Balance Your Workload by Changing Your Price

I’m sure at this point you have taken at least one economics class, and have heard of the concept of supply and demand and the effect on prices. When demand goes up relative to supply, prices go up as well. I’m surprised by the fact that very few of you actually implement a pricing policy like that.

So you are a freelance consultant with 2 or 3 clients each competing for your time. Congratulations, by the way – You are in demand! Naturally your prices should increase, but it can be difficult to go to Client A and ask for more money or give a discount to Client B if they can delay the start of their project by 3 weeks.

But this increase in price is a natural thing, as sometimes these clients are not around in the slow months – even for free! I’m surprised how many freelancers don’t take advantage of this situation.

Any advantage you have should be managed in a sustainable way – the decision of when to discount and how much, as well as, when to raise prices and by how much. You cannot have reasonable expectations the client will be satisfied if you just double the price.

So how do you do this properly?

First, always quote your price in writing. Hard to argue with a piece of paper because it won’t talk back.

Second, write a quick list of reasons why they get this price. “You are employing me through January 1.” or “Ad hoc demos will not be given.”

Third, do not write what your price increase will be if the above terms are changed – just write the fact the price will change.

If you write a specific price increase like, “Holiday rates are time and one half” or “20% added for unscoped changes,” the client is given room to gamble with your time.

When a situation develops where you should increase your price (project definition or demand changes), you should approach the client at time of change.

Then, of course, you have to figure out how much to charge. I’ll leave that for the next post.