produce a commodity, and when you boil it down to that you’re doing a disservice to yourselves and everyone else in a creative field.
Regarding price discrimination, I’m not sure if you have done much work at the cooperate level (I literally just surfed in from another post, so I know next to nothing about you guys, other than your writing and design work is good). However, from personal experience, you charge cooperate customers more, not because they can afford it but because they make you earn it. They’ll typically expect to meet for a half to full day several times a month to discuss the nature / progress of the project you are working on for them and they are almost always more exacting in the standards and minor touches expected when doing the work. From my experience, cooperate customers are expecting to pay more, but conversely when the scope changes mid project, they expect you to get it done, rather than bill them additional.
I honestly look at it from a completely different angle than you do, so I’ll use an example from my own business picking random numbers to protect the innocent
. We have a suite of proprietary software that we’ve invested a _very_ significant amount of resources and money into over the last 4 or 5 years. I honestly and truly believe without a shadow of a doubt that this software package is worth $50 000. However, I know that most likely only 1 in 10 of my clients will have the budget to pay what I feel the software is worth. Does that make me a bad person when the other 9 times out of 10 I sell it for somewhere less than what I believe it’s worth?
Please don’t misunderstand, I really respect the position your taking, but I do feel it’s a case of good intentions missing a the important facts. Should we advocate that musicians set a rate at which their work is worth and after they make that profit, start giving away their albums at cost or free?
What we do is the same as a musician or artist, but we do it to help businesses rather than just create art and that has value beyond simply the time it takes to create the art, as if it was a candy bar you’re buying from a local convenience store.
I do applaud the integrity you’ve chosen to put forth, even if I do feel that your method may be misguided. It’s something that’s sorely lacking in the creative industry as a whole… and we too have run into clients who’ve been burned and had their trust destroyed. My own company backs everything we do with a 100% money back guarantee in the contract, that’s our way of helping to rebuild trust in people. “If we don’t give you what we promise, you get your money back.”
Out of all of this, there is one truth I think we _can_ agree on, and that’s if you aren’t happy without money, you wont’ be happy with it. If the only reason you are charging more for your work is because you want more money in your pocket at the end of the day, then you are going down the wrong road.
DaveRH´s last blog post…RH’s Opinion Sought By National Post
Hey Dave,
You bring up some good points and I appreciate your opinion. I agree with some; I disagree with some. Let me see if I can clarify a little:
First, I do certainly believe writing is a commodity and not an art. I believe that what I do for a living is a trade and that I practice learned skills and honed techniques. Sure, there’s creativity and talent, but we’re not talking about Michelangelo, here.
Read more on my views about writing as a trade here: http://menwithpens.ca/is-writing-an-art-or-a-trade I’m definitely not in the “writing is an art” camp.
Price discrimination – Yes, we do a good deal of corporate work. Our rates are the same as any other individual, however, we *do* factor in the additional time corporate clients require and the quote that we provide does often come out to higher than the hobbyist who needs a cleanup of an About Us page.
I highly agree that corporate clients make you sweat like a bastard before you even see a dime. We’re fair, yes. We don’t play pricing discrimination. But we do get compensated for every drop of sweat people squeeze, trust me.
Value and confidence – I have differing views here. Our whole business is all about helping others earn money with their business. If a piece of copy I write creates millions for someone, then good for him! My confidence level in the potential returns of working with me does not justify (I feel) a hike in rates.
There are days where 15 minutes of my time means the difference between 0 sales for someone and steady, continual, rising sales and better business. I *expect* that to be a result of my efforts, and I don’t think that a client’s success from my work means they’ve taken advantage of me. My time is paid, my efforts are paid, my skill levels are paid…
Cripes, I’d be very ashamed if they *didn’t* have success!
(Note: I may be missing your point here; it’s late and I’m tired, so feel free to say, “James, you twit, pay attention, would you?”)
You made good comments, Dave. Feel free to come back and carry on the discussion; it’s interesting!
I can’t agree with you about writing / graphic design etc. being a trade. To me it’s a business application of artistry, to avoid being stuck selling fries as the local Fast Eddie’s. I find a brilliantly conceptualized ad / website / written copy that sways people’s opinions and turns them into a customer as beautiful as any piece of art.
What is art supposed to do? When done properly, it’s supposed to move people on an emotional level. What do we do? We try to do the exact same thing, only we have a goal, to convince the individual viewing our art to become a client / buy a product.
I think the primary thing we don’t see eye to eye on is the view of creative being a commodity… and I don’t’ think I’ll be able to dissuade you from that belief, but I’m very glad that society at large does put value on creativity because I wouldn’t want to live in a world that didn’t!
All that being said, It’s great to come across a fellow Canadian in the industry who has integrity. You would not believe some of the horror stories that we’ve come across…. service bills for responses to email, companies that charged many thousands for a website that was broken and never worked and then tried to get the customer to hire them to fix their broken work and the list goes on.
DaveRH´s last blog post…RH’s Opinion Sought By National Post
@ DaveHR – Hehe, imagine poor Harry and Charlie over here, who are right there with you in the art camp. We all have to work together even though we have different opinions
I absolutely 100% respect your feelings that what we do is art. I don’t agree, but I understand your take on it (more than you may realize) and am also glad that there are those in the world that do believe this for each of us that doesn’t. They’re both good, valid opinions, just ones that don’t agree.
As for horror stories? I can relate. Some of the stuff that clients tell us about their experiences and how they ended up here asking for our help is truly, really shameful. Some people really have no business being in business, and that’s something that gets me every time.
Cheers!
Dave and James, I truly enjoyed this exchange. I see creative as both art and commodity. Buyers who hire you to write copy may appreciate you as an artist but more than likely they appreciate how that art is going to impact their bottom line objectives. The artist views life through a kaleidoscopic image and finds beauty even in the mundane. Dave, I thought your points about pricing were interesting but conversely what if you do a stellar job and external factors delivered horrible results for the client. Do you not deserve to be fairly paid for a job well done? I approach every job with the intention of making my client a star. When they appear on CNN or have a best selling book or their business skyrockets to success I am wildly excited for them, but never feel sour grapes because I only charged X amount (I realize you were not expressing bitterness, I’m simply making a point). Of course there have been a few times where I’ve kicked myself for not negotiating royalties but that’s another post!
Karen Swim´s last blog post…The Gift of Words
I wasn’t necessarily making the point to say that you rates should always be based on what the client earns from what you provide. The point was more that any type of creative work has more value than the simply just the hours invested into creating it. That’s what we have intellectual property… and yes that is grossly abused by some, but the intangible does have a tangible value in many cases.
DaveRH´s last blog post…RH’s Opinion Sought By National Post
Interesting, many think charging less is better but this might not always be the case. Anyway, it’s a great article.
“We’re the Pen Men, after all – we can almost start our own trademark.”
“We do rockin’ work. We’re good at our jobs. We’re conscientious, caring and friendly.”
“I’m a writer, for god’s sake. Yes, I’m a very good one, but let’s be realistic.”
“Why should we inflate the price just because the Pen Men are doing the job?”
“We’re something of a small superstar.”
Damn.
Huh, all of that in the same article !
“I’m cocky, but I’m not that much of an arrogant ass.”
Well, I think many readers must have found the first part of this sentence to be quite obvious (that you are cocky), but many have probably raised some serious doubts about the second one (that you are not arrogant) as well.
@ Dmitri – I think you’ve raised some serious doubts about how much of the article you read. You quoted back quotes from *other* people said to me – not quotes I said (or believe) myself. Also, you’ve obviously chosen to ignore every single place where I’ve chosen the low road over the arrogant one.
Selective perception, much?