This weekend I was talking with a non-freelancer friend about how the freelance community is SO OPEN, always willing to share experience with others, help newcomers to the industry, talk about their process… but when it comes to talking about money — most clam up! Most freelancers seem a bit reluctant to discuss what they actually charge/make/quote. Why is this?
In a community that is so transparent about so much, what causes this aspect to still have a veil over it? Well I posed this question on Twitter and got some interesting ideas on the matter – share your thoughts, leave a comment below!
Competition
The job market today is competitive and freelancing is no exception! We are all working hard to build our businesses in a fledgling economy and having a competitive edge can be the difference between feast or famine. While so much of the freelance community does have an “all for one and one for all” community feel to it, we are still in the running with each other for much of the same work!
Taboo
Growing up I remember my fathers telling me it was no polite to discuss money, religion or politics — does this old school adage still have a foot hold on us today? Even in the online world where there seems to be no subject off the table, perhaps deep down many of us feel there are certain things you just don’t talk about?
Price Fixing
Price fixing is the practice of multiple businesses in an industry agreeing on a fixed price for similar items or services. It’s a practice which is highly frowned upon and in some cases even illegal. While revealing to your freelancer buddy how much you charged for your latest development job isn’t the same as conspiring to regulate prices on the whole coding community, it opens the door for that type of activity – and this makes many nervous about talking dollars and cents.
Hi Liz,
Pricing is a touchy subject in itself. It’s basically talking about your salary with your colleagues. It can cause too much bad feelings among others. It’s not so much that they don’t want to talk about it. It very much feels like, it can cause tension in a relationship. I don’t think most fear undercutting too much. At least those who do good work. Undercutting will always hurt the entire group and doesn’t benefit anyone. It’s my hope that most understand that. Of course, a beginner shouldn’t be charging as much as a seasoned veteran.
That said, I have been doing a lot of wedding shopping around. And in doing so, I have to talk to various freelance photographers, DJs, etc. And of course, part of the decision making is always price based due to budgets.
So, if you think about it that way. Then yes, prices are always out in the open and freely available. What makes web design any different right?
– John
I do think that the idea of keeping money, politics, and religion is a huge reason to keep the “salary” you make to yourself. I really only tell my parents and my fiancée things this personal. I have felt that it is a form of “bragging” if you release or discuss something such as your salary. It can make others feel jealous or not worthy of being your friend. In other cases, it can make your friend take advantage of you if they know you make twice what they do.
Freelanceswitch.com has a great “calculator” that helps with finding the hourly rate you should charge based on criteria that you need to have as a freelancer. Here is the link: http://freelanceswitch.com/rates/
On another hand, depending on the job (graphic or web design) you might have multiple rates due to the task. Concepts could be $50/hr vs. web development that could be $100/hr. I would say that giving someone a general idea with hourly rates is the best approach to this. Asking what kind of salary do you want to make might give the newbie a better idea of what to charge for their services. Keeping in mind, based on a 40 hour work week and and hourly rate of $50, your salary should be $100k (before taxes).
So keeping things general with the discussions is what I recommend. Even if you’re using a statement or example such as a story problem, it should be safer this way than to simply state that for a web site my minimum fee is $5000. There are too many factors that come into play with earnings, and experience is a HUGE one, but also your clients might have a budget 10 times what the newbie is asking about and would give the newbie the wrong idea of what they should be asking for starting out. ;-)
I hope this helps in some way.
Great point John! I’ve seen a similar reaction from freelancers that I’ve worked with in the past when we get to the topic of pricing.
When I first started out doing freelance work I was very careful about sharing pricing information for the simple fact that I didn’t have a set rate, and my pricing would change from project to project and client to client. Now that things have stabilized with my freelance work I have no problem sharing my pricing, and now that I have a set pricelist I find it much easier to answer the question of cost for a project.
