Designer/Developer Not Getting Paid What You're Worth - Fixable?

Over the years, I've delt with a lot of clients, as I operate as a registered business providing graphic, media, and web services. My clients vary quite a bit so it's hard to pinpoint a certain kind of client. But the problem I would like to conquer is the way clients respond to fees.

I mean, I by no means rip anyone off. As a matter of fact, I am the one getting ripped off. The most common scenario is this...

A client needs an entire website. So I go about it and estimate it. Now, I have my rates set in quickbooks (common hourly rates) so I just go through and add up estimated hours... but then at the end, the price will be high, so I typically will start reducing my estimated hours just to bring the cost down. I do this because through all the clients, I've learned that they just don't want to pay... and because this is my primary source of income (which is hard), I can't afford to give them a high price with the possibility of losing the potential client over what they think is a high price.

Now, everyone that I've built sites and applications for... love them! I do great work because if it's going to have my name on it... it better be my best. So I provide a quality service, but clients still don't want to pay what I'm worth.

How can this be changed?

I have seen other web companies charge three times what I charge... and for complete junk compared to my work. How the hell do they do it?

I think part of the problem is that the clients don't know everything involved... and don't know what it takes to build php/xml/mysql sites and applications... so they see an estimate of 2400 for a huge site, and they're always hesitant. And I never charge the amount upfront... just 50% deposit. And it's not like I just tell them a price. I provide a Proposal breaking everything down, along with an estimate... all in a professional business manner using my business documents.

It's always only after they see the final product that they're jumping in joy, and want to hug me... but by then, I can't do anything else.

I'm open to hearing some ideas if you got them.

Thanks,
idotcom

 

I faced the same problems when I tried to go freelance by myself. My situation was made more complicated by living near Los Angeles, where anyone with a copy of Photoshop calls themselves a designer. I didn't have the kind of rep or experience to get big, well-paying clients, and the only clients I could get were the ones who didn't the see the value of what they wanted me to do. I was charging 25-50% what others charged, but then 10 others were charging half of what I charged, so I was in a bad position.

Which I think is what you'll need to sell to succeed. You're not selling them a website, you're selling them a way to get in touch with clients. You're not selling them an inventory tracking program, you're selling them a means to keep their records straight and be more efficient. Unfortunately I didn't learn this until much later after I had given up on freelancing, and I think that's the key to getting paid what you're worth. Plus, there's the golden rule which clients conveniently forget when they're not the ones selling: "you get what you pay for".

Also unfortunately, I think you're stuck. The only way I've seen that works is to get new clients as your current ones will bitch if you raise your rates on them, especially since they've previously been charged a lower rate.

Once you get new clients who are paying you what you're worth, you can then renegotiate with your old clients, explaining to them that since you've now got more clients, you have to go with the highest bidder. Some people think that's cruel or almost like extortion, but business, after all, is about making profit.

 

I haven't seen one of your proposals so it's hard to comment specifically.

Keep your rates at what you think you're worth. Have several references you can point to to justify your rates.

Make sure your proposal clearly shows what they're getting for the price. Pictures help here.

When clients complain about the price, remind them they can go with buddy down the street but they'll get what they pay for. Personally speaking, my rates are high for a reason. I'm through, professional, and am usually the guy who is called in when the previous guys can't get things working.

You don't have to take every job. It also helps to know your limits. For example I do some tech work but will not touch printers, complex hardware repair or pull cables. I happily recomend companies here in town that do those things well. In those cases we all come out a winner.

 

Thanks guys for you input.

Sketch...

I know what you mean by using benefits instead of tech talk. I always consult with potential clients before hand. I introduce available technology, systems, processes, etc... so, essentially, I end up being their consultant and developer. But... even with my no lose plans and proposals... they're still hard to sell on price. I mean, I have many clients who have returned for another site or something, and the second time around, they tell me whatever the price... I'll take it. So returns pay... and happily. It's the dang new ones that cut things short.


Tandac...

I too end up being the one they come to after they've been burned. As a matter of fact, I'd say 40% have been burned before coming to me. That, I'm sure has a lot to do with it... but, dang... I have to sell myself short just to get the sale. And like I said, this is my primary work, so I can't afford to lose a potential client over the extra 400 that should have been in the deal.

It's hard... I don't have a day job. I don't want a day job. I enjoy running my own business and luckily, I make enough to pay the mortgage and bills. But I'm losing too much damn money trying to make the price right for them.

If some of these other guys or companies can get away with selling a crap site for twice my pro site, then they're doing something in their sales process. Maybe it's lying to the clients... I don't know... I am too damn honest to lie.

My proposals are very thorough. Usually several pages breaking everything down. Then my quickbooks estimate lists the hours and price for each different service. I also do provide references. I don't advertise either... all of my clients are from referrals or me finding their needs.

There must be a way to get my worth. I'm sure lot's of people like me have the same problem.


Thanks again you guys for your input.

 

The main problem is, websites do often appear very expensive to the average person compared to other web services.

If you consider that these clients are probably paying $100 a year for their shared hosting package, $10 a year domain reg and $36 a year on their merchant account, this makes your $2400 appear a massive investment, unless they practically KNOW they can make that back off the website within a couple of months (most can't).

Look at paid forum posting, you're very lucky to earn minimum wage doing this service, the fact is that as with web design it's a job you can do in your own time, in the luxury of your own home.

Remember, a service is only worth what somebody is prepared to pay for it.

 

My only advice is ..... Knock on more doors.

This is a phase where most start-ups have to face especially if you are a do-it-all by self. You need to bite your teeth through this hurdle by spending additional hours to do marketing and promoting your services to your new clients while you keep working on your current clients for the income. Once you get a new client that is willing to pay you the rate that you think you deserved, this new door will lead to more opportunities gradually, of course, you have to keep up with the quality and continuously pour in enough effort. Gradually, you can wave a good-bye to your low paying clients and emerged up a new level.

I love people who put in full sincerity and commitment in what they are doing. You are not burnt and neither you are losing out, you are building experience and a good set of portfolio for a better future. All the effort you put in the past and now will benefit when you cross this hurdle. All the best!

 

The best advice I can give you is: "Raise your rates!"

It might sound crazy based on your current predicament but you will get better qualified people and your clients will actually respect you more. It sounds like you are doing a lot of work for a little money - that's a losing proposition.

Raise your rates / believe in your work / stick to them..

 

I heard that... it is true... for some strange reason high price adds value.

 

Heres my opinion. First focus on filling up as much of your time that you are willing to spend working, with projects. Book out all your availability. Then as you have more demand than you can supply for, start raising prices. Do this slowly until you have weeded out the cheap clients and are only working with higher paying ones.

 

Also - "fire" at least 10% and up to 25% of your worst clients per year (if you have ongoing service contracts/monthly arrangements). It sounds crazy but its an essential practice to make sure you are working with the right clients...

 

Think from your client's position..
Instead of talking about pricing to our website client, I will help them to analysis if the website can really help them to either "save" or "earn" money. Information site, they might save money by cutting their ad and printing cost. Or e-commerce site by doing a sales forecast. With that $$ in mind, we both will be at the same page. It works for me really good...
Just my 2 cents..