Recently I was negotiating a subcontracting project with a colleague. He wanted me to lower my price—to which I had already applied a subcontractor discount—by saying he was sure the client would have more money (and presumably more projects) later. My response was “Great! When your client has a bigger budget, let me know and we can get started on this. If it turns out that your client has steady work, we can talk about a volume discount after, say, six months.”
You’ve probably had this happen to you at least once… You have what seems like a perfectly normal conversation with a prospective client, you send what you think is a perfectly reasonable proposal, and your client responds with shock at how expensive you are.
One of the scariest things a solopreneur has to do is start the discussion of how much a project will cost. You might be having a great conversation with your client, in which you learn everything your client needs and you figure out how you can delight your client with your deliverable. Then comes the big moment where one of you has to start talking about cost….
Do you choke?
As I mentioned earlier, I was recently in the market for a graphic designer to create a new template for my online courses.
I could go to Elance or Fiverr and find someone who could probably deliver a perfectly serviceable template for a very modest fee. In fact, Fiverr specializes in jobs that will cost no more than $5. (Why would anyone work for or hire someone for $5/job? I have used Fiverr to get a 3-D image of an ebook; it probably took the designer 15 seconds and it would have taken me more than $5 worth of my time to do it myself.)
My coaching clients often ask me for advice and help with setting an hourly rate. While I encourage them to use per-project rather than hourly pricing when talking about budgets with their clients, it’s helpful to have some hourly rate in mind on which to base that project price.
Here is my calculator, in all its math-nerd glory. And remember, this is your minimum hourly rate; your actual rate will be increased based on the value that you provide and the difference you make to your client.
I am a big proponent of pricing by the project rather than by the hour; to me, it’s a no-brainer that both my client and I are better off if we focus on outcome rather than the amount of activity required. But what do you do if a prospective client insists on talking about your hourly rate at the beginning of a conversation?