Own Your Pricing

As some of you know we moved to San Antonio back in December. We’re finally settled into our house and are looking to have it painted. We called a number of painters to come give us estimates and they are starting to roll in.

Today, one of the contractors called me and gave me his estimate, and as soon as he said the price, he started defending it to me.

“You know, there are a lot of windows to cut around, and I have to tarp everything off…” and he went on. I know these things need to be done, and any painter we hired would have to do these things.

I know what these types of projects generally cost, too, as I used to do construction and contracting work.

I also know that not everyone knows what things cost when they go out looking to find contractors, it doesn’t matter if it’s home improvements, web design, photography, video editing, whatever (those are all things I have done professionally, and on the side, which will make great examples for this post) and sometimes they get sticker-shock.

When Ali and I were first starting out money was really tight so I would pick up as many side jobs as I could. They were mostly small graphic design and small website development stuff. At that point I still considered myself a beginner, but having set up multiple sites for myself and others, I definitely knew enough for low budget work.

And it was low budget work. I was charging $400-600 for setting up a simple WordPress site with minor edits to fit the client’s branding and colors. My typical clients were friends of friends, usually housewives with a side business who  needed a cheap web presence quickly.

We needed the work, and I thought if my prices were too high, they would pass and I would lose that potential income. Or, if I shot high and they tried to haggle the price down, they would do this for the length of the relationship and I would lose all power there, which I did not want.

So, I set my prices low, and went on my way. As our monetary situation started to improve slowly (very slowly) I would raise my prices. They were still low, but it was almost a 50% increase. I still ran into people trying to haggle the price down, and I worked with them, because, well, I never learned my lesson, and we still needed the money.

It was around this time when the pricing triangle (or project triangle) was introduced to me by my boss at the time. Fast, good, cheap. That’s what clients want, but it’s not feasible.

So while the client always wants faster, better, cheaper, you can only give them two.

If you want something fast and good, it will not be cheap. If you want something cheap and fast it will not be good, and so on.

So which one suffers?

Like all people who take pride in their work, I try to always deliver a good product. And since I was doing these projects fast and cheap, as well as good, I was losing money on them (which, when you have no overhead or supply costs like what I had, it’s all profit that you are losing).

The answer is, none of them should suffer. When you are bidding on a project, be honest with the cost. How much do you want to make on it? If you want to make $10,000, then that’s what you bid on the project. And that’s it.

In March of 2011, Mike Monteiro of Mule Design did a fantastic talk for San Francisco Creative Mornings called “Fuck You. Pay Me.” and if you are in business for yourself you really owe it to yourself to watch it. Given the title, there is some swearing, so be careful if you are watching at work or around little ones. If you’ve already seen it, watch it again.

Mike Monteiro also co-hosts a podcast called “Let’s Make Mistakes” that covers a lot of topics that freelancers encounter. It’s geared towards designers because that is what he does, however the lessons can be applied to almost any field.

Around 25:15 into the talk, Mike has a great line about money and bidding on projects. “Be specific and confident about money.” Own your pricing. It was after watching this talk that I learned that lesson. You want a website developed with branding design? Well, that costs this much money. Half is due upfront, the rest is due after you have approved all designs, collateral, copy, edits, whatever and then we begin the transfer of property to you or your servers.

We’ve been burned a few times in the past with a client telling us that they paid us enough and weren’t going to use our designs or marketing plans. We were stuck because we didn’t have a good contract. We have used those lessons, and every other horror story we have heard to protect ourselves as best as possible.

As I stated at the beginning of this post, as soon as the painter gave me the estimate he immediately started to defend it. And after that, no matter what he said, I wasn’t going with him as a contractor. He told me in that moment that either he was overcharging me or that he hasn’t been in business for himself for very long and didn’t know how to speak to customers. That’s not who I want working in my home.

This particular contractor’s estimate was over double of the other contractors, however, I knew I wasn’t going to hire him from the minute I met him. He showed up for the estimate wearing this hat to meet with me (not this hat exactly, it was camo, not black). Classy.

Ali and I have learned our lessons. We don’t do much side work any more, as we are more comfortable we don’t need the extra income. However, when we do take on side work, we are sure to bid out for the price we want to make, which is well above the $400-600 projects we bid out 5 or 6 years ago.

Be confidant in your abilities and your price. People will pay it.