The conventional thinking goes like this:

“Once I get more experience with ‘x’ and build up the portfolio, I’ll be able to charge more.”

“As soon as a get a better feel for what clients like, I can get higher fees.”

“When I sharpen my design philosophy a little, I can bump up my prices.”

First you hone your abilities, then you get to charge more.

But in reality, it also works the other way ’round.

Crank up your rates, and your chops will rise to meet them.  You will get a lot better, very fast.

I know that sounds bass-ackwards. But I see this happen all the time. With me, and with every other freelancer I know. And I suspect it is always thus.

It starts in your head

Try this.

Let’s say you have been getting $1000 to create a custom WordPress theme.  Or to design an identity for a product line. Or to write some product copy. Whatever.

What if, tomorrow morning, you decreed that as of 9 am sharp, that fee is now double.  $2000.  Boom, just like that.

I know, I know.  There are 94 reasons why that’s crazy and stupid and you can’t possibly do that. Bear with me a minute.

Making that purely arbitrary, audacious, utterly impractical rate hike will do wonders for your head. Which will do wonders for your business.

You will start thinking:  Holy crap, what can I possibly do to make this worth twice as much?  Push the envelope a bit?  Try a few more iterations?  Learn more tricks?  Break some new ground? A little more research?  Focus intently on what this client wants? What his problem is?  Push two steps beyond the obvious?  Or maybe, maybe I can figure out a way to make working with me the most satisfying experience ever?

That’s the kind of thinking that gets you out of the minor leagues.

Making that mental rate hike also changes your mindset, your attitude. You sit down to work that day thinking, “Okay, now I’m a $800-a-day copywriter.  Or, I get $4000 for an identity.  How would a 4K designer hit this job?  This proposal?  What would Coudal Partners do here?”

Maybe you won’t get that rate right away, or every day. But something has changed in your head.  You’ve turned pro, moved up a notch.

A photographer friend remembers when she first got the guts to quote something like $1500 for a day’s shoot.

“That day, for the first time, I felt like a photographer.  Not some scared-ass pretender newbie scratching around for a job. No, I didn’t get that gig, or the next. But my work instantly improved. I walked into a shoot and man, I just knew how to nail these shots. Hell, I was a 1500-a-day shooter.”

Time to move on?

I know what you’re thinking.  Your clients would never pay double.  Or even 33% more.  They beat you up over the price as it is. They want everything for six dollars.

Chances are, you’ll realize it would be hard to raise your game with the clients you’re working with.  They are always short of money.  Or their business doesn’t live or die on what you do. You like working with start-up restaurants, but they have peppercorn budgets, and their website is, well, not everything to them. The struggling band loves your logo and cover art, but well, they can’t pay right now.

You want clients who need your creativity, your code, your copy like they need oxygen. They need a lot of it.

So maybe it’s not about getting your current clients to pay more (which never, ever works) but finding the guys who already pay more.

—

Adapted from ‘Talking Money’.  Coming soon from The Freelancery.

What you quote for an assignment will send strong signals to a new client.  Or a potential client.

Your fee gives off subtle clues about the quality of your work, where you fit among other freelancers. It will even color how much the client likes what you deliver.

Most of us, most of the time, are leery of losing out on good work by quoting too high.

Fact is, you can also miss out on jobs by charging too little.

There are plenty of clients out there who will pass you by because you’re too cheap.

“Is this guy working at a folding table in his basement, or what?

“At those rates, she can’t be very good.”

“He obviously doesn’t understand what’s involved here.”

Clients who think like that are gold. Those are the clients looking for world-class work, for smart people who can solve problems, for stuff that must be good. And they usually need a lot of it. You do not want to turn them off with WalMart prices.

You can buy a beach house with a stable of true fans like that.

You’ve been talking to a new client about a project. The client has been disappointed with other freelancers, seems to like you. Has lots of work. The client asks for a quote.

You want this project, you want this client. So you think very carefully about the fee.

After a lot of head-scratching and figuring, you finally settle on $2100.

You type up the email, send it off to the client, with fingers crossed.

A few hours later, the client replies to the email:  “Okay. That sounds good. Let’s get started right away.”

Except you notice that, in your email to the client, where you had meant to type $2100, you actually typed $3100. One thousand dollars more.

What do you do now?

Boy, this post apparently touched a sensitive nerve:  The scariest pricing idea ever.  That works.

The notion (even the possibility) of allowing clients to decide how much to pay got a lot of people commenting, retweeting, forwarding and linking. Very intriguing.

Some 100 or so readers offered perceptive comments here (thank you for chiming in).

The post also prompted this discussion at yCombinator’s Hacker News. Lots of pro and con, back and forth, including some perspectives that I hadn’t heard before, which will be woven into this section in the upcoming Talking Money.

