Counting the Cost

We consultants sometimes agonize over our rates. How much should we charge for which tasks? Should we stick to our rates even when we don't have other work lined up? Is it ethical to charge different rates to different companies, or different rates for different tasks?

Questions like these used to plague me. Now, after 8 or 9 years of working for myself, I'm very clear about money; money conversations with clients are no different than any other conversations. To make money conversations easy requires integrity, clarity, and flexibility.

Not that you have to talk about having integrity. When you have it, it's part of all you do and say. For me, having integrity means being fair to my client and fair to myself. When I started my business, I decided upon an hourly rate. This decision was not made lightly. I had to consider my overhead expenses, and that I spend 10-20 hours a week on tasks for which I can't get paid--email, telephone calls, invoicing, banking, records, filing, and so on. After 6 years, I realized that my rate was inadequate--I could not afford to contribute to my retirement account, nor buy health insurance, nor could I take sick days or vacation days--and so I gave myself a raise. What is interesting is that I didn't lose any clients by so doing. I did have to refer some potential clients to other consultants who charge less. All of that having been said, I will also say that I often do free work. I rarely charge for telephone calls, ditto emails, and I often throw in this or that bit of work for free, especially for clients who have given me a lot of work over the years. It is very important to me that my clients know I will give them the best work I can do. Once, a client told me she was dissatisfied with my work, and I told her to pay me what she thought it was worth, as it was more important to me that she be satisfied than it was to receive the paycheck.

My hourly rate is at the higher end for tasks involved in content development. However, I can be flexible, given my schedule and my client's budget. Sometimes I will work for a lower rate for some simple tasks, especially if I have no other work lined up. Better to work at a lower rate than not to work at all. (Usually. There are some exceptions. Once I committed to a large project for which there were no written specifications--which is where the clarity comes in. I'd worked with the company before, though not with that particular editor. As we began mapping out the tasks, it became clear that the scope of work was much greater than I had understood from our earlier conversations. I told the editor I would have to charge more money for the additional work. The editor was unable to pay more, and we decided together to nullify my contract. These weren't pleasant conversations, although certainly there was no animosity; we both simply agreed that the project was not a good fit for what the editor called my "cost structure." It was the first and last time I've done that. You can imagine that now I am very, very careful to make sure I understand what is expected from me before I sign a contract.)

If a client's budget for a project cannot accommodate my rate, I can work with my client to find a mutually acceptable compromise. We might decide that my work will only involve design, specifications, training, and/or content review. Sometimes I can vend out lower-paying work to subcontractors. I do have to make sure I keep enough of a percentage to pay for my share of the work (assigning and explaining the work, and reviewing and editing it before delivering it to my client) and to pay the taxes on the income. I can also set a per project rate for clients at companies with a lower ceiling on hourly rates. This works best for clients with whom I've already established a foundation of mutual trust. I've found that most people want to be fair. I want to be fair, too. Once we know this about each other, it's a simple matter to figure out what they can afford for me to do.

If they can't afford everything they want from me, I can give a little. I often give a discount to clients who call me for work, as they save me money when I don't have to spend time fishing for work. I often give a discount to clients who offer me a contract for a large project, one that will last for several months or more, for the same reason. I am just about to start a venture that will take me through the first week of May; although I am working at a lower rate, the peace of mind that comes from having a steady income for the next few months is worth the sacrifice.

There are two more discounts I am sometimes inspired to give: one is the likability discount, and the other is the fun discount. You cannot overestimate the importance of likability, and sometimes the attraction of a fun project is so compelling that I'm willing to take a little pay cut.

Green Grass

I like to say that self-employment has ruined me for corporate work. After having been the mistress of my domain for lo, these many years (8?), I doubt my ability to shed the pajamas, don the pantyhose, and kowtow to upper management (and there is always going to be a management Upper Than Thou, no matter how high the monkey climbs on the tree).

Like much of what I say, though, it's a joke. Sometimes I consider the prospect of employment with longing, say, when I am paying for my own doctor visits or when I get my 401k statement in the mail, or even when I feel unbearably lonely clicking away on the keyboard by myself all day.

The benefits of working for a company extend beyond the medical, dental, vision, and retirement plans. Consorting with others--especially smart, likable, cooperative others--can be very pleasant. Sharing responsibilities can ease one's mind. Being able to finish one's day and walk away from the office may be preferable to having one's office at home and knowing that there is always some task calling out to one.

And this discussion would be incomplete without an acknowledgment of the current economic landscape. Lay-offs have been legion through the holidays; unemployment rates are higher than they have been in decades. If one is fortunate enough to be offered a job when so many others are losing theirs, doesn't it seem akin to ingratitude to turn down the offer? And doesn't the offer appear all the more appealing?

It's worth thinking about, in any case, and not just in a "is the grass greener over there?" kind of way. In fact, at least two of my fellow free-lancers are thinking about going back through that gate, and if they do, I must say that I will think about it even more.

Besides, in terms of thinking about one's work, I like adopting a flexible approach. Be self-employed for a while, see how that works for you. Sure, take that job that calls out to you because you heed the siren's call of benefits/more money/steady paychecks/collaboration/more variety. Try it on, see how it feels, and if it doesn't work, the pajamas aren't going anywhere.

CORRECTION: I said that unemployment rates were higher than they had been in decades, but that was inaccurate. The unemployment rate is actually higher than it has been in 16 years.