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, take a look at my rates page >>
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Copywriting rates should be transparent.
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, I charge a flat rate. At the moment, it’s £250 a day. But a thought recently occurred to me:
Should I be setting variable prices?
Fact: Middle of the road doesn’t sell.
Let’s imagine you’re buying a notebook.
Notebook A costs £200.
Notebook B costs £400.
Notebook C costs £1000.
Which one do you pick? Chances are Laptop A has poor specs, but you’re on a budget, so you buy the cheapest. Or £300 means nothing to you, so you buy the best. You choose C.
Who chooses option B? Answer: no-one. It’s not cheap enough for people on a budget, but people with a much larger budget only want the best.
Middle of the road doesn’t sell.
So your options are simple:
1. Be the most expensive or be the cheapest. Be option A or option C.
2. Charge a variable rate: be option A to clients on a budget. Be option C to the rest.
Some of my bigger clients are getting a bargain. They know my day rate is cheap compared to a big London copywriting agency, marketing agency, ad agency or similar. They’d be happy to pay double that — 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?
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. Just an empty lane.
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 £400 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 £300 and small clients £200?
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. But I don’t think my clients would stand for “variable” prices — just like I wouldn’t stand to pay full price at the bowling alley.
So when you see a copywriter who won’t tell you his daily rate in advance, beware.
He’s probably trying to figure out what your “pain threshold” so he can charge you as much as he can.
In conclusion:
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.
There’s no point being middle of the road. At the moment I’m pursuing an aggressive price strategy, undercutting my competitors and increasing my market share. But if I ever decide to change my pricing structure, I won’t change my copywriting rates so I’m “middle of the road”. Because nobody would buy it.
For now, I’m content to keep my prices relatively low — and to carry on charging by the day, to maintain transparency. But as my portfolio continues to improve and I find myself landing more and more “big” clients able to pay more, I need 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.
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!
t
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?
It’s an old chestnut this one. You need to be flexible, but as a general rule, charge more. You’ll lose some potential clients, but end up better off in all senses in the long run.
[...] a lengthy discussion on my blog earlier this year, I abandoned the policy of setting variable copywriting rates and settled on a [...]
Hi, Al; came across you by accident whilst researching current charging rates. Like Danielle (25th June), I love your site!
I’d be interested to know how you fared after changing your pricing structure. The received wisdom in business circles is that you’ll struggle to sell quality to clients you’ve acquired on price. Once a cheapskate, always a cheapskate, in other words. Equally, many pricing strategies are actually the opposite of the one you outline above, in that they rely on the so-called “Goldilocks effect” – clients go for the middle option as an acceptable compromise between quality and price.
Both of those theories sound reasonable enough. But evidence trumps theory – what has your experience been?
Nick,
Charging a daily rate doesn’t make you a cheapskate — far from it. I strongly repudiate what you’re implying.
Charging a daily rate enables me to work according to my client’s appetite for quality. If they’re on a low budget, I’ll do what I can for them in a day. It’s usually pretty basic work. If they have more money, the project takes longer, but is better thought out, better researched, edited more times, and the work is of a better quality.
I suppose in this sense my prices are variable — but the hourly / day rate remains the same for all clients. They choose how much time they want me to put into a project.
Regards,
Alastaire
I am just getting my copywriting business up and running and I found this discussion very useful. It’s difficult to know where to begin regarding rates and charges, but this has helped me get a better idea of what I ought to be paid for a professional service.
Thank you.
Rich
Bit late in replying to your reply of seven months ago – sorry about this! I do tend to interrupt a lot of people’s blogs (too much time? Or just the ADHD? Bit of both?), and I don’t always get back to read people’s replies.
I respectfully beg to point out that I didn’t say charging a daily rate makes you a cheapskate (though you’re welcome for my part to repudiate the notion) but that someone who buys only on price is a cheapskate (and that’s something I stand by). In other words, my question was, did you find you lost clients who were only interested in getting work as cheaply as possible?
Anyway, your notion of charging according to your client’s “appetite for quality” (I like the way you’ve put it) is really interesting. It certainly applies well to a piece of work I’m currently involved with, where the client didn’t initially want to pay for much in the way of quality but in which the research was absolutely necessary.
Hope you’re doing well…
Nick