Your Hourly Rate is Killing You

Many freelancers in the creative field have their hourly rate, they have their day rate. The typical interaction between a client and the vendor starts with the job description and ends with price negotiation. 

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Dealing with some clients, especially in the corporate world, they will want to know the estimated time it will take to provide the services. What a freelancer naturally does is provide estimated hours and their appropriate rate- this document better known as the Quote:

Shooting — 10 Hours x $50/hr

Editing — 40 Hours x $30/hr

TOTAL: $1,700

Once the client agrees on the estimated time and hourly rates, it’s time to get to work.

The freelancer shows up on location, starts filming/photographing/writing — whatever the job is. They end up working the estimated 10 hours. 

Then it’s time for editing. The freelancer works the estimated 40 hours.

This is the perfect scenario. The client expected to pay $1,700. And the freelancer expected to get paid $1,700. Everyone’s happy. 

For a freelancer who’s new to the game, this sounds like the perfect exchange of time for money; a fair bargain. The new freelancer finds the logic quite simple:

“If I work, I get paid appropriately. If the job takes longer than expected, then I get paid more. If the job is shorter, then I get paid less.”

This logic follows the pricing model known as “Time and Materials”. The client pays the vendor the cost of time and materials needed to complete the project.

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The Increase in Productivity

The new freelancer is no longer new to the game. It’s been a couple of years now, and the freelancer has gained quite a bit of experience, and increased their productivity. Fantastic! 

Now it takes less time for the freelancer to complete the job needed. What took 50 hours of time, now takes 30 hours:

Shooting — 5 Hours x $50/hr

Editing — 25 Hours x $30/hr

TOTAL: $1,000

If the freelancer's rate remains the same, they now earn $1,000 for the job — previously it was $1,700.

Their increased productivity is now killing their revenue.

The natural thing to do now is to raise their rate. The freelancer now charges $100/hr for Shooting and $60/hr for Editing. They have doubled their rate across the board.

Now let’s readjust the job:

Shooting — 5 Hours x $100/hr

Editing — 25 Hours x $60/hr

TOTAL: $2,000

It’s the same product, the freelancer doubled their rate, they’ve improved productivity, and they have increased their revenue on the job by 17.5%. Pretty good, but let’s push back a bit.

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From the client’s perspective, the freelancer has produced the same results quicker and at an increased cost. Let’s say the client isn’t in need of faster turnaround time. Getting the final product on Wednesday instead of Thursday isn’t so much a priority, what’s really the priority is to do the same job at a lower cost. The freelancer has doubled their rate for the same job. Perhaps the client agrees to the rate increase but asks if the freelancer can stay within or below the old budget of $1,700. Again, the client holds the power and the freelancer can agree to work within the budget or be substituted by someone else.

Welcome to the World of Commodity (and the Race to the Bottom!)

In this classic scenario of client vs. freelancer, the freelancer lacks the power to price-negotiate and to control the interaction. From the start, the freelancer has trained the client to expect fixed cost for time and materials. The client values the final product to a certain extent but cares equally if not more about the total cost to create that final product. 

By chaining themselves to cost-based time, the freelancer’s increased productivity slowly kills off their revenue when the exact opposite should be happening. Unless the freelancer turns to lying about their hours to get what they think is worth (a quick way to ruin one’s reputation), they will be able to finish jobs more quickly and make less money in doing so. 

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How to Avoid the Trap of Selling Time 

  1. Articulate the Value - The freelancer must find a way to better translate the value of their work and how the client will receive this value. 

  2. Understand a Commodity - Freelancers must realize if they are in a commodities business. Can the client easily find your skills on Craigslist, Fiver or TaskRabbit? If so, then you’re a commodity. 

  3. Become the Expert, Not the Vendor - Take on an expertise position with new clients. An expert isn’t replaceable — a vendor is.

  4. Bundle Your Services - Charge for the project as a whole. Avoid breaking down the job into hours and rates. An hourly rate is easily haggled down. 

  5. Stand By the Policy - Inform old clients that there will be a new policy change effective immediately in regards to the pricing model. “I’m sorry, it’s our policy.” 


 
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Start with Your Client, Not Your Product

 
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Concepts based on Pricing Creativity: A Guide to Profit Beyond the Billable Hour by Blair Enns

The Failures of Starting with the Product

In many creative firms, they start by creating their main product - let’s use video production for example. They start with the statement that they produce this product: video. They will understand the cost of that video, and based on that will price the video. Once the pricing formula has been created, the creative firm will then find a client to sell that video. This leads us into the concept of “cost-based” pricing.


