March 11, 2011

On charging money

(This post is for all you freelancers out there.)

I got work consulting right out of college. I quit school. It was more giving up spending mtoney on something I wasn't happy with than not wanting an education. (Not to speak ill of Rowan University, but I wasn't happy in the middle of nowhere New Jersey.) When I came home I figured I'd straighten myself out and go back to school elsewhere. My godfather had plans for me in the meantime.

He figured as long as I was home I should work repairing computers (a hobby of mine). I didn't have anything better to do so I went along with it. I made some flyers; "$20 an hour, fix anything PC or MAC!" and got someone from my old junior high school to let me stuff the teachers mailboxes with them.

That led to a few jobs, which led to a few more. I talked about my new venture with anybody who would listen. I gave out cards all the time. I offered free advice, tons of free advice. Leaned the phrase, "Well to figure out anything more I'd really have to take a closer look, here's my card." And eventually I had enough work where that I felt like I was undercharging.

Two things convinced me. A guy at a copy center asked how much I was charging (I was telling a friend about my new business) and when I told him he immediately said, "That's way too little, you'll never make it." I spun off, "Oh I'm just starting blah blah blah" and he didn't elaborate further. (He ran away quite nervously if I recall.) But that guy was right. I started noticing that people really didn't mind paying for my work.

And while I was getting better at what I did every day, I could barely believe that anyone was giving me money. It felt like a scam. This was a hobby, I mean I actually liked what I did. But as long as they insisted on paying I bet I could get more.

And so began my trek up the pricing chart. $20/hour turned into $35/hour, turned into $55 residential, $65 business, turned in to $75/$85 and so on. $85 an hour was a plateau that kept me happy and ensured clients reserved me for the interesting jobs. I began working with a startup around that time and quickly became unavailable for most of the trivial work. But if I ever needed money I had a roster of clients a phone call away. There's always something I can do to help them.

A side effect of charging low was that people didn't mind wasting my time and would argue over pennies. My best guess is if they don't see you valuing your own time, they won't value it either. They wouldn't show up, or they'd spend hours talking to me, not learning about computers (I try to teach as much as I can), but sharing personal stories about computers, telling me about their family, their personal problems, etc. Some people became good friends (you know who you are) but it's an odd experience when you charge by the hour.

I'll leave you with the quote from this blog post that inspired my story.

Your response reminded me of how I moved from a $20/hr web developer to a $120/hr web developer in about 12 months simply by increasing my rate at every contract bid I put out and occasionally doing some very high, just-to-see type bids. I never lost a contract due to cost (unless I wanted to ;) ), it was purely a mental barrier.

I wasn't writing to these points, but if you want a take away:

  • Teach as much as you can. Keeping your client dumb doesn't keep you in business, it just keeps your business with them dumb.
  • Charge more with every project until it becomes prohibitive to the clients. As long as you're honest, you won't get paid more than you're worth.

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