How setting freelance and consulting rates is like playing blackjack
When communicating with freelance and consulting prospects, there comes the moment of truth.
The moment of truth is when they ask our rate and we have to respond.
We’ve tried some alternatives. We have asked for their budget figure. Perhaps we have asked what rate they usually pay.
We suggest that we develop a project price rather than an hourly rate. (If we choose this course, let’s give ourselves a day or two to prepare the figure if we have the tendency—as many of us do—to speak too quickly and sell ourselves and our services short.)
Eventually we have to give a figure. And if we suspect the prospect is short on funds or interested primarily in price, we don’t want to waste a lot of time preparing a proposal that may well be rejected.
The communal “they” say that the first person to speak loses. But not necessarily so. The solopro who spends hours preparing a proposal that sinks like a rock loses . . . as does the solopro who throws out a figure that is way too low and then is stuck working at rock bottom prices.
Blackjack and how it works
Sometimes throwing out rates and prices feels like a game of blackjack.
Blackjack refresher: Blackjack is a gambling game played between the player and the dealer. Our goal is to be dealt cards totaling 21 or as close to 21 as we can go without going over. An ace counts as 11 or 1, a face card counts as 10, and the numbered cards count at their face value.
As we approach 21, the decision to continue taking cards gets more difficult because we have insufficient information about which cards may be dealt to us.
There we are, negotiating with our prospect, wanting to be paid top dollar but possibly fearful we will land no work—and therefore no income—at all.
It certainly would be helpful to know the market value of our work. We may have access to a professional resource that specifies the going rate for the type of work we do.
Such a website or book may be invaluable. However, our competitors may be global and of varying skill levels. Also there may be tremendous variation in their visibility, networking, and such. In the real world, competitors’ rates can be all over the place.
We need a way of looking at the situation that gives a sense of being in control rather than at the mercy of whomever is on the other side of the metaphorical table.
The solution is to have confidence in our figures and feel comfortable walking away if there cannot be a meeting of the minds between the prospect and us.
There are two ways to achieve this confidence.
The first is to already have clients. When our plate is almost full, we don’t worry about each prospect so feverishly. We are busy today, and if we serve our clients well, we are likely to receive more assignments in the near future. Ideally, these clients are at a satisfactory or near satisfactory rate. We are more certain that the rate we desire is fair if we are already charging it (or something close to it).
The second is to have a prospecting system in place that works and to be dedicated to its steady implementation. When we are always in touch with our market and have experienced success with our system, we feel comfortable being choosy. We know that we can get more work whenever we want to because we have in the past.
A polished prospecting / sales system breeds success. And success breeds more success.
Note: This article seems to imply that marketing freelance / consulting services is like gambling. However, it is not. With time and effort, effective marketing succeeds and luck diminishes as an issue. In gambling, the odds are more consistent and luck is always a factor.
Originally posted 2-17-15