Today, we’ll start with a set of problematic scenarios.
Sometimes, our well-meaning colleagues refer work to us that is, shall we say, beneath our pay grade. It’s below the rate we’d like to earn.
Sometimes, we have time-sucking sales conversations with prospects who have no intention of paying our fees.
And sometimes, we work too cheaply.
There’s a simple solution that helps with all three scenarios.
Set your pricing floor.
Your pricing floor is the price below which you won’t accept a gig or client. It’s your minimum.
In my career, I’ve met with a lot of designers. Often, I’m trying to assess whether I can partner with them or refer work to them, since I’m a pure strategist myself.
During those conversations, I always ask: “What’s your minimum pricing for a project that’s right in your wheelhouse?”
I’m always impressed by those designers who confidently quote a pricing floor. It sends a signal that they’ve done this before, and that they’ve thought about what it takes to do good work. They’re telling me what their work is worth.
Your pricing floor sends similar signals.
For each of your core services, define and enforce your pricing floor.
First, start by asking what it would take to do excellent work – work that you’d be proud to sign your name to.
This is important, because work that you’d be proud to sign your name to is work that creates repeat business, referrals, and testimonials.
It is, in part, a process question. When done well, does your work require:
An audit of brand communications?
Interviews with company leaders & employees?
Analysis of distribution channels?
Multiple rounds of revisions?
It’s also a principles question. For example, as a brand strategy consultant, one of my core principles is that good strategy stands on depth. I think “lean strategy” is an oxymoron. If the prospect wants shallow, cheap strategy, we’re not a good fit, and my processes and pricing reflect that.
Whatever your ideal process is, identify it, step by step. Be thorough.
Second, assign each step a number of hours. Since we’re talking about a pricing floor, it’s okay to tend toward the low end of the range. But remember: The idea is to put a number to what it takes to do work that you’d be proud to sign your name to.
Third, add up those hours and multiply by your desired hourly rate. Et voila! You have a candidate for your pricing floor.
(If that sounds like a simple exercise, it should. It’s a small investment of time that’s going to help you make a lot more money.)
I say “candidate for your pricing floor” because you want to run a reality check, in both directions:
Is your floor too high? If you’re a writer in a field in which the standard rate for an article is $500, and you set your floor at $4,000, you may struggle to win any business at all. There are exceptions, of course – clients with deep pockets, your stellar reputation, etc. But generally speaking, you want to avoid a proposition like “I sell a Toyota at a Lexus price.”
Is your floor too low? Your delivered value may be much higher than your pricing floor. As a rule, I want my clients to see at least a 5-10x return on their investment on my services. If you’re delivering a return even greater than that, your floor may be too low.
Finally – and I can’t emphasize this enough – share and enforce your floor.
When networking, share your floor clearly and unapologetically. You don’t want people sending you $2k leads if you do $20k work. That wastes the time of all parties.
Before you invest hours in writing a proposal, advise the prospect: “My pricing for this kind of work starts at $X and goes up from there. Does that meet your expectations?” If not, no proposal.
I’ve even seen a website contact form that asked this mandatory question: “Are you prepared to invest upwards of $10,000 to solve your challenge?”
At times, there may be strategic reasons to take a gig for less than your floor. But these should be exceptions, not habits. Once you’ve defined your floor, your default mode should be, “I go up from here, not down.”
It’s only a pricing floor if you stick to it.
Your pricing is a powerful part of your story. It signals what your work is worth. And a pricing floor is like a magnet – it attracts work you want and repels work you don’t.
Your time is valuable, and I hope I’ve rewarded it. If so, your shares are greatly appreciated, as I try to spread the gospel to as many freelancers as possible.
Need help setting – and sticking to – your own pricing floor? I have a limited number of slots available for 1-1 coaching. Click here to find out more about how my customized coaching can help you level up.
Copyright 2022 – Matthew Fenton. All Rights Reserved. You may reprint this article with the original, unedited text intact, including the footer section.