May 3, 2010How do you decide on a “fair” price for a job?
This is a blog entry about changes to my pricing structure. If you’re looking for details about my current daily rate, or would like me to quote on a project, take a look at my rates page here and then get in touch.
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It’s hard work being a freelance copywriter. In fact, it’s just hard work working for yourself. Not only are you unable to blame the boss when you’ve had a bad day, half the time, you’re expected to work for free. Here’s why.
Clients are happy to pay you for your hard work. They’re not so happy to pay you to answer your emails, price up and send out detailed quotes, and, of course, do your taxes. Yet “admin” work takes up half my week. So I have to factor this into my prices. Every freelancer does. That’s why when people come to me with a job and say “this will only take you a couple of hours, so I’m only going to pay you for two hours work” I turn them down. I may have to spend at least a half a day looking for work, so when I get it, it needs to cover all my costs.
So how much is it fair to charge? Well, at my base rate of £150 a day for the simplest work, I’d say I can earn about £500 a week. I’m not exactly going to be a millionaire any time soon. But a thought recently occurred to me…
Should I be setting variable prices?
Some of my bigger clients are getting a bargain. They know £150 a day is cheap compared to a big London copywriting agency, marketing agency or similar. They’d be happy to pay £300 a day — and they’d still be getting a bargain.
But jobs like this only come along rarely. The majority of the time I’m dealing with SMEs on a limited budget who can’t afford big agency prices.
So the question is, is it fair for me to set variable rates,
charging those willing to pay the most more than those who can’t pay much?
I don’t know the answer — that’s why I’m asking you.
There’s something distinctly unfair about charging people more than others for the same thing.
For example:
A friend and I recently tried to go bowling at the Lakeside Superbowl, Chichester. We were told by a very grumpy member of staff that we couldn’t have the deal advertised on the website as we hadn’t booked a day in advance — even though there were plenty of lanes available. We were told we’d have to pay £40 between us for four games, rather than the £16 in total the website suggested. Naturally, we refused to pay, and left.
The bowling alley could have had £16 off us. Yet they ended up with nothing.
I’m faced with a similar problem:
I do a great job (if I do say so myself) and I’m pretty sure that some of my clients would think £250 a day is value for money. But I know that some of my clients with small budgets wouldn’t be able to pay these rates. Is it fair for me to charge big clients £250 and small clients £150?
The answer is that it probably isn’t. I factor in the complexity of the work when giving a quote, and that includes the number of expected redrafts and amount of client time in meetings, phone calls and emails I’ll expect. Bigger companies tend to be more demanding, so naturally I’ll charge slightly more because they’ll take up more of my time.
Big jobs only come along every so often — and I find myself doing smaller jobs for companies on limited budgets 3/4 of the time. I couldn’t in all conscience set variable prices because I don’t think my clients would stand for it — just like I wouldn’t stand to pay full price at the bowling alley.
So I’m faced with two options:
Either charge “standard” rates for a senior copywriter, which is at least £250 a day, and lose some business (but have more time to go after ‘big’ clients) or carry on charging £150 a day and get more work more often, but risk seriously undercharging big clients who’d gladly pay £300 a day.
This is the freelancer’s dilemma. It’s a dilemma that most businesses face, too. Price is an indicator of quality. By being cheaper than my competition, I run the risk of looking cut-rate, and scaring off bigger customers. But if I raise my prices and don’t get enough big customers, I end up earning much less.
For now, I’m content to keep my prices within the £150-£200 a day rate, which is definitely cheap. But as my portfolio continues to improve and I find myself landing bigger and bigger clients, I find myself thinking that at some point, I’m going to have to start charging more.
After all, I don’t have a boss who’s going to give me a pay rise. As a freelancer, I have to decide that, too.
This entry was posted on Monday, May 3rd, 2010 at 3:02 pm and is filed under Blog, Me and my business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
Maybe you’d get more business if you charged more because people are more likely to think you’ll do a better job. Then again, business is business. Supply and demand! How elastic do you think demand for copywriters is?
Interesting questions…I do mostly copywriting in my business, but an awful lot of creative directing, liasing with web techs, and general project managing. So what I do is charge hourly, and the first hour is charged at twice what all subsequent hours are charged. And if a company wants me on retainer for any length of time, I give them a break on the hourly rate.
However! I am well aware that I charge far less than I should. I suppose the reason is because I started out on my own a few years ago, and felt like I just wanted to break into the business. And I’m still in that mindset. Your blog inspires me, though – I think I’m gonna put my rates up. It’s only fair!
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Thanks!
There’s a fascinating series of posts going on at ABC copywriting at the moment about the “copy mill” copify where they hook “writers” up with people looking for content and pay the writers between 2p and 4p a word.
Anyone can see that’s not enough to live on and I’m a definite believer in market economics. Put simpler, if you pay peanuts, you get monkeys. A good copywriter might manage a thousand good words a day = £40. If you’re not paying a living wage, you’re not getting a professional copywriter.
I’ve never worked out my cost per word before, but I’ve had a look at recent jobs and it’s tended to be between .10 and .20 a word, or £100 – £200 a day. It’s better, but it’s still not much.
I’m worried my prices might be signaling that I’m a mediocre copywriter, even though my clients will tell you that I’m actually very good!
oh, lads…
100-200 a day is terrible. I’m glad I saw this, but it really depresses me. Al, you REALLY have to up your rates. Good writing has a long shelf life, and ignites the best marketing campaigns. You’re selling yourself very short indeed. I hate to be the bearer of bad tidings. But you have to hear it somewhere?
As someone interested in negotiation, it’s pretty clear you find the money bit of this work difficult or at least, uncomfortable.
I would, if I was buying your service, see how you have worded your fee page and try to get you to your absolute bottom line.
They say you should never be the first to suggest a number in a deal and there is a lot of merit to that but it’s one of those things that is entirely dependent on the parties negotiating.
If you want to retain your smaller clients, cut them great rates but don’t undersell yourself in the wider market.
Thanks for the opinions guys.
When I switched from journalism / sub-editing to full-time copywriting we were in the middle of financial meltdown and I needed to undercut everyone to guarantee enough work.
Over the last year, I have generally charged £150-£200 per day.
After listening to your thoughts, I’ve decided to set a standard rate of £200 per day (still £100 less than an agency copywriter).
I’m still open to negotiation, and any freelancer who says he’s not is lying — but from now on I’ll only be offering discounts on large projects or as rewards to loyal customers who pass me a lot of work.
I’m still undercutting my competitors and providing a comprehensive service. But I’m taking myself out of the bargain bucket.
Some things are ‘reassuringly expensive’ for a reason. I feel my new pricing structure combines competitiveness with a confident attitude about my work.
I’m good. My clients get an excellent ROI from my work — and I deserve appropriate remuneration for my skills.
Thanks for all your comments.
Hi Alastaire! I’ve recently discovered your website via a link on Smashing Magazine. Your website is brilliant.
To remain on topic, I charge an hourly rate and this works fine for me. As a freelance virtual assistant (in the Netherlands), I can’t charge too much. I don’t overcharge, but I don’t undercharge either. I do make sure to record all my time spent on the job per client {and this includes time communicating via e-mail, phone etc. :} and bill them accordingly at the end of the month. Fortunately, I have several regular clients with whom I have a great working relationship and who appreciate my services and quality of work.
On a side note, one thing I find very unfortunate is that there are so many freelancers out there who undercharge their clients for their services, thus ruining the market for others. I myself can’t find work outside the Netherlands, mainly because there are many virtual assistants out there, in India for example, who charge two euro’s an hour. Now, how can I (we) compete with that?