Freelance Payment: How Lowballing Can Hurt Your Business

By Ashley Eneriz, Contributor, on April 16, 2018

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One of the nicest perks of being an indy is being able to set your own freelance payment rate. But it can be discouraging to hear back from a potential client with phrases like, “Your rate is out of my price range.”

In many ways, platforms like Upwork and Fiverr can hurt the gig economy by encouraging freelancers to continuously bid on work and undercut rates out of desperation to get the job. Of course, accepting a lower rate will likely land you more work initially, but it’s important to think long-term here. By learning how to negotiate for the rate you deserve, you can set yourself up for future success.

How Lowballing Can Hurt Your Freelance Business

When you’re desperate to find new clients, it can be tempting to take work for less than your average rate. After all, who doesn’t want a little extra money in their pocket right now? As a new freelance writer, I was fine with doing articles for $25 a piece because they were simple and the work was plenty. What I didn’t realize was that I wasn’t improving my writing skills, and I was burning myself out by churning out 20 articles a week. Once I set my rate higher, I worked less but made more. Since I wasn’t frantically writing — or sleep-deprived — my quality of work improved, and I started attracting the attention of bigger companies.

Freelance writer Zina Kumok made a similar mistake: During a particularly slow season, she accepted projects at half her desired rate. This provided Kumok with a lot of work, but she was left with very little time to find new clients or pitch for higher paying assignments.

“I started thinking about the successful freelancers I knew and what made them different,” she explains. “I realized that charging too low for so many articles was really affecting my average rate.” So Kumok decided to raise her required payments and look for new, higher paying clients. “It was a huge gamble, but so far — four months later — it’s worked out great!”

How Lowballing Can Hurt Other Freelancers

Lowballing constantly comes up on freelancer platforms and social media forums. Whether you’re a photographer, virtual assistant, programmer or accountant, you’ve likely seen someone in your field accept a less-than-desirable freelance payment rate. Unfortunately, this mindset can hurt other indys. After all, a single freelancer who accepts a low rate can set unrealistic expectations with clients.

It’s important to remember that in order for a client to complete the work you are offering in-house, they would likely have to offer additional benefits and perks to a full-time employee. In this way, they may already be saving money by outsourcing a project to you in the first place.

Ideally, the freelance community should strive to band together to ensure we are all earning a livable income. Keep in mind that our rates need to be at a certain level to offset the hours devoted to pitching, finding new clients and interviewing — and don’t forget about insurance plans, retirement savings and quarterly taxes.

How to Respond to Lowball Offers

Of course, it’s always hard to turn down work. But trust me: Declining low offers is okay. That being said, there’s an art to handling these often-difficult conversations in a professional, diplomatic way.

Here’s an example of how I would respond to an interested client that wants a lower rate:

“Thank you so much for your interest in my work. You seem like a wonderful group to work for, and I know I can provide quality work that will make your business stand out from the competition. I have attached my resume and portfolio, so you can see my expertise and experience and understand why my rates are what they are. I would love to work with you in the future if your budget changes.”

When business is slow, it might be hard to let go of a lowball client. But it’s important to understand that these clients will often expect more for less and be difficult to please. Your time will be better spent looking for new clients who understand your true value and can afford your rates. When you decline low-paying freelance work, you’re not only helping your business, you’re raising the bar for the indy workforce.

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