When you begin your freelance writing career, it can be difficult to set yourself apart and build your book of clients.
Your desire to get started and earn a steady stream of income can be overwhelming, which leads many freelancers to fall into a costly trap: Competing for business based on price.
It’s true that some of the most powerful businesses in the world make their bread and butter by competing on price. Think of Walmart, or Amazon, or McDonald’s. But these are major corporations that can turn pennies into billions of dollars based on sales volume.
As a single freelancer, there are only so many hours in the day you can work.
You don’t have the luxury of turning small profits on a huge volume of jobs. You want large profits on a low volume of projects.
You need to build a business that competes on quality instead of price.
But why is it so dangerous to focus on a low price? After all, offering quality work at a low rate can make you extremely popular with clients, the same way that quality cars sold at a low price will draw in customers.
Here are four pricing issues to watch out for as you build your freelance writing career.
1. You can’t always be “on”
The biggest reason why don’t want to compete on price is simple arithmetic.
If you work 40 hours at $20 an hour, you earn $800. If you work for $50 an hour, you only have to 16 hours to earn the same amount.
Sometimes freelancers don’t realize how consuming your work can become. At a typical office job, you leave your work at the office and have a clear delineation between work and home.
For freelancers, that line blurs. Can’t sleep at night? May as well work on that project. Need to run to the grocery store in the middle of the day? You’ll just catch up on work this evening.
The result is an “always on” mentality for freelancers where you’re never off the clock. But if you charge more, then you don’t have to work the traditional 40-hour (or 50-60 hour) workweek.
Instead, you can have the freedom of lifestyle that draws many people to freelancing in the first place.
2. You are worth more than you think
It’s not just a self-esteem booster: You are worth more than you think.
Consider a company that wants a copywriter to write a new ebook. It has two routes to take. It can either make a new permanent hire, or can hire a freelancer for the project.
A new hire comes with the costs of a salary, health insurance, a 401(k), Social Security, paid vacation, office space, a computer, training and even a Christmas gift at the company party.
Freelancers come with none of the extra baggage. So when you’re bidding on a job, think of those expenses to the company. After all, you have to pay for those things. You should be bidding an amount that covers all your expenses, an extra charge for the convenience of the company not having to bring on a full-time employee.
Don’t be shy about your prices. Remember, people are willing to pay for what they value.
3. You’ll never win the low-price game
The ugly truth about competing on price is that you will never, ever win. There will always be someone willing to do the job for cheaper than you.
A person pitching in New York can be underbid by someone in Kansas. Someone in Kansas can be underbid by someone overseas. And someone overseas can be underbid by a person willing to do the project for free because they want the experience.
That’s not to say you won’t ever get a job. You will. In fact, you’ll find plenty of work. But over time, you’ll find yourself in a spiral of continually having to lower the price you’re willing to take if you compete on this end of the spectrum. Instead, you want to set your prices based on the value you bring to the job.
4. Your cheap clients won’t be worth your time
We’ve all had difficult clients: Those people who don’t clearly articulate what they want, but know what you produced isn’t it.
There’s no evidence that clients who pay less are more trouble than those that pay higher rates. But it’s simple logic that those clients paying less are worth much less of your time when they do cause issues.
Any bid you make on a project should be done so with the knowledge that you will have to go back and tweak things. The catch is that if you compete on price, those revisions eat into your already thin margins.
It’s easy to see that getting materials just right for a client and ensuring they are happy is no longer worth your time. You want to build a client base where no matter how much you have to adjust, tweak or revise your work, it will still be wildly profitable for you to work with them.
Have you learned similar lessons trying to compete on price? How did you adjust your business model?