By Chris Kania

I never understood the logic of doing work for a large company, and then waiting 30 days to get paid.

I am one person. My clients are BIG companies, with lots of people, assets and financial resources. Why do I need to extend 30 days of credit to a big company? Or 45 days of credit? Or 60 days?

Fortunately for freelancers, this 30-day crap may be going the way of the typewriter and fax machine. Most of my clients over the last couple of years have been 15-day payers, and a few 7-day payers.

When companies call me for hourly consulting work, I explain my 7-day terms. Usually, the more nimble, smarter companies agree to pay on my terms. They get my best work.

The stodgy old-line companies start hemming and hawing about “30 days is our company policy.”

To those companies, I politely say  ”I’m not your guy.”

Am I stupid to be turning down work? I don’t think so. If my clients can’t meet my terms, they are not my market, not viable clients.

Worse yet, 30-day payers don’t actually pay in 30 days. Their “goal” is to pay 30 days, unless day 30 happens to fall on a Saturday, Sunday or holiday. Or, they simply MAIL the payment on day 30, and it arrives on day 35.  And then you deposit the check, and the bank hold the funds for a number of days.

Some younger, smarter companies have figured out that it’s more efficient to hire freelancers than to take on staff. Which is good. And many have figured out that the faster they pay, the better the work, the more responsive the freelancer. And they get their pick of the top talent.

If I have a choice between two projects, one that pays in 10-days, and one that pays in 45 days, it’s a no-brainer. And in my book, the 45-day company is not really a customer of mine anyway.

The infamous “Net-30 days” needs to die. Do your part. Just say no.

—-

Counterpoint and commentary:

No argument here.

Better yet, let all clients pay in cash, upfront, before we begin. Sure.

Problem though. What if you don’t have a choice?

What if your biggest, most profitable, or only markets are thirty-day, or 45-day laggards? Like big publishers, big marketers, agencies, government organizations?

A bunch of us freelancers standing resolutely with arms folded and shaking our heads ‘no’ won’t change a thing.

What to do:

1.  If the company pays only in 30 days, or 45 days, your fees go UP. To do 1000 worth of work in March, to get paid in May, it’s 1500. Or more.

2. Set yourself up to take credit cards. Like through PayPal, or others. (Slight pain in the ass.)  Because sometimes, not always, some executives can ‘expense’ certain types of work directly on a company card, usually for less than $1000 or so here in the states.  You get paid right away.  Worth a try.

3. Tell your client that you ‘customarily’ submit the invoice when you begin the project. That can take a week or two off the payment cycle, compared to waiting until you’re done.  It’s a week to do the job, a few days in review, a few days for fixes. First-time clients might not agree, until they know you will deliver.

This has been going on for centuries. Pope Julius was reportedly slow in paying Michelangelo his ducats for painting the Sistine Chapel.

But Michelangelo got the best of him anyway. Millions of people have been awed by the Ceiling. No one remembers that Pope.

The one that is due first? The harder, more challenging one? The one you like the least?

Nah. I always work on the one that will pay me sooner.

The short answer is: “As much as you want to earn.”

I know that sounds smartass and unsatisfying. But it is as close to the truth as I’ve found. Virtually all the freelancers I know end up making precisely what they want to earn. Period.

The key word is “want.”

Not hope for, or fantasize about, or wish for, but want, deep in your bones.

There may be technical and economic realities at work in your profession, but their effect will be tiny compared to your desire. You can override all sorts of “realities” and “practicalities” if the itch is insistent enough.

Your income thermostat

It all seems to be governed by an ‘income thermostat’ in the brain circuitry.

Let’s say your thermostat is set on $100K a year. Which means, to you, making anything less would be unthinkable, intolerable or outright painful. Or unacceptable to your spouse.

When you’re set on $100K, the sensors in your gut will continually monitor your income by whatever metrics you’ve chosen.

Maybe the metric is the money owed to you. Maybe it’s the number of works in progress, or how many weeks you are booked. For me, it seems to be the number of assignments on my desk. For you, it might be the money in your checking account, or the number of invoices you send out on Fridays.

When things cool off, you turn up the heat. Until you're coasting again.

Whenever your gut senses that your income is slipping below $100K you will instinctively and subconsciously turn up the heat. You throttle up. You hit the desk earlier. You call people back sooner, send out quotes or estimates faster. Or you reflexively raise your fees (or lower them, in the hope of attracting more work.) You start calling people, sending e-mails, working your network.

You may find that inspiration strikes. You work faster. You quit checking Facebook. You over-deliver. You do stuff you were scared to do last week.

