By Andrew Neitlich

Back to low pricing self-esteem

By Andrew Neitlich

Let’s get your advice on a classic example of low pricing self-esteem.

I’m working with a guy who has a masters from the Massachusetts Institute of Technology, extensive software development experience, extensive off shore experience, and holds a couple of patents. He is brilliant at technology and development.

And he proves my point that the most qualified developer is not always the most highly paid.


Without giving away his rates, let’s just say that he asks clients for at least 50% less than his market rate, and has not filled his practice with high-paying clients.

I’ve been doing this blog for almost 2 years now. If you have read my stuff in this blog or elsewhere, you know what he has to do to earn the high rates and fill his practice with desirable clients. Let’s assume you were coaching him. What questions would you ask? What are your hypotheses about why he is not earning up to his potential? What advice would you offer?

I want to cure this problem of low pricing self-esteem in the technology world, and would be grateful for your unique perspective!

Don’t worry whether I am getting more lazy than usual; next blog I’ll provide a synthesis of your advice and any ideas that your posts may have missed.

  • He’s got to find a smaller target market. He’s got to do some research and find a niche that wil recognise his skills and need his level of professionalism.

    Then he needs to become visible in this niche and establish himself as the most knowledgeable and professional guy in his field… People will feel priviliged if he takes them on as a client.

    ..and if he hasn’t already done so, he needs to charge for the value he provides rather than charging by the hour.

    Did I pass the test? :p
    I better because I haven’t missed a blog post since you started blogging on sitepoint.

  • JMorrow

    50% below market rate? I’ll hire him. Don’t teach him another thing. lol

    No, I agree about charging on value. I’ve made over $10,000 an hour on several occasions. The client didn’t mind paying it because I made him a ton of money.

  • EagleEyesDesign

    “I want to cure this problem of low pricing self-esteem in the technology world, and would be grateful for your unique perspective!”
    I’m still working on this problem also. Two of my clients are under-pricing their art/recording services. And they have that low self-esteem issue. And of course they are so talented it’s beyond words.

    A journalist pointed out that people have no problem knowing that their CEO makes a ton of money, but they are LIVID if the person in the cubicle next to them makes 50 cents an hour more than they do for the same job.

    So I’m going to try to awaken the jealousy instinct.
    Trying to find comparisons of people they’ve known for years who are charging more.
    People with even a small amount of fame don’t seem to count – somehow they seem out of reach, like a CEO. – Christina

  • Maybe this guy is motivated by things other than making a ton of money. I know that runs contrary to what this blog is all about, but there are people out there who are like that. Maybe he wants to be able to coach his son’s soccer team, and high-pressure, high-paying clients would prevent him from doing that. Maybe he has some property with a cabin up in the mountains and likes to retreat to on a regular basis. And maybe that property has a river stocked with some of the best trout anywhere. Again, the pressures of a high-profile clientelle would prevent that.

    Or, maybe this guy likes to donate a sizable amount of his time down at the homeless shelter, or maybe he mentors at-risk youth at the local middle school.

    There could be a ton of reasons why this guy operates the way he does. However, I’m sure Andrew has something else in mind when he concludes this article. :o)

  • Anonymous

    It’s almost impossible to know how to coach this person without knowing more about him and what his motivations are. Without knowing why he is pricing the way he is, what he expects to gain and what he wishes to accomplish.

  • wildscribe

    I personally found myself with the same problem two years ago.

    Here is my simple advice:

    1.) Get rid of all the clients that he is charging less than the going rate. Yes, he could ask them to pay twice as much for his services, but he is better off spending the time on finding new clients who will pay more. See below.

    2.) Get new clients who will pay more than the going rate. If he is good at what he does, (and he should be able to justify higher rates with his MIT degree) and can relate well with clients, he should be able to provide more value than the competition and charge higher fees.

    It will take some time to build up a new, higher-paying client base, but he will have a much better business and make more money.

  • wildscribe

    I meant to add that his extensive experience along with his MIT degree should help him find new clients. I have found that big corporate types love to hire people with degrees from Stanford, MIT, Harvard, etc., even if their work and experience is not as good as someone with an IT degree from a lesser-known university.

  • dev_cw

    From the reading I would guess that this person works alone.

    Maybe this person is not a “people person” or is uncomefortable with the self marketing game. What I mean is that although he has great technical credentials and experience, in order to rise in the rate ladder he still needs to present, sell, deal with and confront the clients. It is one thing to deserve the higher rates and it is a much different thing to sell the higher rates to the clients.

    Maybe a solution for him (in the case I described) would be to partner up with a seller, so he can just do his part and leave the selling to someone who enjoys it and can get him better rates and more work. Some people are just not good sellers.

  • He is not marketing his services correctly. He isn’t establish himself as the expert would be your take on it I’ll bet. He probably hates public speaking or avoids it.

    I would say its time for him to start a campaign to market what he knows and get his face all over the place. Futhermore, he needs to notify all of his clients that his rates are going up by 25% this year, but that because they are long established clients that he will offer work for them at his current rates for the next month.

  • AnandC

    Like everyone else has mentioned there can be a multitude of reasons why this guy is under charging. Does he deliver on time? Is he only sticking with the same group of 3-4 clients that “can’t afford” to pay him? It is very possible that he is seeing wage deflation due to outsourcing and does not command a presence is any niche market but rather a general space with global competition.

  • EagleEyesDesign

    How is your qualified developer’s energy level?

    My rates and my husband’s rates improved in proportion to our health improvements over two decades. I remember dragging myself through each day in the 90’s, and felt like my time was NOT worth the same as the other developers.

    And without good energy, the thought of learning better people and sales skills could feel like an impossible mountain to climb to your developer. Plus, people respond well to someone who is healthy and energetic.

  • $10,000 an hour? Phew! Much of the world’s population doesn’t earn that in a lifetime.

  • busyboy

    He must learn to accept praise. Praise leads to self-esteem. Self-esteem leads to confidence.

    Praise from industry peers and co-workers, praise from clients, praise from his own wife (if applicable).

  • Anonymous

    This is kind of tough for me too, but right now my rates are about where they should be.

    Something I did that helped a lot was pitch for one particular project that I knew could get a large budget, and I made sure my bid was about 10 times as much as I usually charge. I didn’t win the bid but it made me MUCH more comfortable with going for an appropriate price tag after that, and as I result I have been making more money.

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