Hey, freelancers and consultants: No, I don’t care if you can pay your expenses
I recently wrote an article in which I said that the freelancer’s / consultant’s cost of living is irrelevant in determining what to charge.
I received some “interesting” comments both to my article and to comments I wrote on other people’s articles.
I was not trying to say that the solopro’s expenses are not of interest. They certainly are of interest to the solopro himself, and if I had the discipline and inclination to maintain more spreadsheets, I would track more data myself.
However, the point that I was making is that it doesn’t matter to the client what the service provider’s expenses are. Nor should it matter.
If I move from Manhattan, Kansas, to Manhattan, New York, clients will not happily pay me twice as much for the same work.
And if I move from Manhattan, New York, to Manhattan, Kansas, I certainly would not cut my fees in half simply because my expenses drop. I’ve never heard of anyone who has done that and I see no reason to be the first.
Perhaps I am unusual because I look at the issue of rates from two perspectives. I am both a service provider and a paying client of other people’s services.
I am shocked when providers and coaches who preach how to charge top rates, also called “what you are worth,” disclose in other articles that they pay rock-bottom rates to their own service providers. This ability to disassociate what they demand for themselves from what they pay others is astonishing.
Making it even more amusing are the articles in which they announce the limits on the services they provide. They brag about how unresponsive they are. They let the phone calls roll over to voice mail. They check email only once or twice a day. They permit only one round of revisions. Even when they have no work, they schedule prospect conversations two weeks forward so they look like they are in demand.
I agree it is possible to be too permissive and allow clients to drive you crazy, but I also believe that higher levels of service merit higher rates of pay.
I am especially entertained when coaches recommend “firing” low-paying customers to create space for higher-paying opportunities. Sadly, firing only works when you use the freed-up time to do more marketing to land better clients. An empty schedule in itself does not create some vacuum into which big bucks are magically sucked.
Anyway, one reader commented that she lives in California and has a high cost of living. Therefore, she moved her business towards higher-paying work including project management and more complex, demanding assignments.
Good for her! That’s exactly the right move when you need to make more money.
Another commenter was indignant! How dare I suggest she lose money by undercharging for her services.
That wasn’t my message. I’m all for people making as much money as they can.
However, you have to mesh your fees with what your market will bear, not with what you want to earn regardless of reality.
Anyway, when you set your current rates to cover current living expenses, you logically should end up with a crazy effect: When you have fewer clients, each should pay more. As you gain experience and your schedule fills up, each client can pay less and you’ll still meet expenses.
The problem is not only an individual one. It has international implications.
It’s not only about Manhattan, Kansas, versus Manhattan, New York.
It’s about country versus country.
We Americans and Canadians can’t expect prospects, whether in North America or elsewhere, to pay us top dollar simply because of where we live.
We have to decide how we will offer enough value to justify rates that cover our higher cost of living. It’s a challenge and can be daunting to contemplate.
However, I think it is an issue each of us needs to resolve for ourselves.
Originally posted 4-13-15