Why Your Rates Should Be (And Can Be) A LOT Higher Than They Currently Are

The sale was mine.

I’d been courting this prospect for a solid eighteen months now. The project: 150+ blog posts over the next 3 months.

“I think we can make this work.” I stirred my unsweetened iced tea and leaned back in my chair. The chill outside the coffee shop gave me a shiver that only a fat check from this future client could cure.

She brushed her noticeably colored blonde hair out of her field of view and crossed her arms. “Absolutely. You seem like you see eye to eye with me.”

I think I stirred my tea again, trying to get her to notice I’d gotten the unsweetened edition. Surely this alternative health blogger would catch on to my anti-sugary ways.

“Let’s talk rates now.” She scooted her chair forwards.

I knew her family brimmed with millionaires, so this was my red carpet moment.

Let’s seean hour and a quarter for each blog post, give or take, so the whole thing will be about—oh, gosh—where’s my calculator… I fumbled my fingers in my pocket to fetch my cell phone.

“Before we go any further, I have to say something.” Her gaze bounced between each of my eyes. “My family told me all about you.”

My spine grew a little straighter. Her interest in my writing services came at the recommendation of family members, some of my very best clients! I expected her to whip out a handwritten letter of recommendation about me. Because that’s what rich people do. Right?

“When they said you knew what you were doing, that you are the best writer and consultant and blogger or whatever they could find around here, I just didn’t believe them.”

Huh? That little rascal vein popped out of my jaw.

“They told me what they pay you hourly, and I said to myself, ‘No way he’s worth anything close to that.’”

See, by this point in the conversation, I’d already planned out what percentage of income from this project would go to electric bills, which portion would go to a Whole Foods splurge, and how much I’d (maybe) devote to savings.

Twenty bucks an hour was my starting rate TWO FREAKIN’ YEARS AGO!!! This is NOT a negotiation! I thought. No way those words would ever come out though. The grip of Whole Foods’ pumpkin cider wouldn’t let me walk away from this. For what she apparently expected to pay me, I might be able to afford three or four bottles of the stuff.

“Well, you see, actually,” Negotiation tactic underway in three…two…one… “I’m really busy these days with other clients of mine. You know, there’s not much time in my schedule for new clients.” I raised my right eyebrow. I saw Don Draper do that once in a chat with Connie Hilton. Model the masters, right? “So, uh, based on my schedule, my rates are slightly raised. Slightly higher, I mean. How would thirty-three an hour work for you? Is that okay?”

She slunk back from me, slapped the armrests of her chair, and looked at me like a giant bumblebee was crawling out of my eye socket. That actually might have felt more pleasant than her response did.

“You’ve got to be kidding me. Ten minutes for one blog post, times a hundred and fifty, why—that’s over eight hundred dollars!”

I wanted to whip out something like, Hey, that’s how much you spend on Cheetos for your kids’ school lunches, but I was too upset she hadn’t needed a calculator to knock my confidence down another notch.

“At least give me a family discount. Twenty-five an hour?” She propped her chin up on her fist. “Please?”

At that very moment, I did what any self-respecting solopreneur would do. A self-respecting solopreneur whose bills next month needed to be paid.
I shot my open hand across the table. “You’ve got yourself a deal!” I squawked.

“Good. Though you won’t be billing me for our meeting today, will you?”

Our meeting today. Our ten-minute meeting today. Our ten-minute meeting today that would’ve cost all of $4 if I charged for it. WTF.

If you’ve been in the selling-your-services-for-dollars game any amount of time, this scenario is one you’ve probably lived through—er, sobbed your way through—because (wait for it…) you needed the money. The luxury of firing a sucky client, much less being able to say, “No thanks,” wasn’t even an option.

When I told my tale of woe the next day to Thomas, a business consultant from town I respect, he laughed, “Sounds like a bitch. But you were being a wuss. So you deserved it. There’s a reason I charge $175 an hour, yet you have millionaires haggling you to save a buck.”

I promptly shot him one of those oh-really-mister-well-how-about-you-tell-me-what-that-reason-is-then-please glares.

But seriously. Why was I scraping the bottom of the barrel when there are consultants, small business owners, freelancers, etc. who can pay their Wifi bill for the next seven years with just a week’s worth of work!?

Thomas was right. I was a wuss. And so was every business growth “expert” who dished out the conventional wisdom I’d dined upon…

  • “You just gotta build up a solid portfolio as a freelancer, then you’ll get clients who pay you what you’re worth! You’ll work for pennies, so in effect you’ll be losing money at the start.”
  • “Hey, start at the bottom and work on the cheap until people are willing to pay you more. Everyone has a chance of striking it lucky, right?”
  • “Set up a blog to make yourself an expert within a niche you enjoy. Then use SEO to get lots of good traffic.”

