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Keep fees flexible to maximize your business

Keep fees flexible to maximize your business

Teacher: David Perlstein

Free agents always ask, "How much should I charge?" Aside from the obvious, "As much as you can," I answer that fees or hourly rates depend on your industry, experience and expertise. But just as important as what you charge is how you charge.

Navigate the marketplace

Every fee (or hourly rate — I'll use "fee" only from now on for brevity's sake) is negotiable. In the souks (marketplaces) of the Middle East and North Africa, haggling is a way of life. It's the same in North American business.

Even in the same company, two clients might pay different fees for exactly the same project. They'll measure value by their available budget, the project's urgency, a perception of your abilities and even whether they had a good breakfast.

Over time, you'll find that similar jobs earn fees within a given range. For example, I usually estimate writing a direct mail package at between $2,500 and $3,500. Sometimes, I charge more for a difficult project or less for an easy one.

You should maintain flexibility because:

  • Insisting on a single fee or range that's perceived as too high can overprice you out of the market.
  • Lowballing your fees risks underpricing yourself — big clients see you as fit only for small, cheap jobs and not qualified for the big, lucrative projects.

Take into account the size of the company and its budget

Social service agencies often establish fees on a sliding scale based on ability to pay. Smart free agents do the same. Create a three-tiered grid with a sliding scale for large, middle-size, and small clients so you always get paid fairly.

  • Tier I: My largest corporate and agency clients pay the highest fees.
  • Tier II: Mid-size corporations and agencies pay a bit less unless they're working with budgets at the Tier I level — and many do.
  • Tier III: Small agencies and clients. They generally pay my lowest fees. It's what they can afford. But I never drop fees in this tier below levels that reflect my worth or become unprofitable.

Free agents also ask, "Is it fair to charge different fees to different clients for the same type of job?" It is! Start your grid from the top down. I ask Tier I clients to pay the full worth of a job. I haven't inflated my price. Gouging clients is both unethical and bad business. I reduce my fees in Tiers II and III because other clients have more limited resources. I'm giving something up in return for that particular job and the opportunity to establish or maintain a long-term relationship. And relationships build businesses.

Put it in writing and take control

Put your fee grid in writing and keep it updated. Maintain it in privacy, then use it as a reference for your estimates. You can always raise or lower an estimate based on conversation with a client, but you'll appear consistent. And after being asked "How much?" you won't be caught in an awkward pause that makes clients wonder if you do want to gouge them or simply aren't in control of your business side.

Finally, what if a client offers a fee that's higher than the one in your grid? Accept it gracefully and without comment, then use it as the baseline in your relationship.

Athletes and entertainers have their own agents to represent them, but you have to do it all. Grid your fees and take greater control of your income.

About the teacher:
David Perlstein has been a freelance advertising copywriter in San Francisco since 1979. He is the author of SOLO SUCCESS: 100 Tips for Becoming a $100,000-a-Year Freelancer, Crown Publishers, New York.

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