Oh, and notice that the highest-rated comment in the Hacker News thread was this first-hand story. Purely human, and not about money at all.

The grossly oversimpified summary:

Freelancers who seem to like their clients were intrigued by the idea. They were more willing (at least in principle) to submit themselves now and then to a ‘value judgment’ on their skills. They wondered if they would be pleasantly surprised.

Freelancers who have wary and contentious relationships with their clients hated the idea. They figured they would only get screwed by their clueless, cheap-ass clients. Which is understandable.

Although (trust me on this) mutual suspicion is a painful and unprofitable business model. There is MUCH more money in relationships where you and the client sit on the same side of the desk, trying to do amazing things.

If you are both circling each other like two wrestlers in a ring, you both lose.

And, one of the most unexpected comments to the post, from Thorbjørn in Denmark:

Drunk customers pay more in Denmark

“Me and a few others are running bike taxis and we also sometimes tell people pay what you want. . .

“Usually the drunk people will give a lot more (although they usually tip pretty good too when you give them a quote)

“The people who just hop on without asking for a price first are usually the most generous.”

[This is adapted from "Talking Money,"  coming soon from The Freelancery.]

Here’s a pricing technique that sounds, at first, like the dumbest newbie move of all time.

Call it ‘fill-in-the-blank’ invoicing.  Or ‘pay what you want’ pricing.

The notion is, you do the work first, then let the client decide how much to pay for it.

I know, that sounds like a sure way to end up working for nickels and peanuts.  I once thought that way, too.

But it’s actually an ingenious tactic that should be in every freelancer’s arsenal, ready to wheel out when the wind is right.  (Notice I said when the wind is right. We’ll come back to that.)

It goes like this.

Instead of quoting a fee or negotiating a price in advance, you tell the client:

“Here’s what I suggest. Let me jump in and do the work as we discussed. I’ll hit this as hard as I know how, and make it as good as can be done.”

“When we’re finished, just pay whatever you feel the work was worth, based on what it contributed to your overall project.”

“I’ll accept whatever you decide, no questions asked. Provided it is more than a buck sixty-five.”

Scary? Absolutely.

Risky? Maybe a little.

Foolhardy and stupid? Not at all.

I had dabbled with this tactic before, but only on those small, oddball projects a client would send me now and then.

“I have no idea what to bill for this,” I’d say. “Just send me whatever seems right to you.” Sometimes they would send a hundred or two more than I anticipated, sometimes less. But it was always intriguing to see how the client perceived what I had done. And a little humbling, too, on occasion.

But over the past year or so I finally got the guts to try this on large projects for big clients.  (Partly because, while developing “Talking Money,” I was thinking/obsessing about pricing issues pretty much all day long. I was itching to see how this worked.)

I can tell you this:  the ‘pay what you want’ idea can be suprisingly and dumbfoundingly profitable.

Better still, I can guarantee you that it will shake up your thinking about fees and pricing.  It will un-stick some old notions.  And heaven knows we need that; most of us are way too myopic, constipated and chickenshit about fees.

As an added bonus, you will most likely do the best work of your life, and deliver obscenely wonderful service to your clients at the same time. (Mainly because you’ll be too scared not to.)

Making it pay.  More.

Naturally, the sole reason for using fill-in-the-blank invoicing is to net more from a project than you could with “traditional” pricing.

The idea is to get paid for the value the client derives from the work, rather than for the number of  hours it took.  Or how hard it was.  Or how many shots you had to take.  Or what somebody else charged some other client somewhere.

And by value, I don’t mean only hard economic value, like sales or savings or new business. (Which in most cases is hard to quantify anyway.)

As I’ve discovered, clients are also willing to pay lavishly to get a nosebleed project done and off the desk, to look like geniuses in front of their bosses, to have presentations that their sales people rave about. To finally get the bosses sold on videos for user training. To untangle a project that somebody else screwed up.

That kind of value has no relation to how long it took you to do the job. It’s irrelevant, immaterial.  And it is difficult to guess what that value might be from our side of the glass. So it can pay to let the client set that value.

Example.

A client of mine was knee-deep in redoing all her company’s web site content. She was getting raw material from the various divisions that was ugly, undeciperhable and unusable.  The go-live date was looming. She called me in to figure out how to fix it all.

But she had no idea how many sections we’d be doing, how many pages, nor how bad the raw material would be, so it was impossble to estimate any sort of fee.

I said, “Let me just concentrate on getting this done for you, and we’ll settle up later.  I trust you to be fair.”  She agreed.

I did the work as it came in over a couple of weeks, revising, re-writing, re-building the content. We came up with a neat and tight format, a solid voice, sharp messaging.  Everybody loved it.

I then told the client to let me know what she felt was a reasonable fee for the project.  It was entirely her call.

Meanwhile, I went back and parsed out the work based purely on hours spent.  Had I been pricing conventionally, it would have come to 3800 to 4200 bucks, depending on how I counted.