Google “small business tips” and you’ll get tens of thousands of results just like these. After putting the conventional wisdom to good use and as a result earning less than $6/hour on most projects when you factor in time spent marketing, I have one thing to say to the so-called success gurus out there.

I call BS.

Thomas knew something I didn’t. And I knew damn sure I’d find out what it was or die trying.

There’s this quirky quote by Mark Twain that goes something like, “If man were meant to go naked, he would’ve been born that way!”

I propose an ironic twist—“If freelancers were meant to work for free, we would call ourselves, well, FREElancers!”

If you’re like me, you’ve fantasized about earning real money through your most profitable skills, kicking the ceiling off your income for good, and having the option to scoot out of the home office in the afternoon and catch up with a pal over coffee (not an unsweetened iced tea, please and thank you).

It doesn’t matter if you’re a service professional, into graphic design, trying your hand at freelance writing, or want to build a business around your knowledge. When you hop onto Elance, Odesk, or that forum on LinkedIn your buddy told you about, yet see only projects paying less than minimum wage, you’re heartbroken. Why is this? Because so many independent professionals are willing to accept less than minimum wage for their work.

“I am NOT a commodity! So why do I have to pimp out my skills to barely earn enough for lunch at Chipotle!?” we ask ourselves.

At least I had all the good excuses in my briefcase of shame! *cue whiny voice*

  • “It’s those stupid foreigners! You think it’s okay to outsource your work to other countries, then you pay the price!”
  • “Hey, we’ve all gotta start somewhere. At least I’m earning something. That makes me a professional, right? Now my spouse/family/friends can respect me as an aspiring business owner.”
  • “Here’s what I’ll do, I’ll troll around the new projects listings on Elance and blast out a copy-and-paste proposal that’s good enough for each new project I see!”

If we think of ourselves as freelancers/consultants/[name your self-employed job title], that’s all we will ever be. But since I was a teenager, I wanted to be more than a guy who “does freelancing on the side.” I dreamed of building a real business around what I was good at, one I could depend on month after month to earn me the income *I* wanted.

No, I didn’t hope to become a multi-gazillionaire by age 30 like those “vision board” gurus tell you to do (or whatever the hell fluff name we call them these days). I simply wanted to earn my own living doing my own thing. Landing that first thousand-dollar client hustling on the side of my day job was never meant to be the end of the line.

To re-purpose the title of a Marshall Goldsmith bestseller, what got me here (earning a few thousand dollars on the side) won’t get me there (total career independence).

When a prospect you thought would be perfect for you pulls a low left hook, you completely forget why you got into this game in the first place. Like I said, for me—and the 42 million freelancers, self-employed, and indie professionals in the US alone—that reason always has something to do with lifestyle freedom and what that would mean for us personally, our lifestyles, and our families.

To wrap up this post/venting session/analysis of my past stupidity, I’ll teach you the lesson I wish Thomas would’ve shared with me.

Thanks to this one epiphany, I’ve more than tripled my hourly rate, begun working with clients who actually respect what I do for them, and have referrals bombarding me every single week. In fact, this past month, I earned over $8,000 in income as a result of this lesson. When once I couldn’t even land a single article writing gig for $16, I now regularly land $16,000+ consulting projects.

I say this not to brag, only to show you what is possible for you when you leave the piddly sandbox of commodity projects I camped out in for so long.

If a new college grad in a small Midwestern city can do it, by golly so can you.

Ready for the dastardly delicious lesson? Here she is…

Nobody wants to pay a freelancer to be a freelancer and do freelancing for them.

One more time—

Nobody wants to pay a freelancer to be a freelancer and do freelancing for them.

Say what, Joshua? Before you open up Word and start crafting a rebuttal, I will show you how I learned this at-the-time-painful lesson. Oh, and this applies to you if you’re a newbie freelancer, consultant with six dozen clients, or a small business owner looking to hire employee number three.

I was at a networking group in town because, you know, that’s what all the experts tell you to do (assuming you have a freshly printed stack of business cards with your name and number on them). A fellow in the corner with a gut that bulged out of his monogrammed polo waddled over to me.

Damn, this guy’s one-upped me. I totally need to get my own custom logo on a polo! I whipped out my notepad to scribble down this idea before he reached me.

We exchanged the standard “what brings you here,” “what business are you in,” and “what’s the best way to reach you” pleasantries. Then I noticed something on the back of his card that made me do a double-take.

