How to cut the baggage of low-paying clients and get more high-paying ones

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When you’re first starting out as a freelancer, it’s easy to get caught in the trap of offering discounts, cutting rates, or doing work completely free.

Even as a seasoned freelancer, if you’re not careful, you might end up using pricing as a way to ‘close the deal’ with a potential client.

And after a few years of offering deals, giving out discounts, and cutting rates, many freelancers are weighed down with the baggage of clients who don’t pay well or sometimes don’t even pay at all.

In fact, two GDB Insider members Kim and Laura recently discussed it over in the facebook group (more on that discussion later).

As April has mentioned many times before, pricing can be one of the hardest parts of running a freelance design business. (PS: don’t forget, you’ve only got a few days left to enter to win a free skype session with April plus a free copy of her new ebook How Much Should I Charge?.)

How to cut out low-paying clients and focus on high-paying ones instead

So what should you do if you’ve got a jumbled mess of clients who all pay cut rates? How can you cut the baggage of low-paying clients and focus on high-paying ones instead?

Here are a few ideas. Add yours in the comments.

Just cut ‘em out.

The easiest way to get rid of the baggage that comes from years of offering cut rates to clients is to simply fire 80% of your clients.

Take an inventory of your client base. You may be surprised to find out that probably close to 80% of your income comes from just 20% of your clients. And the other 80% of your clients (the ones you should just fire) not only bring in very little income (20% if I had to guess) but also cause all sorts of headache for you.

Cutting out clients is scary. And it shouldn’t be done haphazardly. Be smart about it.

But cutting out clients that are killing your business by bogging you down is just as necessary as pruning a tree when it gets too big and bogged down to flourish and bear fruit.

Up your prices (just do it)

If you’ve been offering the same cut rate to a client that you offered them when you started working together years ago, it’s time to up your prices.

It’s a natural process in running a business. It’s not something to be feared.

In fact, most of your clients have probably raised their prices if you’ve been working together for a few years so they may not even blink when you tell them your rates have gone up.

The more you work as a freelancer, the more you’ll realize that if you can “book yourself solid” you’ll be better positioned to charge exactly what you know you’re worth. (Get the Book Yourself Solid book here.)

Change how you talk about your rates

Okay, back to that GDB Inside conversation I was telling you about earlier. Here’s what Laura does:

The biggest problem client we ever had was one that we first started working with over a decade ago. We were broke, he got a great deal and because of that we are in the “cut rate provider” category to him. I simply double his quotes, half them during negotiations, and he feels like he gets a deal. It took me a while to figure this stupid, obvious solution out!

Sometimes the easiest way to ditch the baggage is to simply change how you talk about what your client is getting charged.

As long as you’re being honest and not charging an unfair amount of money for the value you’re providing, this can be a great way to solve the underpaying client problem.

You can also switch from hourly rates to project rates as another way to change how you talk about your pricing.

How do you deal with low-paying clients?

Do you have any tips or tricks to share with the rest of us on dealing with low-paying clients? How do you handle it? How do you keep them from bogging down your business? Share in the comments.

PS: if you still haven’t heard, you can answer this and tons of other pricing questions with April Greer’s new ebook bundle, How Much Should I Charge?Plus, if you preorder before we launch on Monday, you’re entered to win a free Skype call with April herself to talk freelancing, pricing, making more money, etc. Preorder here before you miss your chance.

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About Preston D Lee

Preston is a web designer, entrepreneur, and the founder of this blog. @prestondlee

Comments

  1. Over the years I have found that I can increase my rate because I AM worth it and my customers enjoy working with people they can rely on! Most business owners don’t have a clue about graphic design or how much time you spend on their project. You have a skill they don’t, so don’t sell yourself short. Selling banners, signs, stickers, and the custom graphics to go with it. Most of the time I research the rates of other companies and then offer my clients slightly more than average, but I give them the best customer service and build a report with them. After working with them several times throughout the year you can up your prices slightly because they are hooked (in a good way!) You still increase your profit and they still get to work with a company they trust.

  2. I think the best way to “fire” low paying or bad pay clients is to let them “fire” themselves. For low pay, raise your rates to what your other, similar clients pay. If they stick around, everybody wins. You don’t need to “fire” anybody. If they don’t like your rates they will go elsewhere and you don’t have to “fire” them, which is pretty unsavory for both parties involved. And, they will look at it, as you being an a$$. For bad pay/slow pay clients that you’d just as soon not want, I recommend steadily raising your rates to cover the hassles. And don’t forget to contractually cover yourself for the handling charges for managing their account. Give them the full charges treatment until they go away of their own volition. The big takeaway here is that it is always better to let THEM decide who they want to deal with, not you.

  3. I completely agree with the ideas expressed in this article. Designers should value themselves and their abilities to a higher standard. Especially when we absorb more in training and skills to provide the best service for our clients.

    Over the years, working with low paying clients ( …and this is totally my fault ), I set the bar too low. In the long run, these same clients expected the same rates every time they used my services. But after years of abuse accepting lower rates, I decided to raise them. This tactic completely relieved me of the practice of selling myself short and removed these clients from my radar.

    In closing, let me say that it is sad to lose clients that have been in your corner from the very beginning. But it is liberating to be free from the shackles of “managed care” ( …Lol. Just my term for all the shenanigans ). I honestly hope some of my past clients will seek my services again when there mind set and/or financial restrictions change. Ultimately they know I have always had there best interest at heart and in design.

  4. I definitely agree that the most problematic client is the oldest one. No matter how many years ago they bought your service, they still want the same rates. Just be firm and raise your price and bring it to the level which you will be comfortable with. It looks scary at first but most of them didn’t go to someone else as they are happy working with you. If they choose someone else, just turn the page and move one! Look for the new opportunities! As there are many!

    Ezgi

  5. KNorlock says:

    I acquired a client as a referral from a friend who is also a small business owner. The client said she needed her website updated to help her promote her services, which have grown since the inception of her website. She has a WordPress site, so I did not have to set up hosting, theme customization, SEO or any of the usual work associated with getting a client online. She (seemed as though) she were ready to go and that all she needed were a few updates. SIX MONTHS later the site is still not finished. I finally put a deadline on the project, which is July 23 – but we started the site February 20. I’ve basically been working for free since all of the hours that I quoted for the job were exhausted months ago. It’s extremely irritating and I told her to find a new designer, then decided (since she gave me a referral) that I would finish up the site for her anyway. I have learned valuable lessons from this experience. Because I thought it was a small project, I did not put together a contract or set a deadline. From this point forward, every new client I work with will sign a contract and agree to a deadline. I will further bring a list of fees and services to every meeting, and then discuss what the client needs and finalize an estimate at the end of the meeting. I will send a follow up email with notes from the meeting and points that we have discussed. I will mention that the quote I have offered is just an estimate and that if the scope of the project changes, the cost will change as well. If I determine an hourly rate is the best way to go, I will keep a timesheet of my hours worked and submit it with the invoices to ensure all business communications are clear and transparent. This experience has taught me to tighten up my business practices, no matter who the person is, or how small the job appears to be.

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