5

I can see that almost all, if not all, top freelancing service allow you to specify minimum hourly wage.

But how really smart is to do that? Should not such price be exclusive and only for special customers or projects?

The reason for this questions is that the client saw my minimum hourly wage and was offended by hourly price I offered to him. I explained to him when and how I give minimum hourly price, but I think I lost this client for good. Somehow I don't think this client is alone, but may be the first one who told me he's offended.

EDIT

I am in programming business.

So 2 things are bound to my question.

  1. I have to write estimations. And it's not just a few lines with sum, but listing features, estimating best, worst and probable case, adding risk formula. And all has to be nicely formatted since that's the way I do. Anyway it's taking pretty much time to create it and in the end a client complaints about unfair pricing.

  2. Clients usually look at the price at the end, when I calculate all the costs. Then they ask me "why this hourly rate when I see that your minimum is XY, why can't I get minimum, etc". Too many nasty question before the real work started. And that is never good for relations.

7

There are many good ideas listed in answers above, and I agree with most of them.
However, to my mind, the main thing has not been spoken out:

The minimum wage means minimal (or zero) profit margin, hence, it is associated with maximal risk I can afford. A single tiny step down, and it won't worth even starting. Hence, I have to be absolutely certain on everything else in oder to agree working on minimum hourly rate.

Here are some considerations I should take before working on my minimal rate:

  • Work load. There are lots side activities associated with every job. A brief chat over an instant messenger takes several minutes and it is not usually billed. I'm fine if I have 6 billed hours per day and spend 30 minutes non-billable extra. However, the same 30 minutes of chatting in addition to 30 billable minutes becomes a huge overhead, making my rate to raise.
    In order to convince me working at minimal rate, you should load me with 4+ billable hours a day.
  • Late payments. We are all people, and delayed payments happen. However, working at minimal rate leaves me without financial buffer.
    You must be my old, reliable customer in order to let me work on minimal rate.
  • Dispute. Misunderstanding happens. Even when you have the most meticulous approach (like I do), sometimes we end up with a dispute. A client thinks I've done work that worth $100, I think I've done work that worth $120. Everyone makes a step back, we mutually agree on $110, everyone's happy.
    Familiar? Forget it. Working at the lowest possible rate, you can't afford to make a step back.
    I must be absolutely certain there will be no dispute with the client when I'm working on my lowest rate. Am I sure there won't be?
  • Priority. Unless this job takes full 8 hours of my day, you may assume I'm doing several projects at time. Hence, I prioritize what to do in first order. The lowest-rate work will likely get the lowest priority among the other activities of mine. No, I will not fail the formal agreement, but one may expect some difference in quality of what I have done.

Obviously, while discussing it with the client, you should not copy and paste what I have said above since it will sound rude. :-) You have to formulate it in a polite manner so that the client understood that your goal is to make your business relationship strong and reliable. Then you can mutually agree on lowest possible rates.

  • 1
    Is definitio of minimal wage really ...The minimum wage means minimal (or zero) profit margin,...? I thought that minimal wage is cover costs + earn some small money to sustain life/business. For example, to cover all office costs + earn enough just to have for your preset salary. – Peter MV Jan 21 '14 at 8:11
  • 1
    Now to comment. I read some good suggestions. never thought of them so detailed. For me, lowest rate if for old customer or for project over X work hours (for new customers). But never thought about money buffer, which may be reason why sometimes I get out of it for a week or two. – Peter MV Jan 21 '14 at 8:14
3

If you are taking in customers where the most important aspect is price, they're really going to annoy you. I promise!!!

  1. First they'll want you to agree to a cheap hourly rate
  2. Then, they don't want to give a deposit to start work
  3. Next, they'll expect to keep you on the phone for as long as they like, but refuse to pay for the time.
  4. Also, they will nitpick over every little detail but have a problem with you adding more hours to the bill.
  5. Lastly, they don't pay on time!!!

Your rate is your rate. You have to decide -- from the place where you're trying to "sell" your work -- what is attainable to keep your belly full. But like a fisherman has to throw sickly-looking fish back, you have to throw certain clients back as well. Some of them will even pressure you or try to make you feel guilty if you tell them you can't work with them. Don't fall for it, you might actually be the 10th person to turn them down!

Best of luck.

0

I don't have a lot of experience with this, but I look up market rates and present them to the client. There are several ways to do that, but I use Bureau of Labor Statistics to look up salary/wages and then find an hourly rate.

Then I explain that I typically add or subtract up to 10% depending on the special details of the job.

I wouldn't worry about being consistent -- I would worry about being fair though. My rate might be X on one month, and on another month when I'm short the hours, I sometimes lower the rate. It's probably beneficial to try to keep the rate in the same range at all times... Look, everybody knows that on one particular week, the cost of a 12 pack of Coke may vary wildly.

0

It depends on what services you offer and if it is usual in your field to have your prices open.

Most likely you have some concept for your pricing and if you customer doesn't like it... Well then you would have been to expensive to them anyway.

Like I have a minimum price: Working from remote with my choice of tools on projects I like.

Every time one of these parameters changes it gets more expensive.

  1. On site? Depends on the distance.
  2. Your toolchain? Depends on how much I know / like them.
  3. Morally challenging or otherwise uncomfortable to me? You pay extra.

Customer doesn't like the price? So be it.

So, if it is usual in your field to post any price, it should not be bad to post minimal wage (or any price and then saying "Cool projects get 10% off"). If it is unusual in your field to post any price, every price you post is bad.

Just to make my point clear: My stance is that I don't usually tell customers the calculation behind my per-hour fee, because that causes too much trouble. Its just "Thats my fee" and period. If somebody else ask they get a different number. My experience is that usual customers don't value the transparency in any way I find satisfying, but only use it to try to get a lower price.

  • I am in programming business – Peter MV Jan 20 '14 at 19:49
  • Well, so am I. My stance is that I no longer write my price somewhere and only give prices directly to the customer. I did it different earlier in my career and it only caused avoidable trouble. But if I were in the plumbing business that would most likely be different. – Angelo Fuchs Jan 20 '14 at 20:10

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