Your burners will stay lit like this until the sensors detect that you are back on the $100 K pace.

At which point, you will reflexively and subconsciously back off a bit. Never mind returning every phone call or e-mail within the hour. Tomorrow is fine. You may blow off assignments that seem dull and small. You may coast through the afternoon and knock off early.

Whenever I put a juicy check in the bank, my productivity sags for a day or two. (Or longer, depending on how fat the check was.) It is hard to nail myself to the desk when the bank account is bulging.

“Bulging”, of course, is a relative term. I have one low-energy friend whose notion of bulging wouldn’t fill my cookie jar. I also have a hard-driving neighbor who isn’t happy until the rafters creak under the weight of the gold stashed in his attic. By comparison, I am a slacker.

The same dynamic is at work in salaried folk. Which is why some are continually angling and finagling their way up the organization; their thermostats are set on CEO level salaries and perks. So they instinctively — involuntarily — fidget and maneuver till they hit the number.

What determines your thermostat setting?

Most new freelancers seem to shoot for the income they last made on their staff job, or some suitable percentage over that. “I made $80K on staff. I bet I can make $95K freelancing.” Or maybe they set their sights on some salary they heard about somewhere. “I read that Francesco Scavullo gets $25,000 for a one-day shoot.”

It could also be an arbritrary number that seems ‘realistic’ or ‘fair’ for their line of work. “Even the world’s best proofreader can’t earn more than $62K. It just can’t be done.” (This, of course, is pure crap.)

Or maybe you pick a number that matches what your peers earn. A figure that would make your parents proud. A number that would get you off the hook with your bookmaker or credit card company.

Sometimes it is inborn. There was a kid at my high school known for his endless ambition and hustle. He went on to make millions and make headlines. (Except the dope did it at Enron and got 10 years in prison for his trouble.)

Do you truly and earnestly want – ache – to make $100K a year? $300K? Is it horribly painful when you don’t?

Then you will. You will figure it out. Up in your brain, the boys in the back room will be working the issue around the clock. Even while you sleep, when you shower. They will be restless and anxious. They will be cranking on ideas.

Do you want to make a million a year? Just figure out how to generate about $20,000 per week. Or about $4,000 each work day. There are fashion models who earn that. Film directors, writers, photographers, app designers. (Probably several times over.) Self-employed people make huge piles of money all the time. But only because they truly WANT to do so, and believe they can. For them, it is horribly painful NOT to.

So the simple answer is: if you’re content and happy and feel lucky to earn $50K a year, that’s pretty much what you’ll earn as a freelancer.

If you itch and burn to earn $196K, that’s what you’ll end up earning. Same for $472K or $1.58 M.

You will earn, to the penny, pretty much what you want to earn.

So if someone asks, “Why didn’t you earn a million bucks this year?”

You can answer, “Meh. Didn’t really want to.”

And you’d be right.

In quoting your fee, you are allowed one zero.  No more.

I recently sat in on a conference call where a design group was  talking about a big branding project. They listed all the things they were going to do, in detail.

Then, they said it would cost $20,000. Ooh.  Fail.

The client started questioning everything, nitpicking, complaining.

I suspect it was because $20,000 sounded like some number they pulled out of a gumball machine. (Which maybe they did. I don’t really know.)

They would have been just fine if they had quoted $21,460.

More money, but it would have looked liked they had mapped out the project in detail. It was a rational number. (Not that pricing is rational in any way, mind you.)

I’ve seen this at work dozens of times.

Somehow, a $1280 fee seems more reasonable than $1000. Because $1000 suggests the freelancer said, “Heck, I want a grand for this.”  Whereas, the $1280 suggests it is all based on the complexity, the time involved, the nature of the work. It’s just what it costs.

If you’re tempted to charge $300, charge $320 instead. If your real hourly rate is $100, make it $115. More rational to the client, more coin for you.

I have also heard that even numbers supposedly convey higher quality. Odd numbers suggest a better price. $1460 is for quality work. While $1570 is a bargain.  I’m not sure about this. You would have to test this over years and years. Not worth it.

One zero. No more. You’ll be fine.

—–

Which is probably why my $3500-a-day rate never really caught on. Two zeros.

Don’t do it.

Eighty-seven times out of a hundred, you will do way better by only talking about fees one on one, with a live client.

Personally, I have experimented with posting and unposting my fees seven different times. (Within the last month, even.) So have all my freelance cohorts. I have followed all the online debates about this. I have watched what the bumblers and scrabblers do. I have watched what the high-earning elite do.

Net:  Skip the price list.

It won’t help, and will mostly hurt.

