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I know someone who is exceptional at what she does, and provided her service for a friend.
Her friend asked, “How much do you charge?” And she was so uncomfortable and squeamish about the question that she just said, “Oh it’s fine!” and charged nothing.
No-thing.
Now, we may be judging my friend, but there is not an inch of my house without glass because I, too, have left money on the table during these conversations.
They’re intimidating. It’s hard to name a figure, out loud, to a person’s face. I have often thought about why it’s so hard for us to name a figure vs. say, a retailer naming a price for a pair of jeans.
Probably because the retailer is likely removed from the jeans. She didn’t make them or price them - she’s just reporting the news.
When we name our price, though, we are the product. It feels scary and it feels vulnerable to say, “I am worth $X,” to someone’s face.
But, like everything that makes you feel squeamish and sweaty here, it’s something we gotta do. We want the money, so we have to charge. And if we have to charge, we have to name a price.
This article is less about determining specifically what you should charge- I’ve talked about that before and I’ll link those articles below, if that’s what you’re looking for.
The purpose of this article is preparing yourself to get the most value out of any pricing conversation. It is based on two things:
What I learned in my MBA negotiations class (2%)
What I’ve learned from answering this, “What do you charge?” question hundreds of times (98%)
Let’s begin.
One thing you should know before you enter any pricing conversation
You have to know something called your reservation price. (This is part of the 2% I learned in business school! The other 1% will come later)
Your reservation price is the lowest price you will accept to take on a client. The answer is not $0.
I have a ballpark in mind for my potential clients on an hourly rate and a project rate. It does not mean I won’t take a client who pays less, and sometimes I do.
But in my mind, I have a number that I need to clear to make the work worth it for me.
Have an idea of what that number is on an hourly basis, and what that number is on a project basis.
If you need help thinking about project vs. hourly, and naming your rates, I talk about that below.
These even have calculators to help you!
OK, so at this point, I want you to have your reservation price in your head. AKA the lowest possible rate you will do the job.
You got it? If so, let’s move on.
OK actually, there’s one more thing you should know before you enter any pricing conversation.
You need to know who you’re talking to, and how much they expect to pay.
I chose my words carefully there: expect to pay.
No one expects you do this for free. They have a certain expectation for how much it will cost.
You won’t get a sale if you’re too high above that number (they can’t afford you), but you also may not get hired if you’re too far below that number.
If that sounds weird, think about this:
If you’re below what they expect to pay, are you any good? Should they be going with someone more expert?
When I was just starting out, I had the opportunity to pitch a big client. The biggest one we’d ever done. I knew what I would typically charge for a project like this, and I knew, frankly, that I’d be happy with that number.
And then, I upped the price by like $10,000.
Not because I wanted more money or I was being greedy. It was because I knew my price was going to be much lower than what my client expected to pay, and I didn’t want to have negative perceptions around me, my team, or its ability to do the work to their standard.
So, have an idea of who you’re talking to. Know what they expect to pay.
Now, let’s get to the question. They ask, “What do you charge?”
This question is actually a gift, because it allows you to anchor everyone’s expectations. This is the second part of that 2% I learned in business school:
Whoever names a price first takes the anchoring power.
If I say it costs $100, we’re all anchored to $100 as a starting point for discussion.
If the client says they want to pay $50, we’re anchored to $50 as a starting point for the discussion.
See what I mean? You want to be the one to name the price, assuming you understand your reservation price and what your potential client expects to pay.
So now when someone asks you this question, you should feel excited and happy to answer it - assuming you are prepared.
When you should NOT answer the “How much do you charge?” question outright:
You should not take advantage of the anchor opportunity if you do not understand your market.
If you do not know what the client expects to pay, or what similar providers are charging for a similar service, you should push the question back to them about their budget.
This happened to me once. I was pricing a project in an industry I knew nothing about, so I had no sense for a budget.
When the client DID tell me their budget, it was actually 1.5X what I expected them to say. I was glad I didn’t anchor them. I did not leave money on the table, and I did not give a price to them that would have signaled I was an amateur.
What if they cringe and say, “Oh, that’s expensive!”
Well, well, well. Good for you.
Be careful not to misinterpret this comment. This does NOT necessarily mean you are overcharging. (I often charge $250/hour for my work. This is a lot to some people. It’s a bargain to others.)
It does mean that you are more than what the client expected to pay. Your next step: figure out what that number is.
Is it below your reservation price? Refer them on.
If it’s within your range, work out a scope that you feel comfortable with. You may take things off of your original scope to make work within their budget, or adjust your expected costs to fit their needs.
Reminder that a lot of these conversations are made easier when you have the tools to think about your numbers on the fly. I have made a project calculator for my paid subscribers that helps them do just that!
Whewwwie. We did it.
At the moment, I am full for the year. But there are still a couple of ways you can work with me:
🎯 POSITION OR DIE 1:1: Positioning helps pricing. We set your foundation in 90 minutes. Keep in mind that Founding Subscribers to this Substack get a Position or Die Session that as part of their year-long subscription for a $50 discount. BOOK HERE. I keep spots available on Fridays.
👩💼 BECOME A PAID SUBSCRIBER: I give you all my resources and templates and once-a-month Office Hours for anyone who wants to come. Plus you get three ideas weekly for content that I think of- not AI- based on what I know works for clients.