Good freelancers spend lots of time sharpening their skills and upgrading their tools. They take pride in what they do, put souls into their work, and always endeavor to offer the best to their clients. Freelancing is nothing but personal, because your name is the brand.
But that’s just one side of the equation.
You have meticulously listed the deliverable items on your quotation with confidence, and now you are about to add numbers on the “Price” column. A little voice starts ringing in your head: should I write $8,000, $7,999, or $8,130? Or should I write $9,000 and then give a $1,000 discount at the bottom?
This happens because you are serious in getting the job and you want that number to look “just right” to your prospective client. In spite of all the great values you are offering in your proposal, it all equates to this magic number at the bottom line.
We are not talking about how to calculate your prices with reference to your cost structure or how to buff up your margins. Instead, this article explores how to “present” your prices in a manner that would put your quotation in a more favorable position in the bidding process.
Clients don’t like zeroes
According to Lindsay van Thoen at the Freelancers Union, she suggested that clients don’t like zeroes on your price tags. She made an example that if you were to quote a project fee of, say $5,000 to your client, chances is that they will come back and haggle you down another $500, even if you had provided detail cost breakdowns. Why? Because they would think there must be some buffers behind those zeroes. Now if you were to quote something like $5,180 instead, your client would probably feel a lot happier because your price appeared to be more calculated and exact with no padding and rounding up.
Will this little trick work and make it harder for your clients to bargain? As a project owner, I find rounded numbers with more than 3 zeroes usually suggest they are ballpark figures – either the freelancer is not being confident and took a cut back on his side (rounding-down), or he is trying to charge a premium (rounding-up). Either way it is a gesture in the communication process that suggests “let’s have some flexibility”. Freelancers often do that because of anticipated project uncertainty, especially if they know the client is unsure of what they want initially.
On the other hand, exact figures suggest precision and certainty – the total price was a “computational result” of the itemized cost breakdown. It’s another form of bargaining gesture that basically says “I am a pro, I know what I am doing, and this is the price for my service”. If I see a quotation like this, I will get an impression that this freelancer knows his stuff, and there will be little room I can bargain. Furthermore, if he ended up doing extra work on the project, I would expect additional billing from him.
Unless the prices for your services are clearly indicated somewhere people can check and provided that you have a good reason, I personally would not consider discounts are genuine in the freelancing context. Marking up your fees and then lowering it with a discount at the bottom is meaningless, but freelancers still do that because they fear once their “official rates” are lowered, they can never get them up again in the future. This is a pessimistic view and a vote of no confidence in your freelancing career. As a professional freelancer, you build up credibility and goodwill over time through your hard work and commitment, and the result is more people would want you on their project, and hence your bargaining power to ask for more.
Perhaps another reason why freelancers offer discount is comparative pricing. For example, the market standard for a web project is $10,000 but we are now offering at 30% discount at $7,000 so why not us? It make sense and sounds right, but the discount will only prompt me as a client to wonder which corners are you cutting? Are you going to pull something out of your stock and just give me off-the-shelf quality work? Furthermore, it will only lead me to think your value is only going to worth $7,000 – or even less.
Focus on value
If you are desperate to get the job and want some instant competitive edge, instead of giving discounts or micro-adjusting the numbers, I would suggest you to include more “value-added items” or “free perks” in the proposal.
For example, if you are a graphic designer and you are bidding a project for designing name cards, you can offer the total solution of printing and delivery of the name cards as your value-added service (printing doesn’t cost that much nowadays and you can easily absorb the cost in your design fees). Or if you are copywriting for company profiles, why not offer “one free revision within the first 6 months” as a perk?
Value can also be represented in turnaround time – can you respond and deliver faster than your competitors? If you can promise a quicker delivery in your proposal, you may even add a premium on your price (but don’t take it lightly thought, as it will become a contractual term that you will be held responsible for).
There are many different ways in how to “window-dress” the numbers in your quotation. It depends on context, industry practice, and culture. The ones I suggested here are based on my personal experience and findings. Price setting is a skill derived from market observation, business experience, and above all, how much you understand your customers.
Please share with us your suggestions and stories