Tips for Putting a Price on Your Work

WHEN I first started as a freelance writer, I was eager to sell myself — but not eager to have to discuss money. So I more or less took whatever was offered.

Then I read somewhere that no matter what price a new client states, you always say in a polite but firm tone, “I expected more.” The first time I tried it, I was sweating and I doubt my tone was firm — it probably sounded more like pleading — but to my great surprise, it worked. With that one sentence, I made an extra few hundred dollars.

Negotiating a salary when you have a job can be stressful enough. But as more people are choosing, or being forced, to strike out on their own, they face the issue of deciding what to charge prospective clients.

Ask for too little and you feel cheated. Ask for too much and you may be pricing yourself out of the market. So what do you do?

At the most basic, you need to know what people in your field charge. This is true whether you are a marketing consultant, graphic designer or, like Mike Stoner, a professional magician.

“You have very little information to go on and it’s very easy to aim too high or even worse, too low,” Mr. Stoner said in an e-mail. “You really don’t want someone to say, ‘Wow, that’s a bargain,’ which basically translates as ‘We would have been happy to pay much more than that!’ â€

But how do you find out? Consult with others in the field. Especially if you are just starting, many professionals will be eager to help. Roy Cohen, a career counselor who has provided outplacement services to Goldman Sachs employees, said that when he first started, his competitors were not threatened. “They didn’t consider me competition,” he said, “and therefore shared information.”

Surveying friends or colleagues who have hired consultants in your area is a “very efficient way to determine a fee structure,” said Mr. Cohen, who wrote “The Wall Street Professional’s Survival Guide” (Financial Times Press, 2010).

Professional organizations are another great way to find out information. I belong to the American Society of Journalists and Authors. In one section of the group’s Web site, members can anonymously report what they were paid for jobs.

Colleen Plimpton, a garden consultant for the last three years, said she joined the Garden Writers Association to learn about prevailing wages.

“There is a lot of free information available, but with many sites it’s not easy to find, so you have to hone your research skills,” said Leanne Hoagland-Smith, whose company, Advanced Systems, offers executive coaching focusing on small businesses. She found that the American Society for Training and Development and SherpaCoaching were valuable resources.

But money is only one part of the negotiation, and it’s crucial to know what all your objectives are before talking to a client.

What does the contract say? If you’re a writer or graphic artist or logo designer, say, will you own the rights or will someone else? For how long? Will the work appear under your name or someone else’s? Is the client well known and possibly helpful to your career? If so, are you willing to take less for the long-term benefits that may offer?

Sometimes, especially when starting, underpricing yourself is a good strategy.

My sister, who was a marketing consultant, then took time off, is just returning to the job market. When bidding on her first job recently, she deliberately lowballed her work.

“I wanted to get some practice and get my confidence up,” she said.

It’s also important to realize that you have to constantly revise and change as a business develops. Kate M. Gilbert, a Web developer in Massachusetts, said, for instance, that she started out charging hourly rates when working by herself.

But when she teamed up with a friend who is a Web designer and started a business, Wide Open Sites, last year, “we had dozens of different clients and we were constantly asking each other, ‘What’s the rate for this one?’ It made it difficult when dividing up the payments.”

So they decided to set a flat rate based on an hourly fee, which they do not disclose to customers, because they want clients to focus on the project, not on the time it will take.

“Back in 2005, when I started as an independent contractor, I charged about $30 an hour,” Ms. Gilbert said. She started hearing from potential clients that her fees were lower than average, “so we kept pushing the envelope.” Now they charge $80 to $140 an hour.

Asking for more money, especially from customers you’ve worked with before, isn’t easy for most people. One option is to state that your own costs have risen and, therefore, you need to pass them on.

You can “take the coward’s strategy and say, ‘I intend to accept this assignment and I’m very excited, but I wonder if there’s any wiggle room with the fee,’ â€ Mr. Cohen said.

If money isn’t available, there may be other ways to parlay the customer’s resources to your advantage. Mr. Stoner, the magician, offered an example. “I might say, ‘O.K., instead of 300, how about if I do it for 200 but you give me a link on your Web site and let me take a few pictures for my business blog?’ â€

Most important, don’t feel intimidated and underestimate your own worth. You’re not asking for a favor but engaging in a business transaction. It can be easy to lose sight of that.

“You need to point out what additional value you offer,” Ms. Hoagland-Smith said. “It’s not just price point. If that was the case, we’d all be driving Yugos and eating at McDonald’s.”

And, of course, what you ask for will depend on where you live.

“I can’t charge in the Midwest what some of my colleagues can charge on the East Coast,” she added.

While difficult, negotiating the fee is only the beginning. Ms. Gilbert says that as issues arise with clients, she is constantly adding clauses to her contracts.

She has put in stipulations, for example, about how much it will cost if a customer decides to make changes after approving the design. Or if a customer delays and forces the project to run longer than the anticipated timeline.

Also, charging a certain amount and getting paid can be very different things.

“Make sure to invoice early and follow up gently,” Mr. Cohen said. Here’s one way: “I’m checking my unpaid invoices and noticed that I have not yet received payment from you. Please check your records and let’s discuss. I’ll take the liberty to follow up with you immediately.”

At worst, there’s always small claims court, but few people want to put out that kind of time and energy. Another option is simply to walk away and, of course, never deal with that client again.

Working for yourself can be wonderful and incredibly difficult at the same time, say those who have taken the plunge.

“I love what I do, but this has been the most challenging year of my life,” Ms. Gilbert said. “I just want people to pay me for the work I do.”

Source:http://www.nytimes.com/2012/01/28/your-money/putting-a-price-on-your-work-shortcuts.html?pagewanted=1&_r=1&ref=business&src=me