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.