Is it time to give yourself a raise?

Rates are an often overlooked part of the four “Ps” of marketing – Product (or service), Price, Promotion and Place (distribution). But, they are also a big part of positioning. It’s similar to buying a car. You can buy an economy deal for a paltry price, or you can buy a cushy BMW. Both will get you where you want to go. It’s simply that one will get you there in a lot more style. BMWs are well-made cars, but the price also conveys a sense of quality and style that’s worth the price.

 

In the minds of your clients and prospects, your rates and fees can position you as a low-end pair of rented hands or a valuable, high-end project partner. A lot of it has to do with your own sense of value and worth.

Let me share a story to illustrate the point. I have two clients. One is a well-known designer with a high profile practice. He never went to art school, but is innately talented, has won loads of awards and attracts clients with deep pockets. He knows the value he brings to the table and is confident about what that value is worth. He can easily command thousands of dollars for a logo and his clients are happy to pay it.

The other is an excellent designer, but also one who’s just coming out of a divorce and overcame significant health problems. He had been charging a typical or “going rate” rate for the most part. He also had some clients who were charged a lot less, mostly because he felt he wouldn't win the gig if he charged more. We needed to run the numbers to see what he really needed to charge to cover his target salary, overhead and make a profit.

When we ran those numbers, we found, based on his specific situation, he needed to up his hourly rate by roughly $20/hr. He said to me, “Nobody’s going to pay me that!”

And therein lies the rub.

What this designer had been through on the personal side was effecting her sense of value on the business side. It happens to indie pros and it happens often. Lots of business consultants say you need to separate personal stuff from business stuff. That’s true, I believe, but only to a point. Sure, you should have separate bank accounts, phone lines and such. But, the reality is that when things are stressful on the personal side, it’s going to effect your business and can easily effect your sense of worth and value.

We had just done a promo mailing for him which brought in several new prospects. I suggested we use one as an experiment by quoting the new hourly rate. He was, shall I say, a wee bit doubtful but finally willing to give it a try. Off he went to the initial client meeting.

During the meeting, he presented his work, value proposition and held his ground. The result? A new client at a higher rate ... and the client didn’t so much as bat an eye when he quoted it. The designer had just given himself a $20/hr. raise. Not too shabby.

The moral of the story is to accurately calculate your rate so you know your making money. But, you also need to develop the courage and confidence to quote that rate. Then, seek out those prospects who understand the value you bring to their project and are able and willing to pay for it. That, in turn, means being selective about the prospects you woo and doing the background research to insure they can pay your hefty fees for your brilliant work.

Finding those prospects is the tricky part. Research the designers or writers they've worked with in the past. Can you get an idea what they charge? HOW Magazine has good article about rates in several geographic areas to help you get an idea. The Graphic Artists Guild's Pricing and Ethical Guidelines is also helpful. Another option is to simply ask around. Photographers, illustrators and writers may have a good idea what others charge. Some clients' might also tip their hand.

When thinking about your value, consider this. Prospects come to us because we have knowledge and experience they don’t possess. We can do something they can’t. It’s the same reason you hire an accountant, lawyer, financial advisor, plumber or mechanic.

Beyond this, consider the return your client gets for your labors. Let’s say you design a direct response package that yields a few million dollars for your client. Yet, you charged a fee of, say, $500. That’s pretty disproportionate. Maybe it’s a logo you did for a new company. They, in turn, skyrocket to fame. Your logo design suddenly becomes very valuable as their face before the public.

The story of Carolyn Davidson, designer of the Nike logo, is often cited. The story goes that she was paid just $35 the now famous mark. Actually, in September 1983, Nike co-founder, Phil Knight, gave Davidson a golden Swoosh ring with an embedded diamond and an envelope filled with 500 shares of Nike stock. At the time, the shares were worth around $8,000 and because Davidson never cashed out the shares, today they are worth shy of a million dollars.

You’re worth more than you may think. Don’t sell yourself short.