Okay, wait. There are two situations where it may help to publish your rates.

Only two.

1. To make people quit calling.

If you post your rates and fees I can guarantee that fewer people will call and email asking about your stuff. I have heard this from freelancers over and over. This is a surprisingly consistent finding.

In fact, plenty of freelancers post their pricing specifically to cut down on phone calls and inquiries.

“I was spending too much time dealing with tire kickers and newbies who had no budget. Ack. I couldn’t get any work done.”

No problem. Just post some realistic prices, and you will shut down those calls instantly. No more clueless newbs hounding you all day. You can get back to work.

And, theoretically, anyone who does call is serious, has seen your rates, has money, and thinks you are just swell. Theoretically.

Be careful here, though.

No matter what the harried freelancers say, this is almost never a productivity issue. Heck, if the damn phone rings every time you try to work, you must be sitting on one big-ass opportunity. People kill to make the phone ring like that. What can you offer all these people? Maybe a DIY kit? A training thing? An app? Can you sub-contract the work to some elance.com-ers who work for fourteen dollars a day? Why are you hanging up on ten calls a day?

I think it is more of a sanity issue. It certainly was for me.

I would get this ‘ barrage’ of calls. You know, like maybe four.

And those callers would end up blowing me off because I charged way too much. So I would start wobbling and waffling. I feared that I was indeed, after all, just a charlatan and crook. I would think about reducing my exorbitantly obscene rates. I felt like crap.

If you have this particular affliction, don’t cave and lower your rates. Just post your usual fees on your site. That way, when people see your rates and do a ‘WTF’, it will all happen way out on the Internet, like maybe in a basement in Michigan, where you can’t hear it.

The best solution, though, is to take the calls. Hone your ears and instincts and questions so that you can tell in the first four minutes if it’s an opportunity or a goose chase. (“Hi, I have this dry cleaning shop in Wichita. . .”  or   “We are a lean start-up currently looking to develop a product once we get an idea and . . .”  You can politely pass. Net expenditure, three minutes, one chuckle. And you learn a little something.

Over time, the more customers you talk to every day, the smarter you get. Even when they are clueless and they really don’t need you. The conversations give you a sixth sense for how different clients think, what they are looking for, what the real issues are out there in the real world. You learn that by rubbing up against a lot of clients. Even the ones who blow you off or don’t call back.

You will do way better than the tender artiste who sits in the studio waiting for the well-moneyed patron to drop in.

And yes, there is a second situation when posting prices may help.

2. When you sell mostly to first-time buyers, one-time clients

If your clients are people who buy your kind of work all the time — like webmasters, creative directors, editors, marketing managers, project managers — they know how things are. The creative director knows how many zeros should be on the price, more or less. They are mostly looking for a good fit, for style, for skill. Money is number three or four.

But what if you are offering something that people buy only once, or only rarely?  What if you’re offering a service most clients don’t understand, exactly?

Let’s say you’re offering photography services to brides. Or menu design for restaurants. PR services for authors. You set up websites for doctors. You translate financial content into Romanian. You draw maps. Proofread manuscripts. Maybe you do database conversions. Special events planning. Aerial photography.

Most of your potential clients will have no clue what any of this costs. Because they never buy it, and have never thought about it till now.

Which means they are hoping it costs somewhere around $200.

That’s where publishing fees may help. Maybe.

Here’s the theory.

A client starts asking friends or poking around the Internet wondering about aerial photography or custom WordPress themes. Every site they visit says, “Call for a quote.” Which is annoying, because it’s 3 a.m. and they really don’t want to call anyway. And there isn’t even a phone number or email address. Just some irritating contact form that doesn’t let you ask anything, and only asks how much money you have.

Then they hit your site. And you talk about some rough fees, or packages ‘starting at. . .”. Or, maybe you have an educational page outlining what various scenarios might cost.

The client now gets it. They appreciate your transparency and generosity. You were the only one who talked plain. They like you. So the next day, they call you.  (Or they say, whoa, I though this was like $200. Never mind.)

Does this actually happen? Will it work this way for you?

The only possible way to tell is to try it for 30 days with prices, then 30 days without. Or maybe sixty days.

See which strategy lands the most jobs. The most clients.

Until then, the default answer is still, ‘don’t post prices.’

Stay flexible.

—

First time here?  Get 50 of the best posts from The Freelancery in a take-along book.  Free.  You’ll get way smarter about freelancing. Fast.

But some clients are just compelled to bargain. Others may find themselves under-budgeted or caught short or under pressure from a boss. Whatever.

Simple technique. (Used since ancient Greece, I’ve heard.)