Next day, I get an email from the client.  She says “I’m thinking $9,500. How does that sound?”

I wrote her back and said “Fine.  Sold.”

Now, lest you think I’m just handing you rosy stories, here’s another.

A designer friend is working on a web site for a financial firm, two partners. He refers them to me for the writing. We have a few phone conversations.  Seems simple enough. Not a ton of content, straightforward mission. The clients don’t know much about marketing or web stuff.

I say, “Tell you what.  I’ll write everything for you, and when you’re happy with it, send me a check for what you think is reasonable.”

Ordinarily, I would have quoted about $2500 for the project, although I don’t say that.

I do some drafts.  There are some comments, some revisions. Slam dunk. Site goes live.  Time to settle up.  And I’m thinking the Wall Street guys are seeing a fee with a lot of zeros.

They send a check for $1200.  And say, ‘Thanks for the great work.”

Ouch and a half.

What works, what doesn’t

After a few painful scorchings, and several delightfully lucrative wins, here is the bottom line.

This technique works only when:

- You have a long-term relationship with the client.  You’ve done work for them before, at your usual rates.  They trust you.  They know your work.  And mostly likely they need to work with you again.

Don’t try this with one-time clients, clients who don’t use this work often, or clients who didn’t seek you out.  Been there, done that, lost shirt.

- The client has a big personal stake in the project.  They have skin in the game.  They stand to look grand if all goes well, score some points, be a hero, win some kudos.  This does not work for low-level back-burner projects that no one cares about. (Like my Wall Street clients; to them, their website was just some bullshit thing they needed to have. They didn’t perceive it as critical.)

- The project looks hard, impossible, indecipherable.  (My Wall Street clients thought it was a cinch to bang out a few pages of drivel, and therefore paid accordingly.  My technology client tried untangling her web content herself, and got scared.  To her, it seemed unsurmountable.)

How do clients react?  Do clients like this idea?

A few will balk.  They don’t want the responsibility of figuring out a fee.  They don’t want the anguish.  That’s okay. Give them a quote.

Most will be astonished that you offer the option. It shows you trust them.  That you value their judgment. That you even thought to ask.  Huge karma points translate to more dollars.

Sometimes (as one client confessed to me) they’ll reflexively crank up the fee when filling in the blank.

Sort of like the way we reflexively and fearfully crank down the price when the client says ‘How much will it cost?”

—

Just so you know I’m not the only crackpot using this idea, Matt Homann of LexThink, a consultant who works with law firms, offers this ‘you decide’ option to all of his clients.  His experience with the technique mirrors mine exactly.  There’s more about his approach here too, in The Non-Billable Hour. (It’s for lawyers, but the ideas apply to us, I think.)

Oh, and see the classic Little Rascals episode from 1936, “Pay as You Exit.”  As the story goes, the gang was putting on a show in the barn, but the neighborhood kids were reluctant to pay the penny admission, fearing that the show might be lame.

Over Spanky’s objections, Alfalfa decided to let everyone in for free, and allow them to pay on the way out if they liked the show.

As it turned out, the gang botched the show horribly, but the result was so hilarious that the kids filed out laughing.

Leaving Alfalfa with cigar box full of pennies.

A new client calls about a possible project. It feels right, like it might be a steady client.

Don't.

You discuss the project, figure out what she wants. How many pages, how many shots, what’s broken, what she needs fixed. What she wants built.  It’s not so tough.

You do the figuring and thinking. It seems to come out around $1300.  Yep, $1300 is right. Considering all you have to do.  “She’ll go for that,” you say.

So you start to type the email, and you suddenly hear a whisper in your head.  “Whoa, maybe figuring three hours for changes is too much. I bet we can crank those out way faster than that.”

Good point.  You sit back, hand on chin.

What about . . .  $1100?  That’s better.  Tighter.  Yes.  $1100.

You keep typing, until you get to the $1100.

When you see that figure sitting there in 12 point Arial, it seems huge.  Those zeroes look like owl eyes.

That little voice butts in, “Um, you do realize that’s well over a thousand? Four figures?”

A scene plays in your head. The client is reading your email.  Her eyebrows arch. “$1100?  For this?  Are they freaking kidding?” she says.  (In your head.)

You cringe.

Wait a second. Didn’t she say they have a ton of work coming down the chute?

Let’s not blow it by getting too greedy right now. Let’s be cagey.

Backspace.

How about . . . ah, this is genius. . . $980.  It’s practically the same as $1100, but it’s just three figures now. Less than a grand. It’s the old ‘$9.99′ trick that retailers have used for ages.

Okay, $980 it is.  A slam dunk.  In the bank.

As you’re finishing the email, the phone rings. It’s the client.

