I started my business in January and the biggest problem I'm consistently having is negotiating my prices. Far too often, a client comes to me expecting me to work for free (or as they like to call it "exposure"), even though my prices are listed on my website. How do I deal with this? Should I change my rates? What's the best way to determine a fair price point? Thanks so much!
I want to share both of these links right off the bat -- I'm betting you've probably seen these but just in case anyone reading hadn't, these are pitch perfect responses about working for "exposure" -- a brilliant comic by The Oatmeal + this viral blog post by Wil Wheaton.
Okay, now that I've gotten that out of my system ;), let me just say I completely, utterly sympathize with your situation. It's practically a rite of passage for any new freelance designer at this point, so know that you're not the only one and you most likely aren't doing anything wrong! A few different things come to mind when I think about your questions and I'd like to tackle each of them to see if I can offer some relevant advice somewhere in all of this.
What's the best way to determine a fair price point?
This is probably going to be the most straightforward and by the book section of this column ;), but luckily there are people and organizations who have written about these things in a much smarter and informed way than I have!
+ This website by the AIGA lets you review designer salaries based on real peoples' responses (nothing that covers newbie freelance creative business owner, but at least it gives you a place to start!)
+ The Graphic Artists' Guild Handbook of Pricing and Ethical Guidelines is a classic. If nothing else, the higher starting price points in the book should give you a boost of confidence that you aren't off track with your own pricing mindset!
+ This infographic is a little dense but is a pretty darn good outline of the steps you might want to take to make sure your current rate calculations are working for you instead of against you.
My practical rule of thumb is if you can't survive on it, then it's not working. Your skill AND your time are both valuable. Don't forget that!
Should I change my rates?
I think we all have moments (sometimes, many many moments) of second guessing our rates. It certainly doesn't help when we feel like our prices are being questioned, which comes off like a judgement on our value as a designer.
I honestly can't tell you whether your rates NEED to be changed -- so much affects this, like where you live, your level of experience, industry norms, what you need to make to actually live and survive, etc (see infographic link above!). And while you can use other designers who do similar work in your field as a benchmark of sorts for pricing, it's more important that you are charging a rate that will compensate YOU fairly for the level of expertise you bring to the table, as well as what you need to continue running your business in your area of the country (again, see links above!!). So if what you are charging is doing that, then I say keep on with it.
But if you are having trouble booking work at that rate, then it's worth evaluating if there's a disconnect somewhere. ARE you charging more than other designers doing similar work? Have you done enough yet to prove the value of your services at that rate? And as you work on aligning these various pricing factors with what you and your business actually need, I would see if there's anything you can do to enable you to keep charging these rates without compromising your standards. Can you find alternative stream of income to balance out this foundation building period you're going through right now?
I had a few months of transition between leaving my long-term contract work behind and going full-in on my design business and boy, did that force me to look the reality of what I was doing in the face -- I was leaving a really good, if just totally uninspiring, thing behind to take on a less than guaranteed situation. But I was determined not to caught in a position of compromise when my business had barely started, so I cobbled together some short-term freelance gigs designing for startups while I busted my butt preparing my business and new website for prime-time. Knowing I had a temporary source of income to fall back on, even if it wasn't the ideal kind, helped to keep my confidence up enough to stand by what I was offering in the beginning. And it's only gone up from there!
How to deal with clients negotiating over prices or offering to pay in exposure?
The Internet has done a lot of awesome things for those of us building online design businesses -- it's given us the opportunity to make connections and enlarge our network in a way we wouldn't have thought possible just a few years ago (hello Facebook + Slack groups!), expanded our toolbox with an incredible number of high value resources and apps for creating systems and learning new skills / strategies, and it's made our work and services accessible to a MUCH larger group of people. For a LOT of us. And as such, you also end up dealing with a lot more bargain hunters who are price shopping or looking for "work for exposure" arrangements because they have a seemingly limitless supply of options to work through.
I think if you're in this to build a long term and sustainable business, it's important to attempt to avoid the temptation of undercutting your own prices to make a quick buck. I say attempt because I know there are more factors that affect your ability to do this...it's never just an easy yes or no -- in theory it'd be nice to live your life always sticking to your principles, but much like exposure, principles don't always pay the bill either.
So what to do? Well, let's immediately take working for exposure off the table, because unless you've chosen to do it for reasons that work for you (it's a cause or event you support and you're getting something out of it personally, even without the money -- let's say, a portfolio building piece that you wouldn't have had a chance to do otherwise) or you already have a solid and respectful working relationship with the client in question (the only time I personally would consider pro bono work where my only payment is exposure -- otherwise, it's usually a nightmare waiting to happen), it's not worth it. So you can safely and confidently accept that there is no good reason for you to ever say yes to working for free when you're in this to build a profitable business. As for any other negotiating a potential client might make? Here's what I would suggest:
1. Stick to your guns and politely reinforce your pricing.
I don't know what is motivating your potential clients to think negotiating is on the table, but the more confident you are about your prices, the more likely your clients will take it more seriously as a non-negotiable. This might be a good time to evaluate your site and your offerings and see if there's anything you can do to make sure your clients immediately perceive your services as high-value. That might mean investing more time in your copy, re-evaluating your portfolio and social media posts, or redoing part of your site design to reinforce the value of your process and work.
2. and if you can't do that, Meet your potential clients where they are.
If a potential client comes to you trying to negotiate down the price but you don't feel like you can say no based on price, see if you can offer them a smaller scale package that would fit both their budget and leave you compensated properly for your time and work. I wouldn't do this for everyone (if it's a red flag client, trust me, it's not worth it!), but for the client who is sincere in his or her desire to work with you, this could be the first step to a longer and more fruitful relationship in the future. I have clients who came to me starting small, but have grown into some of my best paying and most faithful clients, coming back time and time again for new design projects.
I realize I just threw a lot of thoughts and information your way, but I hope some of it was useful. You are going to get to where you need to be and in the meantime I'll be cheering you along the way!