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Potential clients will ask a lot of questions before they hire you. They will want to know about your experience and qualifications, when they can expect the project to be completed and, of course, the price. But there are two pieces of information you should never reveal, no matter how many times they ask, or how many ways they ask.
The first thing you should not let them know is your hourly rate. If you are quoting a price based on a project, then tell them the bottom-line cost. Do not break out pricing based on an amount per hour.
The second thing is related to the first: how much time it will take you to do some or all of the project. The client has every right to know when they can expect the work to be completed; however, they do not need to know how much time you will spend on the project. For example, you may tell them that you will have the finished project to them in four weeks. But they do not need to know that you will spend a total of 35 hours on the project.
The reality is that as a freelancer you may be working on several projects at once. That may mean spending two days this week on one project, one day on another, and parts of the remaining days on multiple projects. That may be because when you reach a certain point in each project you have to wait for something (e.g., client approval, a proof, a quotation from another vendor, etc.) before you can continue, or it may be because you are juggling several projects and trying to keep everyone happy.
So what should you say when the client asks one of these questions? Get them to focus on the results. If you tell them that the thing you are charging $200 for takes you 15 minutes to do, they will think you are overcharging.
They will not consider, and it may be too difficult to make them understand, that it takes you 15 minutes because you have invested in tools and equipment that give you better results in less time, and that your years of training and experience enable you to do a job in 15 minutes that might take another professional hours. They are likely to fixate on the idea that you are charging them $800 an hour, and nothing you say will convince them that you are worth it. On the other hand, if all they know is that this amazing result cost them just $200, they will be satisfied customers.
Keep the customer focused on the value you provide, not how long it takes you or what your hourly rate is. Then provide value that will keep them coming back for more.
12 responses so far ↓
1 Denise O'Berry // Aug 10, 2008 at 1:48 pm
Excellent points! It would do many entrepreneurs good to print out a copy of this post and paste it on their wall where they will see it every day. Too many of them make the mistakes you’ve identified here and end up severely undercharging for their services.
2 Cathy Stucker // Aug 10, 2008 at 8:03 pm
Denise, as you know, undercharging is much more common than overcharging. And revealing too much about your pricing is a sure route to undercharging.
Thanks for the comment (and the Tweet)!
3 Ben // Aug 12, 2008 at 1:39 pm
I really appreciate this; this is a very helpful article. It makes sense that a person will feel very weird if they are paying you…. $800 an hour??? Good article
4 Cathy Stucker // Aug 12, 2008 at 2:07 pm
Ben, $800 an hour is an extreme example, but it is certainly possible. Remember that the full $800 does not go in your pocket. There is overhead (including equipment and supplies, your training, software and other tools, etc.) and other expenses that come out of the gross amount.
That is another reason why you do not want to tell clients your hourly rate or how long things take. A lot more goes in to the pricing calculation.
Thanks for the comment!
5 David West // Aug 12, 2008 at 3:28 pm
Some good points Cathy. We dodge the “how long will it take” question by quoting time only on points that we have control over - such as how long it will take us to do an initial design. We can not predict how many revisions a client will ask for or when the client will have their content ready for their new site.
Cheers. David
6 Brett Slater // Aug 12, 2008 at 3:50 pm
Outstanding advice… As a freelancer who does a lot of jobs that take anywhere from 15 minutes to 15 days, coming up with a viable pricing structure isn’t always easy… And hourly rates do tend to spook some clients. Thanks!
7 Old Welsh Guy // Aug 12, 2008 at 4:22 pm
How true is that!
Just last week, I wrote a ‘Dear John’ to one of my clients because they demanded to know how many hours I had worked on their site last month.
I politely told them fist that the number of hours was not a deliverable, the deliverables were set out in the schedule of works.
They replied demanding they had a right to know how many hours I spent working on their site. I sent them back an email that listed the volume of hours i WOULD have worked had i not have invested in bespoke software built around my specific knowledge, that allowed me to work faster and do multiple tasks at once.
Oh & my final line was ‘As you insisted on there being no long term contract between us, I now consider our agreement to be at an end’.
They were on the phone apologising within the hour, Turns out they had argued with their developer and vented their frustration on me. Ah well it backfired as I am no longer doing their work for them.
8 Candy // Aug 13, 2008 at 7:30 am
Cathy,
Thanks for the info - I’m just starting out and had not heard that before. It makes a lot of sense!
Regards,
Candy
9 Kris // Aug 14, 2008 at 6:30 pm
I absolutely agree with your points. The difficulty I have faced over the years, is that my competitors are not as professional - they will provide hours worked or planned for the project, they also provide a ridiculous hourly rate, and therefore an equally ridiculous project price. While I can develop a strategy to overcome this with clients I’ve worked with before; it is much more difficult when quoting on work with clients whom you may have met, but who don’t know or understand the value you bring. They compare the dollars and go for the lowest bid! Afterwards, I’ve had some come back to me for work. But I wonder if the effect is that they are lowering the bar on prices overall - as consultants, project managers, etc. we look like we’re overcharging!
10 Phil // Aug 22, 2008 at 2:49 pm
Sounds like good advice, but I don’t think its practical… Most of the time the work cannot be defined well enough to estimate it with any accuracy (what client can tell you what they really want with clarity?). And what do you do for open-ended ongoing support work (which is very common). Estimating fixed bid software work is near impossible unless everything is crystal clear in definition. Even then, there’s always too much unknown that creeps in. Estimating accurately also takes a lot of time and effort. You also have the problem of disagreements on what “finished” means.
11 Cathy Stucker // Aug 22, 2008 at 2:57 pm
@Phil, I know that there may be times when you have no choice but to give some kind of hourly rate, but I would avoid it whenever possible. For example, perhaps the ongoing support work could be on some kind of retainer or other flat rate.
The less clients know about your internal rate calculations the better. Get them focused on the value of the results you provide.
12 Brandon // Aug 24, 2008 at 5:28 pm
When looking at different pricing models for my business, I have considered hourly rates for my consulting, but hated being limited in such a way, especially when what people are paying for, often, is expertise. It may take you 10 hours or 1 hour to come up with a solution, depending upon your level of expertise. One shouldn’t be penalized because they may have more.
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