“I don’t mean to rush you, but I need to get something submitted ASAP. They’re beating us up on budget left and right. Did you have a price worked out yet?”

Your mind races. Oh crap. Budget shrinkage. Didn’t figure on that. You see the project slipping away.

You swallow once, clear your throat.

“Sure, I was figuring, around $800.”

“Oh, wow,” the client says, “That’s great. I’ll get back to you.”

Ack.  Unforced error.  Self-inflicted discount.

I’ve been there.

Way too many times.  (And just two weeks ago, dammit.)

Don’t do this.

This is a lesson I have to re-learn every once in a while:

If you’re working at the lower limit of your fee range, and the client is at the upper limits of their budget range, step away.  Better yet, run.

When it’s small potatoes for you, but a major deal for them, it will go south fast. You will lose money. They will be pissed off.  It will be a 360-degree stinker.

The dynamic is easy to understand. If you’re working for bare bones fee on a relatively small project, your goal is to get it done. Be swift, be efficient, be a pro. Then move on.

But their goal, of course, is to get every nickel’s worth of the astronomical fee they’re paying. They want project briefs, target dates, ironclad agreements. More tweaks, more choices. They will want to re-think and over-discuss everything. They will never be sure if it’s good enough.

You will do twice the work for half the fee. And they will still feel gypped. Bad juju all around.

Best work zone:  Top of your fee scale (where you’re delighted to be working, and eager to bust one over the fence). . . and the mid-range of the client’s usual budget. (Gee, he does really good stuff.  And reasonable, too.)

I’m not sure why, but clients seem to be more comfortable with odd numbers and specific amounts.

A project fee of $1730 sounds like it’s based on some calculations or considerations.

A project fee of $1600 sounds like a number you just made up.

A day rate of $1150 is somehow easier to swallow than a day rate of $1000.  Which sounds like a nice round figure that you feel like making.

When my auto mechanic charges me exactly $600 for my front brakes, I feel suspicious.  But I’ll gladly write the check for $731.45.

The rule is:  Get paid sooner rather than later.  Get money up front if you can.  Get paid as you go.  The least desirable is to bill when you’re done, and wait 45 to 60 days to get paid.

The trick is how do you get money up front, without making the client wary?  Or uncomfortable?  Without actually saying ‘up front’.

Easy.

Keep the focus on what they get, not what you want and when you want it.  Make the terms sound like the most natural and routine and expected thing.

And stay away from killers like “I require . . .,” “You have to pay“,  “I get . .”

Smooth it.

“Half the project fee will be invoiced when your design gets underway, with the remaining amount invoiced when the final design is turned over to you.”

“As soon as the initial $1,300 is taken care of, you’ll have your shoot day booked.  The remaining amount can be settled on the shoot day itself. ”

“The paperwork is pretty simple.  There’s an invoice for one-third of the budget when we start.  The second third won’t be invoiced until the modules are turned over for review.  The rest is invoiced when you have all the finals on your desk and ready to go.”

“The invoices will be submitted with the usual net, 10 days terms.  I assume that’s pretty easy for your accounting to handle.”

Deciding how much to charge is one thing.  Figuring out how to say it is another.

Never, ever say “This will cost $500″  or “This will cost you $900 per month.”   No, no, no.  You don’t want to be a cost factor.  (Even if you are.)

Never, ever say “I charge $50 per hour” or “I charge $500 per page/photo/day/logo.”  Or worse (and I actually heard a photographer say this once) “For a half-day shoot, I like to get at least $500.”   No, no, no.  That brands you as an amateur-moonlighter-tinkerer.

And never, ever let the dollar figure hang by itself at the end of the sentence.  That makes it echo in the silence.  Better to end with what they get.

Examples:

“The budget for the new web content would involve thirty-five hundred, which would cover all the product content we spoke about, as well as the application stories you’re looking  for.”

“You could handle the logo re-design and new stationery for about 4K, and have it all buttoned up within 30 days or so.”

“It would involve between fifteen hundred and eighteen hundred for the on-site shoot, or even less if the conference doesn’t run as long as you’re anticipating.”

“For  about 750 each, you could have a complete template for every type of page or .pdf.”

“As a rule of thumb, the more complex versions run about nine hundred.  But the pieces you’re talking about are more in the 600 range.”

“Figure on eleven hundred per day, per team, for the six-hour sessions you were thinking of, and the leave-behind summaries.”

“It’s all based on a 750 day rate for the six to eight days we’re estimating for the chapter illustrations in the style we had talked about. And you’d always get to approve  rough before we go to final”

“Most of my clients invest anywhere from twelve to eighteen hundred for a concept to show around.  Yours would be entail only a thousand, since you’re working with only a few elements.”

Always talk money with confidence, as if the amounts are all routine and perfectly normal and nothing to bat an eye over.  You never want to sound unsure.  Never flinch, waffle, or apologize.