I just finished writing a new business proposal and, as always, I ran up against what seems to be the age-old question for consultants – what do I charge? I have experimented with different pricing models over the years – hourly rate, retainer, by the project. I have even developed a rate card that I use with prospects for project work, but inevitably, to be competitive, you have to haggle. There are many times I think I should hire an Arabian rug merchant and learn the gentle art of haggling for a better price.
What continues to amaze me is that in public relations and marketing consulting, everyone sees pricing as negotiable. Do you question the fees of your doctor? Or what you pay your plumber? Sure, you have to be prepared to accept a market rate, but in the current economy it’s gotten harder to get a fair wage. I actually challenged my accountant last week when I was quoted a rate for a routine task, and we struck a compromise. But you can’t sell your services on price alone.
Once again, I have Peter Shankman to thank for some great advice about getting paid what you are worth. As Peter notes, when you set your price, remember you can come down but you can’t go up. Also determine what you think your time is worth and calculate accordingly. I know that many consultants don’t necessarily adjust their rate but they miscalculate time, so a project takes twice as long as they anticipate, which means they get paid half their normal rate. And, of course, you have to charge market rate, but you also have to charge what you think your services are worth. If you have a healthy ego, you should be able to name a fair rate and stick with it. If the client doesn’t think your services are worth the rate, then you probably shouldn’t take the contract because they won’t respect the quality of the work if you underprice it.
When working with a new client, you also have to be sure to understand the intangibles that may affect your rate. For some clients, this might be translated as the “hassle factor.” I was revisiting a thread on one of my LinkedIn Groups today where a PR professional was asking how much information to share with a client; should you share contacts, pitches, and enough detail to allow the client to micromanage the process? My response was, “Of course not. The client is paying you for your expertise.” If they want to tell you how to do your job, then the rates should go up. As one of my first clients told me (and I have lived by these words ever since), “You can pay me for process, or you can pay me for results. Process is a lot more expensive.”
And to echo one of Peter’s other points, there are times when working for less pays off. I have a couple of clients that are on a very small retainer, and I know I over service them. More importantly, they know I over service them, which means they never hesitate to offer a referral, send new business my way, or help when I need something. It’s a nice symbiotic relationship that pays off in many ways.
So is there a hard and fast rule about setting fees? I guess the golden rule is never sell yourself short.
After working in Silicon Valley for more than two decades, I have watched the booms and busts. In the good times, it seems as though the high-priced PR firms won’t touch an account for less than $10,000 or $15,000 per month, and freelance work usually commands top dollar. In tough times, the agencies cut their retainers in half and start looking for account work to just keep the lights on, and freelancers are willing to cut their rates just to keep the work flowing.