Five Rate Questions You Need To Answer
When was the last time you reviewed — or changed — your rates? I’ve just started a new financial year, so a rate reassessment is on my agenda.
Hourly rate questions may be a constant source of consternation for the freelancer, but there are several related issues that you’d be wise to consider at the same time.
1. Should I Charge for the Initial Consultation?
Offering your initial consultation at no charge may reduce risk and encourage prospects to meet with you, but it does raise the question of whether you want to meet with clients who aren’t prepared — or can’t afford — to remunerate you for your time.
Some offer a free, time-limited initial consultation, which can avoid the endless brain=-picking type of initial consultation that freelancers, as subject experts, can wind up facing. Others only charge if the client subsequently engages them — a neat solution that allows you to avoid sending single-hour invoices to people who aren’t actually clients.
2. Should I Charge Differently for Different Tasks?
Packaging services into “solutions” with a single price tag can be a good way to drum up new clients, or make complex solutions more digestible for certain audiences. You may agree to reduce your rate for a certain task so that you can compete with others in a certain industry (for example, you may not be able to charge your web design rate for data entry tasks). But unless that task appeals to you as much as — or more than — your other work, you can quickly become disenchanted.
Whether you’re designing or doing data entry, your client’s getting all of your brainpower, and all of your energy — they’re not just getting the part of your that knows how to copy and paste or tap the keys. This is why charging different rates for particular services has never really worked for me. I’d rather work with clients who need — and value — my whole input, rather than those who believe they need only a small portion of my skills, and want to pay for only that portion. If the project takes in any of my basic service offering or skills, I expect to be able to charge my standard rate.
3. Should I Charge Different Rates to Different Clients?
Your answer to this question will depend on the type of work you do, in what industry, and for which clients. Some industries are still suffering heavily from the effects of the Global Financial Crisis, making it difficult for you to raise your rates, or even attract clients from those industries with your standard hourly rate.
On the other hand, certain projects and clients will warrant higher rates. Recently, I delivered a day-long seminar to the staff of an organization as a topic matter expert. The rate I charged exceeded my standard hourly rate, since this client obtained value of a different kind than do my usual copywriting clients — the gained skills and tools that will improve their workflow and product quality. This project was sufficiently removed from my everyday service offering, and the benefits it delivered were sufficiently different from my core work, that I felt justified in charging differently for it.
If you’re concerned about the prospect of your clients talking, and discovering that you charge them different rates, remember that you’re not ripping anyone off, or overcharging (well, we hope not!). If you believe you have good reason for charging different clients differently, you should have no trouble explaining that to your clients in the unlikely event that a client finds out you’re charging them more than you’re charging someone else.
4. Should I Put My Rates Up Regularly? All at Once?
No freelancers set their rates in a vacuum, so whether or not you put your rates up at a given time will undoubtedly depend on the market, the industry you work in, your finances, and so on. You may find it difficult to boost your rates with calendar-day precision.
When you do decide to increase your rates, you’ll need to work out how you’ll do it. If your rates go up o January 1 across the board, does that mean existing clients will get invoices on which your time is charged at two different rates? Perhaps you’ll decide to implement the new rate on a per-client basis, when the next new job comes in from each one. You’ll still need to work out what to do about existing clients, though (my advice: alert them well in advance of your rate increase so there are no unexpected surprises).
5. Should I Offer a Retainer?
Retainer rates involve bulk discounts for clients who want to be assured that they will be allotted a certain amount of your time each month (or other time period). They’re particularly common in maintenance agreements, but are also favored by clients who want to have a strong, ongoing relationship with you.
Retainer arrangements can quickly become complicated — If you have a monthly retainer arrangement, what happens to any unused hours from a given week — can they be rolled into another week within the same month? Will you step your discounts in accordance with the amount of time a client wants to secure? What sort of cancellation timeframe will you require? So it’s a good idea to give some thought to the possibilities, and what basic agreements you’ll require for the retainer to work, ahead of time.
Setting your rates isn’t as simple as choosing an hourly figure. These are just some of the challenges I’ve faced in considering and amending my rates. What rate hurdles have you had to overcome?