On the other end of the spectrum would be designers that are charging too much for their work (highly subjective I know). To this day I’m still slightly apprehensive in giving a price (especially for larger projects), without being able to explain and justify the cost of said project. Many times as a designer if I were to just throw out a number I could end up damaging future business, and potentially current clients with what appears to be a “made-up” price.
What I charge is based on what I need to make, my experience and a few other variables. Everyone’s needs are going to be different, and so is every project.
That being said, it’s not always relevant to discuss what a certain project cost. I’ll second the rate calculator that Tim mentioned—I think it’s a great tool and perfectly suited.
I agree that, for the most part, we’ve all been raised to feel it’s impolite (and maybe even downright rude) to ask what other people make for a living, and that divulging that info could lead others to develop feelings of jealousy, inadequacy, or even pity towards us.
I also agree that online calculators and salary guides are good sources for developing baseline numbers to work off of, but talking about some of these things with other freelancers can help give context to these numbers.
Here’s the thing: As freelancers, we lead pretty insular lives, holed up in our homes/home offices/basements, and as such, can develop over time skewed perspectives over our work and our professional lives. After all, isn’t that search for contact with other like-minded people part of the reason why a lot of designers spend time connecting online, whether through their blogs, twitter or any other social media?
So, yeah, it can be seen as impolite to look into what others are making, but at the same time it can help give us perspective. Maybe finding out that so-and-so designer is charging 50% more for services that what we may be charging might motivate us to action, whether it’s revising our existing rates or working on strengthening the weaker areas of our skillset (we might be undercharging for services, or potentially have untapped “muscles” to bring in additional work– and income, but we wouldn’t know that, not really having ready access to such type of water-cooler info usually associated with working in an office setting). Conversely, finding out that we’re charging more than others in similar boats may be an indicator of our competitiveness (or lack of) in the market. It can also validate our own success– and who doesn’t like an ego boost every once in a while?
The bottom line is that pricing is ultimately an individual decision based on a whole series of issues, and whether or not you want to share with others is entirely up to you. I, for one, feel that the more info I have, the better decisions and choices I can make.
Obviously pricing is a touchy subject, and I’m not going to say what my prices are, because each project and client are different.
Let me stress the client portion of that statement. Sometimes my prices are geared towards who I am working with more than the project itself. The first thing that I do when I am talking with a potential client is try to get a feel for what they want, what their ideas are, what their budget is, and most importantly, what kind of person they are.
After working with a couple of clients where I have been burned, I have learned to sense certain traits about how difficult they will be to work with. If I am sensing that there will be lots of revisions and changes after we have agreed on something, then their cost will be higher. Also, I tend to charge those clients an hourly rate. I’ve gotten enough business from some of those people that if they don’t want to pay what I think my cost will be, I will gladly turn them away because the money isn’t worth it.
Just because you can get the job doesn’t always mean you should accept it, and if I’m hesitant, then I am more apt to charging a higher price.
On the other hand, I have also worked with clients where we make decisions together and the design is a big two way process, but they respect my opinions and I theirs, and that is where much of my repeat business comes from. Also, these people aren’t charged as much because I like doing business with them, and I still get paid what I feel the project is worth.
So, in my mind, pricing comes down to about 40% what the project is and 60% who the client is.
@seth After working with a couple of clients where I have been burned, I have learned to sense certain traits about how difficult they will be to work with.
This is sooo true. If I start getting red flags that go up when I first speak with a client, the price is definitely going to go up. A lot. And if the cost is too high for them? Well, its probably for the better anyway!
While I do agree that talking about your salary can be a bit taboo, I have found that between freelancer friends, we are more willing to discuss our rates amongst ourselves, as we are all eager to learn all that we can from others’ experience.
“So, in my mind, pricing comes down to about 40% what the project is and 60% who the client is.”
this is so true! I actually have one client who is a little high maintenance, although they always pay on time, so I usually mark up their quotes about 25% from the price id give other clients.