“The client is really happy with you,” said my friend. “But they say you don’t charge enough. You need to charge more, James.”
This was a first.
I was doing a bit of freelance work (I’m a marketer) and things had been going well. The client was getting results and everyone was happy.
I was also happy with my rate, which worked out to be about $60 per hour. I felt this was a fair trade for my Saturday time.
I also had a full-time job. And so, I didn’t want to work longer hours.
The next time I met with the client, they doubled my retainer. And the next freelance gig I take, I’m charging $200 per hour, which is not far from what I make now.
I also learned a valuable lesson, one that few humanities majors really know, which I’ll share in a second.
Grinding, grinding, grinding
Poor people (and people like me who tend to think like poor people) measure their value by time. And once this equation goes higher than they expect (such as making $200 for a measly hour of work), they get a big uncomfortable.
Poor people and the middle class are factory workers. We say, “I write stuff. And you can hire my brain for $25 per hour”).
We grind our way to riches. More money requires more time.
Value and time are not the same thing
Rich people simply measure value. I was producing a lot of value for my client. And so, they were likely worried that I was being underpaid for my time and they would lose me and the value I created them.
As such, they were very willing to pay more.
If you want to make more per hour, you need to stop renting out yourself like a helpful robot. This produces a powerful change. Instead of focusing on time delivered, you are focused on outcomes.
For example, who really cares about the difference below?
I can clean your house …$100
I clean houses. $25 per hour. (takes me on average about 4 hours)
In fact, as I’ve often yelled on about, people actually prefer the first option. The second option has more risk for the buyer (will it actually take 16 hours?) and moves from the benefit (clean house) to the cost of the worker.
How I scammed rich parents
Want to know a secret? Some people are really rich!
Like WAY richer than you could imagine. I used to mow lawns for rich people. Typically, they’d have a 10 million dollar ocean home. And they’d only live there three months a year. I know that because they’d pay us to come all winter to make sure the house was alright and it appeared like someone was home. They’d have some other amazing home elsewhere.
When I was in grad school, I needed to make extra money. So I tutored. On the university job board, I saw that most people charged between $10 and $20 for tutoring.
As a joke, I put my rate as $30 per hour. It was way higher than anyone else.
I didn’t expect anyone to call. I thought $30 per hour was a ton!
I actually booked three rich kids right away. The parents didn’t care. They just thought I’d be better as I charged more.
The lesson I learned was two-fold.
One, higher rates often lead to better clients.
Two, money is relative.
$30 bucks for one hour of work seemed like a lot to me. But for a parent who makes $200,000 per year, it’s nothing and good peace of mind that they have a good teacher for their child.
This is true in business as well. I might think that $200 per hour is a lot. But, for example, a client I worked with a few years ago was making 100K per month in his business. If you can provide value, you’ll be worth the expense.
From rich parents to rich clients
One of the big lessons I’ve learned in my career is that the industry you choose really determines how much you can charge.
If you want to make good money, you need to go into profitable industries. Could I charge a non-profit a large retainer? Maybe.
But industries that make a lot of money (like financial services, healthcare, technology), these have much bigger budgets.
I’ve never made any real money from small business clients. So the type of industry you are in is critical to how much you can charge.
It’s time to get practical
So what does this mean for you?
The big lesson is that once you start focusing on value delivered—rather than time—you can charge a lot more. Few customers or clients care about how long tasks take. If so, you are dealing with a cheap client and need to find better ones.
There are three things you need to do:
- Your degree doesn’t matter. I’ve never told any freelance client what degree I have. They could care less.
- Focus on outcomes, not time. People don’t care how long it takes you. They care about the outcomes of what their money buys. Stop being a factory worker. Instead of saying, “I charge $50 per hour for editing,” say “it’s $750 for the project.” Then work as fast as you can! The faster and more efficient you work, the more you make. The client gets the outcome. You get more money.
- Skills that create money, make more money. My skill-set is B2B lead generation. My efforts produce more revenue for companies and so I can charge more. The more abstract your skills are (such as “I teach collaboration workshops and music therapy”) often it’s harder to make money.
Finally, create more value than expected
When my freelance client said I didn’t charge enough, this was good. It meant they were getting more value than they expected.
Some companies will raise their rates without producing higher results. This leads to an inflated sense of worth which is not the same thing I’m talking about.
Deliver more than people expect.
Once you do that, you can stop charging per hour and just charge what both parties see as a good deal.
BUT JAMES! How do I actually do this?
This sounds fine but I’m sure many of you would be happy with $20 per hour. You need to make rent!
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