Lessons from the Freelance Life - The Difference Between Offering a Discount and Shooting Yourself in the Foot

Wednesday, February 20, 2019

Image of a bright red star with a percent sign in it to indicate discountsDiscounts are a standard marketing tactic, but for service based businesses they're a double edged sword.

People tend to devalue creative services. Even veteran professionals are frequently asked for free advice, and to "do it for exposure."

Our time and expertise are largely intangible, therefore many folks can't wrap their brain around the fact they have value. It's common for a creative's project quote to be met with haggling.

Getting paid what your work is worth is an uphill battle. That said, there are some valid reasons for offering discounts. But if they aren't handled carefully, you can make the problem worse.

Just Say No to Introductory Rates

When I first started out as a freelance copywriter I made the rookie mistake of offering discounts up front, thinking it would entice commercial clients to use my services.

It did, to a certain extent. Except, even though I was very clear about it being an "introductory rate," I consistently got pushback on my regular rates on subsequent work.

One of the worst things you can hear from a client is "But you only charged us $XXX last time, and this is the same type of work." They conveniently forget everything about it being an introductory rate.

Me, every time this comes up.
Image Credit: Getty Images
A close second is hearing from a prospective client "But Bob told me you only charged him $XXX for the same type of work."

They don't care it was an introductory rate. They don't care their project is more complex, has different deliverables and will take twice as long.

They think writing is writing. They heard a number. They want that number.

Creative work is subjective. Once a value is established in a client's mind, you will be hard pressed to get more.

Once you're there, you often have to choose between losing the client or working for less than you should.

Charge your full rate up front and don't feel bad about it.

Professional Courtesy Discounts

There are plenty of times it makes sense to consider a professional courtesy discount with a repeat client, and there are several benefits:

  • It's a nice surprise for the client to get an invoice for less than they expected
  • It builds goodwill by demonstrating you value fairness in your working relationship
  • If done right, it supports the client's willingness to pay your full rates

A professional courtesy discount is something to consider in cases such as when the work is an update to something you created previously, or an extension of that work that's technically a new project, but you were able to generate with less effort than usual due to your existing knowledge of the client's materials.
Always document the full project rate on the invoice.

This can be a set percentage you set up as a Professional Courtesy Discount and let your accounting software figure out. Or you can go with your gut and base it on what feels fair for your time and effort.

I go down the middle - I start with what Quickbooks shows as a 25% discount, then I round up or down to something that feels appropriate.

The key is to always list the discount on the invoice. Create the invoice for the full amount the client was originally quoted. Make the last line item Professional Courtesy Discount, and include a brief explanation.

My explanations are things like "Robust source materials expedited content generation," "Content integration less complex than predicted," or "Less time required for interviews than expected."

This tells the client:

Image Credit: Getty Images
  • The regular rate for the service is still what you initially quoted
  • You recognized there was a concrete reason the fee could be less this time
  • That concrete reason only applies to this specific situation
  • Your regular rates still apply for other work

Used strategically and in moderation, professional courtesy discounts can end up making you more money through happy repeat customers and word of mouth referrals than invoicing the full amount.

Friends and Family Rates

We know when those closest to us can't afford to pay us, or it would create family tension or other social challenges to charge them. When this is the case, often we simply cannot bring ourselves to charge them a dime for something that would cost a regular client hundreds, or even thousands, of dollars.

If you really, truly can't bear to ask your friends and family for money, it's very important to still acknowledge the fact  that this is your job and your service has value. The easiest way to do this is to decide what you can trade for.

Full disclosure: It took me a very, very long time to become comfortable with this. I have a hard time saying no, and a burning need to be helpful to people I care about. I have easily done ten thousand dollars worth of free resume work over the years for personal connections, and have sometimes felt frustrated and taken advantage of. Don't be me.

Some people in your life will ask for your help assuming you will do it for free. Most ask assuming they will pay you... something. No one who falls under friends and family ever seems to think they will be charged full rates for any service, no matter its nature. That doesn't happen to bother me, because I feel guilty charging friend and family my full rates.

I learned the solution to solving the awkward question of charging loved ones is quite similar to the solution to the awkward conversations with professionals who are clearly hoping to get  you to do work for barter or exposure... address it proactively.

Don't give them a chance to put you on the spot, intentionally or otherwise.

I work for bourbon. I know. You're so surprised.
Image Credit: Getty Images
Treat it like an inquiry to a project with a flat rate, and casually mention your friends and family rate/barter option as early in the conversation as possible.

What I've found is that most people feel awkward about asking a friend what they would charge for services, and seem relieved when it's addressed as a matter of course when talking to you in your professional capacity.

It helps establish the tone for the working relationship, and results in a smoother overall experience.

Business vs. Balance

Finding the balance between charging what your work is worth and leveraging discounts to foster personal and professional relationships can be tricky. But overlooking the importance of this effective business tactic is just as problematic as using it incorrectly. Either way, you're shooting yourself in the foot.

Related Posts

This post is one in what will be a series on lessons I've learned as a freelance professional creative. I'll link the others as they go up.

This post isn't directly part of the series, but is conceptually related as it speaks to establishing credibility in this profession: Nevertheless, She Persisted