Freelancing and consulting: Why “pay what you think it is worth” sucks
A recurring mode of charging for coaching products and services is “pay what you want” or “pay what it is worth to you.” I despise the whole idea. I neither offer such a pay plan nor accept it from others. Here’s why.
The fundamental issue in pricing is the preoccupation in our society with “getting paid what you are worth.” In other words, pay rate is a measure of human worth.
I hate this concept. What we are worth cannot be determined in dollars. That’s why it is so hard to set a price.
I prefer “getting paid what your work is worth.” It’s more acceptable but still it is not quite on the money.
We can’t get our pricing “right” because the competition is immense and highly differentiated.
All we can do is select a price that feels right to us and go with it. (Of course, we can insert data into this decision-making process. It’s not just about our gut feelings.)
Into this complex scene has come an alternative way to price. Ask the customer to determine the cost. Sometimes a range or a minimal fee is specified, which helps but doesn’t solve the problem: What should the client pay?
Giving the decision over to others is the lazy way out. If the individual offering the product or service cannot determine what he should be paid, how can the client be more capable of making this decision?
It is the responsibility of the service provider to determine the fee. Then the prospect can decide whether or not to accept the offer.
What makes the quandary even more interesting is the service providers most likely to propose it. The crassly commercial, hypey never take this route. They choose a high price, sell the crap out of the benefits, and that’s it.
Pay what you want seems to be the province of the hippy dippy, those with purity of soul who really, really, really want to help people. You know, those people who have more important things to obsess over than money.
Except that instead of them obsessing over what to pay and more important, choosing a number and standing by it, they obsess and then turn the issue over to us so we can obsess.
We have to choose a number at which to value them. Then they can look back through their sales database and see the number we have chosen.
I may be insulting them without realizing it. Or I may be paying twice as much as anyone else.
They would say that if I place that much value on their work, it should not matter to me that others pay less.
However, to me, it matters plenty. I don’t like to overpay. Sorry if that makes me a jerk.
How much to pay the Dalai Lama?
A friend and I were discussing this and she suggested an extreme example. What about the Dalai Lama? What if he charged by how we perceive his value?
That’s a difficult dilemma but even for him, I would not enroll in a program of his where I determine the price.
What to pay the DL is an even greater dilemma foisted on the consumer than usual. There is a much broader range of rates to consider.
What if I want to support the Dalai Lama and his work with a donation?
If I choose to make a donation to him, that’s a separate decision. It has nothing to do with the value of the specific service being offered. Charity donations involve different criteria. I make my decision on how much to give without caring at what level other donors participate.
What about people who can’t afford a program?
I favor setting a rate but offering to discuss a discount privately with those who request it. Yes, they have to request it.
Originally posted 3-2-15