To your clients, are you an investment or an expense?
It’s really hard to lift off if you’re charging way too low. The reason, though, is not always what you think. It’s not just about the money.
When I first started offering my services to clients on an hourly basis, I priced myself obscenely low. In the year and a half since, I’ve increased my hourly rate by 250%. Sometimes, even more.
On the projects I sell on a per-project basis, I also priced myself obscenely low—so low that I almost put myself out of business.I now charge more than double per project.
The best part isn’t the money, though it is nice. The best part is smoothness of every single project.
The problem with low rates
Not everyone is ready to charge high rates, but I wish I had known better when I was starting out. I caused myself so many headaches, heartaches, and backaches because I was too afraid to raise my rates.
The first problem with low rates is obvious: you don’t make much money. It’s tough to make a decent living on hourly rates if you’re simply subsisting.
At any moment, a client could drop off the radar, not pay you, and take your dreams of sustainability (and freedom) along with them.
The second problem with low rates is a bit less obvious: the perceived value of your service is shot to hell. It’s difficult to prove you can provide value if you’re doing it for a lower price than everyone else.
I love my Forever21 t-shirts for their low price, but I accept the fact that I’m going to have to buy another in a few months when this one rips.
But that’s not the worst part.
The main problem with low rates is how clients treat you.
When you’re starting out and charging too little, clients walk all over over you. Not all of them, but some of them, but the ones who do will make your life miserable to an unimaginable degree.
If you don’t charge enough, they won’t keep up their side of the bargain. They won’t send you the information they promised, they’ll stand you up at meetings, they’ll show up an hour late, they’ll leave you hanging on payment.
All because, to them, you are just an expense.
Raise your rates, and you will become an investment. Raise your rates and they will take care of your project, too.
When you charge them enough, they will make sure the project is cared for. They will send you all the information they promised you, they will make sure to make every meeting and interaction is efficient, they will be at your beck and call for any questions you may have, they will put their best foot forward to make sure their money is well-spent and works for them as much as possible.
They will care for the relationship they have with you. They will even pay you on time. And you, my friend, will sleep a lot better for it.
Avoid this at all costs, I beg you.
I remember reading about all of this before I put up my own shop. I remember thinking I’d avoid these mistakes. I remember it clearly.
But then I started interacting with clients face-to-face, I started writing proposals and quotes, and I got scared. I got scared shitless.
Every single time I raise my rates, I’m afraid to do it. I’m working on raising my rates right now, and it’s still scary. Pushing the Send button on that proposal email was terrifying, but what’s the worst that could happen?
The other option—charging a lower rate and suffering from all the headaches involved—is too miserable to even consider.