Lately I’ve been reading what the folks over at the premiere search engine optmization firm SEOMoz have to say on their blog, and I’ve also been looking around their website a bit. One of the things I’ve been impressed with is that they openly display their pricing, which is not the norm for SEO or web development firms.
For example, on their SEO consulting services page they boldly share that they charge $300-$400 per hour or $10,000 to $50,000 per project, and they don’t care who knows it. When I first saw this I thought “Man, those guys don’t even care, they’re just gangsta like that” but the more I’ve thought about it, the more I wonder why we don’t all display our pricing info.
I think the principal reason is that we’re fearful. You know that at some point you’re going to have to tell the client what you want to charge them, and that’s going to make or break the deal. It’s like asking your girlfriend to marry you. Sure, there are other girls out there just like there are other clients, but face it, you’re a computer nerd and you might never have another chance with a girl so you better take this chance or you’ll always regret…I think my analogy went off on a tangent. Anyway, it’s hard to talk about pricing with clients because you fear the client being turned off by a high price and leaving.
By why be afraid? Maybe it’s not just because when you mention pricing it’s time for the client to make a decision, the results of which could be negative for you, but because it’s also your time to make a decision. Don’t give me that innocent look, you know what I’m talking about. That’s right, you give different clients different prices for the same work, and you’re afraid that you might misgauge and tell a client that something is going to cost more than they want to pay when you’d be willing to do it for less.
Stop doing this, it’s not worth it. Allow me to introduce you to a new paradigm. If you develop websites you know that every website is going to take at least a certain amount of work, possibly more, and possibly much more. So you figure out how much you have to charge for a certain amount of work to not lose money, then you figure out how much money you want to make on top of that, and then that’s what you tell everyone your minimum price is. “But then I might lose clients that I would be willing to charge less to!” Then don’t ask for so much. You’re minimum price is your true minimum price.
You have to set a minimum price such that if clients don’t want to pay it, you’re ok with that and you move on. Here’s some free advice–you should charge the highest price the market will bear and which works for your specific situation. What do I mean when I say the highest price the market will bear? All other things being equal, as you increase your prices you will get less work because there will be less and less people willing to pay your price because they will be satisfied with what they get from a lower priced competitor. At some point you could charge enough that nobody would hire you. That’s the limit the market can bear. Obviously that won’t work for your situation. So let’s say you can charge $5,000 per website and get 20 projects per year, or charge $50,000 per website and get one project per year, which would you rather do? If they were the same type of website and I were a freelancer working by myself I’d take the $50K. But what if I’m an employer and I pay my designer $50K per year, then charging $50K for a website won’t work for me if I only get one project per year. But charging $5K per website and doing 20 per year makes me $100K, which means I pay my designer $50K and I get to pocket $50K as well.
The challenge is to figure out what works for you. But once you figure it out, then you’ll be able to set a minimum price that you tell everyone. Sure, you might lose a few clients, but you didn’t want to work with them anyway because you wouldn’t make enough money, remember? When you start setting your minimum prices the same for everyone you’ll feel a peace you didn’t know existed. You’ll feel more confident when discussing pricing with clients because you can tell them to take it or leave it (in a nice way). What’s the alternative? To lack confidence, cave in to clients who don’t want to pay your rate and who talk you down and then want you to do all sorts of extra work that they feel should be covered by what they paid. Trust me, you’re better off sticking to a minimum price, and your clients will respect you more for it.
Once you have decided to have a minimum price why wouldn’t you want to display it openly? After all, do you want to spend several hours talking with a potential client, doing research, and working on a proposal only to find out their budget is half of what you’re willing to take for the job? Why not publish your pricing on your website like SEOMoz and let the website filter your clients for you and save you time so that you can focus on the clients who are willing to pay your rates?
So at MWI we’ve finally made that move by today publishing our pricing for web design, search engine optimization or SEO, SEO consulting and training, and search engine marketing. Was it scary? Yeah, sort of, but I realized we were only publishing on our site what we’ve been telling people who call us for a long time.
“But wait, there’s another reason not to publish pricing on your website,” you say “because then all your competitors will see it and underbid you!” To which I respond by saying that yes, if all you compete on is price, then that could hurt you, but frankly, I don’t want to work with clients who care about nothing but price. I want clients who value the quality of the work we do enough to pay a premium for it. I don’t want to build Hyundai websites, I want to build BMW websites. Sure, MWI won’t build as many websites that way, but we’ll do ok and we’ll enjoy the work we’re doing more. Other firms might be more interested in doing a higher volume of lower quality websites, and that’s fine, there’s nothing wrong with that. Each of us fills a legitimate role in a different segment of the market and displaying pricing helps clients figure out which type of firm works for them faster.
Displaying your pricing helps everyone. The firms that charge less than you do will see your prices and say “Man, I didn’t realize they charged that much. Let’s raise our prices.” That means your competitor is competing less on price and more on quality. You see a competitor who is charging more than you do and you say “Let’s raise our prices, after all, if they can charge that much then we can charge more than we’re currently charging and then we’ll make more profit.” Eventually everyone finds out how much the market will bear for the quality of work they do, which I would put forth is a more ideal situation for everyone, including clients. It ensures that everyone is getting paid a fair amount for the quality of work they provide, and that clients are getting fair results for what they’re willing to pay. This is what would tend to happen anyway in a market economy, whether pricing were published or not, but because of other dynamics there are still a lot of firms that are making less than they are worth, and this doesn’t help anyone in the long run. The firm isn’t making as much as they could, it pulls down the industry as a whole, and while you might think it would help clients it doesn’t. A company that isn’t charging as much as it should can suffer from financial instability which can then affect the quality of their work in ways that are detrimental to the client. The client might then find themselves saying “Argh! I would have been willing to pay more just to know that this project would get done right and get done on time!”
There are some holes that need to be fleshed out in the case I’m making, but suffice it to say I now believe in putting pricing out there and I think if everyone else did it we would all benefit. And I’m willing to take the first step. Well, I guess the second step, cause SEOMoz did it first…well, they were one of the first high-end firms to do it at least…well, anyway…good night.