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Freelancing: Black-box pricing or The big pricing question no one asks

Let’s start with the big pricing question no one asks freelancers: How do you, a self-employed freelancer, determine how much to pay to freelancers who provide business services to you?

Online we see plenty about how our fellow freelancers determine their pay rates. Rates appear to be based solely on value¸ though exactly what constitutes value isn’t defined.

Believe it or not, there are freelancers and consultants who offer well-defined value spelled out in terms of quantified value to the client, such as increased profits, list size, or sales. They keep working on the project until this value is achieved. If the value is not achieved, they refund payment.

Their fees are high, and justifiably so. The amount of work and the risk can be substantial.

But here’s how I’m seeing value play out among many freelancers currently. It’s a vague idea of something that would be really cool to achieve unsupported by any promise of anything measurable.

It’s the promise of value that is valuable and that can justify sky-high fees. Without the promise, it’s simply a sales argument.

Here are some possible promises that I see not being made. Note that it is unreasonable to expect all these promises to be achieved in a single assignment, but at least one or two should be met when the pricing is justified as value pricing.

  • Customer-measured achievement. Yes, a nice website is neat to have and a cool tagline is, well, cool. True value is a hard measurable that measures market response. Examples include increases in sales, profits, and numbers of customers. Copy, design and such, carried through to delivery, are assumed and are not value in themselves.

  • Client satisfaction. Many freelancers only allow one round of revisions so you’d darn well better know exactly what you want from Day 1. That’s generally not enough for me because I hire primarily for visual and tech insights that I don’t possess. I am going with a fellow professional rather than doing the work myself because I am not expert enough to know what I want from the start. Of course, I expect to pay for this additional work, whether by the hour or by the project.

I have worked as a full-time writer in corporate marketing communications. If I had held to only one round of revisions, I would have been promptly canned. And this is in a situation where I participated in goal-setting and planning meetings and was fully up-to-date on branding and positioning!

  • Deadline met. As if . . . don’t make me laugh. Very few freelancers care about meeting promised deadlines. If you promise to get to a project over the weekend, then you commit to submitting the work on Monday. Minimally, update the client on Monday on any progress to date and the new estimated date of completion. No wonder so many freelancers are thrilled to no longer work for T-H-E M-A-N. Employers wouldn’t put up with this. Don’t force the client to be a nag and then get all pissy about it.

  • Qualifications, specializations and other factors that make the freelancer special. Superior knowledge and relevant experience increase the value of the work. We are told that in marketing copy, juicy benefits are better than dull features, but I disagree. As a long-time writer of marketing communications, I’ve written my share of benefit-laden B.S. But when I contract with someone for work, I want hard facts about why I should entrust this assignment to this person.

Not that I think a value promise is necessary for every freelancer engagement. It’s simply that “value pricing” is only worth the money when there are value promises for the assignment.

I have no problem with freelancers making a lot of money. Any fee agreed to between the freelancer and the client is fine by me. Actually, true value pricing should rightfully pay very, very well.

Do I put my money where my mouth is?

I myself am not cheap with the freelancers I hire. I have paid as much as $90 per hour for freelance assistance and have paid even more than this per hour for one-on-one consulting that required consultant time beyond the phone conversation. To date I have only hired freelancers working in the U.S. and other high-cost-of-living countries. Plus I pay all invoices from individuals or very small businesses within 24 hours of receipt.

Sometimes I want to undertake a new project that will require more paid assistance than I can afford at that time. If I can’t afford the full amount right now, I have to go step by step. However, I pay immediately in full for each step.

As a client and as a business person myself, I’m not going to be pressured into paying more for work than makes sense in terms of the value promise and in terms of the near-term potential of my business to recoup the expenditure.

The issue is complicated by how sensitive freelancers are. “Value pricing” is becoming code for high prices that relate to nothing solid. Yet any request to negotiate a lower price is immediately taken as offensive.

Sometimes the fee doesn’t work for us, and rather than just say “no,” those of us who use freelance services want to create an alternative win / win agreement. However, it’s not unusual for the freelancer to be incensed at being so disrespected. This creates a situation that is darn uncomfortable and won’t lead anywhere helpful anyhow. Sorry I asked in the first place.

We used to see a lot about Know, Like, Trust. I detect a move in the opposite direction. I believe those of us with limited budgets are more likely than ever to look for freelancers we don’t know for an arm’s-length relationship. We want to get what we want without emotional yuck.

How about you? How do you pay freelancers?

How do you as a freelancer pay other freelancers who work with you on a shared client project or who provide services to your own business? Do you value their work monetarily at the same level to which you expect them to value your work? Do you look for low-cost alternatives such as online job boards and foreign workers?

So back to my opening question: How do you, a self-employed freelancer, determine how much to pay to freelancers who provide business services to you? Do you do unto others as you want them to do unto you?

You may be incensed as you read this article since value pricing as generally (un)defined is touted as the “secret” to earning “what you are worth.” However, I argue that the key to higher pricing is to structure our service to add real value. I leave it to you to pin down how you define real “value” beyond some high per-project price tag that merely strikes your fancy. Then you have to be able to explain this value to prospective clients without getting defensive and full-out nasty.

Originally posted 2-12-17

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