Money is a taboo subject in the corporate world. Fortunately, I don’t work for a company anymore so I can tell you everything I know about money – including how I earned a higher hourly rate than than you might believe.
3 years ago when I went in to consulting and independent contracting, my long time consulting friends laughed at me when I told them how much I was charging: $50 / hour. That was my starting rate when I first jumped in to the indie life. The truth was, this was the number I was comfortable with because of my history in corporate life. I had made just under $100K / year for a few years at that point, and it seemed reasonable that I would be able to maintain the same level as an independent. Why, then, did my friends laugh at me when I said I was charging $50 / hour?
People perceive value in cost.
If you’re the cheapest around – and I was at the time, for my market – you’ll get the cheapest clients. You’ll get the ones that don’t want to pay for things, but have to. You’ll get the clients that need the work done but don’t care about the quality as long as it gets done. These tend to be bad clients. They tend to be cheapskates. They argue about every penny. They make your life as a consultant or contractor not worth it.
If you’re middle of the road, you can weed out some of the bad clients easier. They won’t be as willing to pay your rates and you won’t let them talk you down, right? But the problem with middle of the road is that you’ll be ignored. The bad clients won’t talk to you, and the great clients won’t see you. You’ll get middle of the road, ignorable and boring contracts because that’s what your hourly says you’re good at doing.
Price yourself high. Higher than you’re comfortable with.
You’ll quickly become accustomed to these large numbers. And when potential clients see you’re rates are higher than anyone else, they will do 2 things: wonder why you’re charging more, they will want to hire you because they perceive value in the cost. After all, how is it that you can charge so much more when others don’t? It is because you care about the quality of work you do. It is because your time and skills are worth it. And it is because your time is more valuable than anything else, and you don’t want to waste time with clients that aren’t willing to pay you what you’re worth.
Take the advice that I was given
Double your rate for your next client. Don’t even give them the option of coming down on it. Double it. Then when the next client comes along, double it again.They might complain a little, but now you’ve got some room to come down. When the next client comes along, raise your rates again. And then again. And again.Don’t stop raising your rates until your clients are consistently saying no. And I mean consistently. When the first client says no, ignore them. The next client will say yes. When 2 or 3 or 5 clients say no, but that 6th or 10th one says yes. Now you have your base rate. Start here, and allow the rate to come down or go up based on the circumstances of your client’s needs.
I may have started at $50/hr, but within 2 years, I was making as much as $250/hr on some contracts. Since then, I’ve given this same advice to dozens of other people, and every person that has taken the advice has profited greatly from it. I have yet to hear anyone say they wish they had not followed this advice. I have heard “thank you!” a countless number of times, for helping other consultants realize the value that they were providing to a higher caliber of client.
What’s stopping you, other than fear, uncertainty and doubt?