For every type of project you work on regularly, you need to have a clear idea of your price — but also how low you're willing to go in terms of that price. We all like to think that we're firm on price. But the truth of the matter is there are situations when we'll consider taking a lower rate.
Some of us are willing to give friends and family a discount. Some of will go a little lower on projects with a big name attached, just for something that will add a little glamour to our portfolios. And before you try to say that you'll never budge on your price, consider this: what if your personal hero walked in tomorrow and asked you to work on the project of your dreams? We're talking about the sort of project that secretly, if you had to, you'd pay to work on.
So we need to have a bare minimum that we know we simply can't afford to go below. And think about affordability in real terms: you still have to eat, pay the electric bill and keep the tax man happy, no matter why you're offering that reduced rate. Even if that project you'd pay to work on crosses your desk, you need to get that minimum to be able to afford to take it, after all.
The Basics of a Minimum
In theory, you can calculate your minimum just by sitting down and figuring out just how much money you have to have to pay your bills each month and dividing that number by how many hours you have available to work. But it's easy to actually come up with a number that's far too low by that method. Most of us don't take emergencies into consideration — but how often does a month go by where no one in your family gets sick and the car doesn't need any sort of maintenance and your computer doesn't even crash?
The reality of life is that most of us don't actually live just on the amount it takes to cover our recurring bills.
It just doesn't ever play out that way. You need to have a little space in your minimum. The reality of life is that most of us don't actually live just on the amount it takes to cover our recurring bills. You also need to be able to save money based on your minimum, whether your priorities are buying a house, making sure you can retire comfortably or what have you.
A minimum is not a game of "how low can you go?" Your minimum rate should really be a number that you can continue to live on without changing your lifestyle — it shouldn't be a hardship to accept work. Give yourself all the wiggle room you need in your minimum to make sure that's true.
Keep Your Future in Mind
For a lot of freelancers, finding a few clients who we can work with for the long term is crucial to being secure. When you can see working with a given client on a regular basis — maybe writing a monthly newsletter or designing new ads on a quarterly schedule — you might be willing to negotiate on your minimums to make sure you can land that on-going project. It's easy to tell yourself that it's worth it. After all, if you're getting a regular check every month, it's worth taking a hit just based on the fact that you're not spending time on finding other clients to fill those working hours.
But that sort of thinking very quickly leads to another thought process. That one goes something along the lines of "why am I doing all of this work at less than my minimum?" It doesn't take long for a bump in an ongoing project to come up and make you wonder why you didn't stick to your minimums.
Even worse is when you find that you're ready to increase your prices down the road. You may have been working with a client at a set rate for years — telling them that you're changing your prices is going to feel awkward no matter what. To make things worse, though, those clients that you set a price at or above your minimums may just see that price increase as a small step, perhaps something that just keeps up with inflation. But for clients who are used to a lower price, that increase can seem like a big leap in costs. You may wind up losing the client that you accepted a lower price just to land.
Pro Bono and Minimums
Among certain freelancers, there seems to be a mindset that the absolute least that they'll take to complete a project is zero dollars. As long as it's for a good cause, a friend, or something that a person can mentally justify working for free on, some people will happily do so. Not to get down on doing things for good causes, but that's not going to help you build your career as a freelancer in the long run. Even as far as portfolio building goes, if a client sees nothing but non-profit work, she's going to assume that you prefer to work with non-profits.
A more effective way to handle pro bono projects is to set a maximum, along with your minimum. Decide the maximum number of pro bono hours you're going to work each month. When they're filled, they're gone — anyone else who needs your help on a good cause will just have to wait until the new month rolls around.
It can be hard to stick to your minimums, especially when it comes to requests for projects that really fit well or could do a lot of good in the world. Just the same, though, a freelancer sets minimums in order to protect herself. It's necessary to have a set number (which you stick to) so that you can negotiate projects that don't wind up hurting your bank account more than helping.
Next week, we'll be taking a look at the benefits of hourly vs. fixed project pricing, and a few options you may not have considered before!