Always frame the discussion around the smallest possible numbers.

1. You quote 1400 for a set of web templates. Client says “The other guy charged only 1200,” or . . .  ”But last time, it was only 1200.”

Get away from those big numbers.  Focus on the difference. Which is a mere 200.

You say, “But for that 200, you’re getting my ingenious designs.”  (Said with a straight face, of course.) Or, “Is the 200 more critical than getting everything done and tested before launch?”  Or, “Would that 200 be an issue for the company at this point?”  (Who would admit to that?)

2. You’re quoting an hourly fee of 85. (Although, I assume, you are only quoting hourly because the client insists on it. Or because you have no idea where the project is going.)

Client says, “We normally don’t go higher than 75 per hour for UX.”  You start talking about the 10. “I hear you. If the 10 is an issue in the scope of the project, I’m probably not a good fit. But otherwise, I’d be ready to start on Friday.”

3.  You’re quoting a project hourly. (Again only because they insist on it.)  You quote hours. Not total fee.  “I’d estimate 8 to 10 hours for the php modifications, and another 4 to 6 for some testing on the staging server.”  Don’t do the math for them.

4.  The client wants you to write a series of promotional emails.  “If you’re looking for a series of six emails, they would run about 650 each.” 

Small numbers sell better.

Which is, incidentally, exactly how you convince yourself when you’re standing there in the Apple store trying to decide between the 16 Gb and 32 Gb iPad.  It’s not about the $600.  You’re thinking, “Yeah, but for just $100, I’d get double the space. All my movies, 6,234 songs. Like $100.”

Small numbers, bigger fees.

She briefly describes what she’s thinking, then:

“Can you give me a rough idea of what that would cost?”

For years, I lived by an ironclad, inviolable rule:

No. No.

“Never, ever quote on the fly. Ever. Not this time, either.”

“And never quote ‘live’, in person or on the phone.”

(I had discovered, quite painfully, that I suffered from a congenital neurological defect. My brain would think ‘five hundred’, but my lips would inexplicably say ‘three hundred.’ That’s a synaptic deficit of $200. Which adds up.)

So just to avoid saying something stupid and giving away my kids’ future, I always begged off and said, “I’ll get back to you.”

Which was okay. But not optimum.

Because later, I accidentally learned an ingenious way to avoid being stupid, and tilt the odds in my favor at the same time.

I had been driving an ancient Honda that I was hoping to keep alive pretty much forever. One day, the gear shift starts jamming and slipping. I call my mechanic.

“Ouch,” he said. “Sounds like your transmission linkage is shot. It often happens with that model year. That could mean about $900 or so. Bring it in, I’ll look into it.”

I start cursing my luck, having to cough up that damn $900 just for some greasy metal. I’m already figuring out which other things now have to wait. And with my wife’s birthday coming, too.

Next day, my mechanic calls back. “Found out it was just a busted pin on the shifter. Parts and labor come to $350.”

Suddenly, that $350 is a bargain, a godsend, a reprieve, stroke of good luck. My mechanic was a genius.

Then, my facepalm epiphany.

Better. You cover yourself, and/or look like a hero.

So here’s the smarter way to ‘ballpark’:

Client asks, “Can you give me an idea of what this would run?”

Say your first instinct is $1,000. A gut feel. Or what you charged last week. Whatever.

Now double that. Or triple it. This could be a hairball. You don’t know at this point. You’re covering your butt. You could be opening a bag of hurt for all you know.

You say,  ”At first glance, this sort of thing typically involves maybe $2,500 to $3,000, depending. Let me work through the details and I can tell you exactly, to the nickel.”

If she reacts, you have a good idea where her head is, what her real budget is. (If she calls you any name ending in -hole, or -wad, no need to follow up.)

If she says, “Phew, I thought it was going to be a lot more, that’s great!”, send me a $56 check for this tip c/o The Freelancery.

Otherwise, if she plays it cool, go through your usual quote process, and let the numbers fall where they may.

You have dramatically altered the perception of whatever price you quote. In your favor.

And, at least, you didn’t give away the store.

—

Other Freelancery posts you will like:

Shooting yourself in the wallet

Why we don’t charge a lot more.

“Sure. I’m flexible. We can raise the fee to whatever you would be more comfortable with.”

“Is there a way to get this price down a little?”

“Maybe. Which parts would you like me to leave out?  Or, I could try making it a little less good. You know, maybe leave a few nails sticking up?”

“Things are a little tight right now. Can we do a little better on the price?”

“What a coincidence. I was just going to ask about raising the fee, because my furnace needs a lot of work, and I still owe my dentist a bundle. I’m sure you can understand.”