Triple-take, actually.

The dude was a web developer. His 40-point bold Cambria font tagline—“For All Your Web Development Needs.”

I don’t know what got a hold of me when I read that. Maybe it was the breakfast I didn’t eat that morning because I had three of these networking functions to go to and didn’t want to start the day off on a tardy note. But I looked up at the web developer blankly and said, “I don’t mean to be an ass, but I don’t have any web development needs. I’ve never met anyone who does.”

“Beg your pardon?” His pupils dilated behind thick-rimmed spectacles.

“That’s the purpose of these networking sessions, right? To refer business to each other?” I shrugged. Then I felt my gut gurgle. Damn you, sausage biscuit forgotten in the microwave. “I don’t know anyone with web development needs. But I do know people who wish they could look awesome online and attract customers even while they’re sleeping. I know people who wish they had a less embarrassing website, one that shared their companies’ most recent success stories. And I know people who want to product-ize their services through e-commerce and build an online perpetual sales machine.”

I kid you not, the guy swiped his business card right out of my fingers and muttered, “Yeah, but I’m a web developer. My clients think in terms of web development needs. That’s what they need, web development.”

“True. But that’s what you know they need, not what they believe they want.” I should’ve asked for my own business card back.

Nathan, if you’re reading this, I’m sorry for pissing you off. But I’m not sorry for blurting out exactly what I was thinking.

No prospective client of yours cares what you do for a living or what your solopreneur title is. Not a single five-figure client of mine has ever asked to see a portfolio (Note: I have, however, provided testimonials and case studies voluntarily during the project-winning process, which are completely different from a portfolio). Clients only care about what you can do for them in terms of (1) results and (2) benefits.

These two words will do more to grow your income than any others you’ll read this week. My friend and colleague Steve White defines them like this:

  • Results — what clients get from working with you
  • Benefits — what clients gain from working with you

Let’s say you write copy for a small telecom business’ website. What they get out of working with you is a website that shares with prospects the very best of who they are and how they’ve helped past customers.

But what they gain is a digital salesperson that doesn’t shut down when the sales team unplugs for the day—and an online lobby that makes every member of the team proud to work for the company.

Locking all the pieces of this puzzle into place now, the picture we get is this—when networking, marketing, or tackling any activity designed to bring more work your way, think in terms not of what you do (“I’m a copywriter who writes for small businesses.”), but reframe your self-employed position in terms of what your clients experience when working with you (“I make small business’ marketing messages irresistible to their ideal clients both online and off.”). Which of these two copywriters has a better chance of commanding a helluva lot more than $33/hour?

One last thing. A paragraph ago, I mentioned briefly the power of testimonials and case studies in landing the projects you want. The master of this is the brilliant marketing strategist Ramit Sethi of IWillTeachYouToBeRich.com. You know how he fills up every single online program and course he launches for his students?

Whenever he’s about to open up a new course, he doesn’t brag about his own income, babble on about his credentials, or even whip out a portfolio of all the courses he’s created in the past (hint, hint).

Instead, he simply posts interviews with his past students. He asks them questions about their experiences BR and AR (that is, Before Ramit, After Ramit), and they share about what they GOT through the course (“A $10k raise after just 3 weeks in the program!”) as well as what they GAINED (“Now I can pay off the rest of my wife’s student loans and have financial peace of mind!”).

Let that lesson simmer for a few minutes. Don’t rush off to your inbox, grab a Hot Pocket, or open up Candy Crush (seriously, if you do, I will…just…no).

Ask yourself these two questions. Then promptly vomit your thoughts on paper.

Now go raise your hourly rate, you mother trucker.

4 comments on “Why Your Rates Should Be (And Can Be) A LOT Higher Than They Currently Are

  1. Absolutely.

    I’ve heard of this concept in the past, I’m sure I’ve heard it from Ramit, and it’s also the first step of the D.E.N.N.I.S system if you’re an Always Sunny In Philadelphia fan. Demonstrate value.

    And there’s so many ways to apply this concept to freelancing. I keep it in mind when I write copy, both for my own site and for clients, and I keep it in mind when going over rates.

    Hustle on!

    • Hey Lindsay!

      Seducing potential love interests, seducing potential clients…what’s the dif? 😉

      AWESOME. Whenever I see a rock star copywriter relying on their own premium pricing system -> *stands up, nods head, slow clap*

      Keep hustling!

  2. Great post! It’s amazing how both small AND large companies don’t even know why they exist. I like your points about what a client will get and gain from your services. Keep up the good work!

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