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.”
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.
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.