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Whenever someone asks me how much they should charge clients, I give a very definite, "It depends!"

Most people would think that it's a very straightforward question. Well, yes and no, depending on what you are actually asking. In my experience, when people ask this question, it usually has some strong assumptions embedded in it.

Basically, it unconsciously assumes that the service you are offering is a generic commodity. That's why the question is a quantitative one - "how much is the normal price / fee for this much service." It assumes that there is a consistent correlation - x amount of service = y amount of money. The approach almost sounds like asking how much to charge per distance for a delivery service.

But if you ask me, how much to charge depends on how much value you deliver in your work.

Do you see the work's value or price first?

You know the joke about the guy who called a repairman about a funny sound in his washing machine? The repairman tinkered around for 5 minutes and finally took out a hammer and banged a few times on the washing machine. And it worked! The sound was gone. The repairman then handed the guy a bill for 100 bucks! Shocked, the guy asked why it was so much for such simple work.

The repairman coolly answered, "5 bucks labour charges to hammer your washing machine, 95 bucks for knowing exactly where to hammer!"

It's a joke, but it makes a great point - the repairman's fee wasn't based on the quantity of his work, but the quality of it.

So when it comes to how much to charge, the real questions that people should be asking are:

  • How much value am I bringing to the table?

  • How much value will I inject to the project?

  • How much value will the client bring to me?

  • How much value will I get out of the project?

I think these are more important questions to ask because value and price do not mean the same thing.

“Value is not determined by those who set the price. Value is determined by those who choose to pay it.” ―Simon Sinek

Many people equate price to value. But in actual fact, when the conversation is focused on price, it's all about transaction. It's about maximising returns. The very concept of maximising returns also implies minimising output. In value terms, it is about getting the best value for the least value given. This applies to both parties. The service provider is thinking about the maximum work they are willing to do for a minimum dollar amount. The client is thinking about the maximum work they can get for the miminum amount. This is alright and there's absolutely nothing wrong to work like this. It's a perfectly a valid way to do business.

What happens when someone else comes along and offers a better price for the same work? That's how price wars start, and price wars never end well. The only way to go is down. And with global freelancer platforms levelling the playing field, you'd be competing with people who are willing to work for 5 bucks a project!

Values-focused thinking

When we shift the paradigm and focus on value, a whole new world of possibilities and opportunities emerge. To me, focusing on value is about contribution, cooperation and connection. It's not about taking money from clients and fulfilling a function. It's about genuinely understanding the client's problems, offering real solutions, and being committed to achieving their goals.

Value-focused thinking enables me to think of better ideas and do better work. That's because I'm not held back by price concerns. My focus is not on quantitative measures of the work. I'm focused on finding qualitative solutions for my client's issues. Value-focused thinking also helps me to find value in the work which goes beyond price, such as personal satisfaction, future opportunity, experience, idea validation, and others.

Of course, price has to be factored into the business relationship. But value-focused thinking has benefits in determining price as well. It helps me build trust and strong relationships with clients. That helps me develop a strong reputation among my network. And that often leads to more work and better opportunities down the road.

In short, focusing on price is always a short term tactic. Every gig you score will always a one-deal win, because you will have to compete on price again for the next job.

Instead, focus on value - giving it to others and developing it in yourself. You will be setting yourself up to win in the long term because when people see your value, they will want what you have to offer and try their best to afford your fees.

And that's the best position to be in!


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