When Should You Compromise?

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Recently I was presented with a question about compromising on rates. It’s such an important topic in this economy. We’re all tempted to offer the world for nothing just to keep things rolling. See my response below.

QUESTION: When and if do you compromise on your rate? Say someone refers you to a prospective client. You discuss the project with the client, and give an estimate of $2,000. Client comes back and says she expected your rate would be lower and cited the referrer’s rate as $50/hour, which you know for a fact is actually $100/hour. She says budget is $500-$800 and wants to know what you can do for that amount. Do you stick to your guns and say this is my rate, sorry I can’t help? Do you offer a slightly discounted introductory rate for less work? Do you refer her to someone else who’s cheaper than you?

MY RESPONSE: Chasing clients who don’t value your worth is never worth your time. If you have been in the business long enough, then you are in tune with what your time is worth. I don’t usually give in when someone low-balls me, but when I do, I always regret it.

Truth is, in this market, you can always find someone who will do a cheaper job. Know your worth, and stick to it.

On the other hand, it’s helpful to have a frame of reference for your rates so you can quote them with confidence. I use this site as a guide all the time, keeping in mind that I have 20+ years of experience, so I tend toward the higher end of the range. http://www.the-efa.org/res/rates.php

I also recently attended a business seminar where we talked about the importance of tracking profit margins and making sure that the work we do is actually profitable. If we don’t keep a close watch on the profitability of our time/services, our businesses won’t survive the long haul.

I’m having a particularly tough time right now with a client who used to contract with a friend of mine for communications work. My friend was able to charge very low rates for this client, and now the burden is on me to educate the client about the “real” costs of what they want me to do. It’s been a struggle.

Against my better judgment, I even let the executive director talk me into lowering my cost estimate for the conference program. According to her it would be “simple” and “not take much time at all,” so I adjusted my rate, trusting that she knew the project well (although she had never actually produced it). Sure as the world, when I completed the project, my original projected time and cost estimate had been right on the nose.

Lesson learned.

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2 Responses to “When Should You Compromise?”

  1. Eugene Says:

    Great commentary, Trae.

  2. traeturner Says:

    Thanks, Eugene!

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