“Look, if you can just help me out on this one, there’s a lot more work coming.”

“Better yet, how about we double the price for this one, and then we’ll discount all that other work later?”

You can’t prevent your clients from hearing about elance.com or guru.com or Craigslist.

You can’t prevent others from pitching your client with a really low price.

You can’t disparage those low prices directly, nor the people who offer them. And it rarely works to raise fear, uncertainty and doubt about these ‘fly-by-nights.’

You can’t prevent a client from trying out one of these ultra-cheap sources.

You can’t collapse to your knees and match their prices. Nor should you even lower your prices as a concession.

Best bet. Actually, the only practical move:  Let them go and try.

(I’m paraphrasing now . . . )

Client: “I found I can get this a lot cheaper.”

You:  “That’s interesting. How much cheaper are they talking about?”

Client:  Mentions a painfully low number. Like the loose change between the seats in your car.

You: “Gee, that’s an irresistible price alright.

“That’s like one of your customers saying he can buy one of your [whatever he sells] for nine cents. I don’t know how to deliver your kind of work for that. But if this source works out for you, you’ve found a heck of a bargain there. 

Bottom line, if the client can indeed be satisfied by a $3/hour designer, they weren’t going to be a client for long anyway.

If the client tries the ‘kid working out of his parents’ attic’ and gets back a piece of junk, he will call you again.

Oh, and don’t ask how that cheapo worked out.  Let him save face.

]]> http://thefreelancery.com/2012/02/big-client-says-i-can-get-it-much-cheaper/feed/ 1 http://thefreelancery.com/2012/02/where-the-money-is-making-stuff-they-really-like/?utm_source=rss&utm_medium=rss&utm_campaign=where-the-money-is-making-stuff-they-really-like http://thefreelancery.com/2012/02/where-the-money-is-making-stuff-they-really-like/#comments Thu, 23 Feb 2012 18:18:34 +0000 Walt Kania http://thefreelancery.com/?p=1467

Customers queueing up for the irresistible cheeseburgers at the Shake Shack in New York's Madison Square Park. This is what happens when you serve up what people like. We need to be masterfully good at that. But how?

Ponder this:

Over time, which is better for your bank account?  For your freelance career?  For your soul?

Should you aim to produce truly distinctive and authentic and imaginative and impeccably crafted work?

Or . . .

Deliver what clients like?

I’ll spare you the suspense.

The fun, the fame, and the money in freelancing comes from building things that clients really like.

It is one of those Irritating-but-Irrefutable Laws of Freelancing.™

(I figured this cost me about a half-year’s lost income to learn. Actually, way more than that. So listen up, even if you’ve heard this.)

We get paid for placing something delightful and appealing on the client’s desk, something that gets them to say “Holy crap, I love that.”*  

That is where money comes from.

Sure, cultivating a distinctive style is important. So is having a viewpoint, taking a stand, honing your craft, being authentic, using sound principles, owning a niche, breaking the rules, and doing all those things 37 Signals and Seth Godin tell you to do.

That is all swell and necessary. But it’s not the crux of it.

In the end, you have to lay something down in front of the client that they really like.

The finer you hone your knack for serving up work that gets a client’s head nodding and heart beating, the more clients you win, the more money you make. And the more fun you have.

It’s the same pain-in-the-ass reality that bedevils every business, whether you’re making chicken soup or iPhone apps or selling wrought iron weather vanes on etsy.com.

Designer Paul Rand got to be a legend because he was masterful at creating identities that appealed to high-profile clients. Same with Saul Bass, indie video maker Adam Lisagor, cartooner Hugh MacLeod. Or the Shake Shack in NYC, where the line is a quarter mile long. They make what their customers really freakin’ like.

You and me, we need to be uncannily and devilishly good at this. Unfairly skilled at it, even.

When you sit down to work tomorrow morning, this is what you should be shooting for.

Because we are not playing here. This is our living. There is the baby. And the car needs brakes.

–

* Just so we’re clear. I’m using like in the broadest sweep of the word. Of course, there’s like in the aesthetic sense: To give one goosebumps, takes one’s breath away. To make one want to hold it, touch it, play around with it, and keep looking at it. It’s pleasing, appealing, endearing, charming.

I also mean “Yes, hooray, this damn shopping cart actually works now. . . Yes, my boss will drool over this.  Yes, I can get this past the lawywers, no problem. Ho, you make our product sound actually good . . . Yes, I’ll look like a genius with this.” 

]]> http://thefreelancery.com/2012/02/where-the-money-is-making-stuff-they-really-like/feed/ 0