Cost-Based Pricing

Product → Cost → Price → Value → Client

Cost-Based Pricing focuses on time and materials or the deliverables to determine the price that firms present to a client. The problem with cost-based pricing and productizing a firm’s creative services is that not every client NEEDS a video. It begins to take on the vibe of the car salesmen or the door-to-door salesman where “Everyone needs my product! No matter who you are.” This simply is not the case.

Cost-Based Pricing focuses on
time and materials or the deliverables
to determine the price or a project.

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Start with the Client

Sit down the client, try to understand their problem on a surface-level and then on the deepest of levels. (Read More: 3 Tips to an Effective Strategy Meeting) Better known as consultative selling, the Firm doesn't push their product and instead listens more to the Client’s real needs. For example, after consulting with the Client, the Firm finds out that they don't need a new video - they need a new landing page to collect leads. This realization never happens with firms who only want to push their product.


Value-Based Pricing

Client → Value → Price → Cost → Product

Start with the client, figure out the value the Firm can provide, settle on a price and then determine the cost and execution method. It's the exact opposite approach to cost-based pricing.

Blair states throughout his book that this method proves to bring in greater average revenue over a cost-based firm. He also admits that this method is harder to implement and takes more practice. In the end, embracing value-based pricing will lead to higher revenue and greater profits for creative firms.

For More Reading

Blair Enns Amazon Page - https://amzn.to/2DAEyfy

Pricing Creativity: A Guide to Profit Beyond the Billable Hour - https://www.winwithoutpitching.com/pricingcreativity/

The Futur - Blair Enns Interview - https://www.youtube.com/watch?v=KtL02T5MonA

 

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How to Brainstorm YouTube Videos

I’ve produced over 300 videos for my channel. Some were published, others were shunned for life. Allow me to walk through my quick and dirty process of coming up with ideas for YouTube and beyond. 

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1. Start with What You Know

If you’re a content creator, then chances are that you consume other content creators’ work. You’re watching your favorite YouTube channel, you’re reading your favorite Medium writer, or listening to a Top 50 podcast. Take a look at the type of content they’re producing and riff off their success. 

It’s a way to get your brain thinking like a world-class content creator. Add a slight twist to their concept.

World Class Creator: “How to Improve Your Instagram Game”

Your Idea: “How to Improve Your Instagram Game for YouTubers”

Go more specific. Or go in a totally opposite direction.

SERIOUS NOTE: Do Not Hang on Step #1 for too long. There’s a fine line between biting and homage.



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2. Brain Dump

Now let’s dive into original idea creation. It’s honestly a numbers game. The Art of the Brain Dump is to unload as many ideas onto the page as possible. 

90% of these ideas are awful. That’s okay.

Use this to your advantage. If you know that 9/10 ideas are bad, then you need to write down 10 ideas. One of them will be decent enough to work with. Write down as many bad ideas as you can think of. 

Whether in the morning, throughout the day, or at the end, relieve the brain of all your ideas. I’ve found that writing down ideas throughout the day helps me because it means that I won’t lose the idea later in the day. Find your own rhythm. 

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3. Save Your List

These ideas can’t live in your head forever without risk of them changing or being forgotten. Find a way to store these ideas. 

When I first started producing episodes for my YouTube channel, it all started with some printer paper and creating a list 1–100 and slowly filling out that list. Then I moved on to a notecard and writing down one idea per note card. I began to lay out the notecards on the floor to get a broad few of my ideas. 

Lately, I’ve found Trello to be the best for ideas storage. I create columns for ideas and write down my ideas as 5–7-word phrases. I used to write 2–3-word phrases but would later forget the specifics of the idea. Flesh out the idea as much as you can as quickly as possible. 


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4. Rank Your Ideas

As mentioned above, my use of Trello and note cards allows me to rank my ideas and sort through the bad ones. Don’t look at your bad ideas with anger and scorn; they’re the stones on your path guiding you to better ideas.

Rank your ideas using your OWN strategy. If you’re aiming for more views or subscribers then tackle the most “clickable” topics. If you’re aiming for creative expression and self-fulfillment then go for the ideas that interest you the most. 

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5. Still Stuck? Read Books. 

My best ideas have spawned while reading books. To caveat, I’ve been reading non-fiction books about filmmaking, cinematography, self-help, business, and social media. Reading these types of books puts me into a certain mindset- it primes my brain. Occasionally, my mind will wander as I’m reading and that’s when those great ideas happen. 

I have not been able to have these same awesome moments when browsing Instagram, watching YouTube videos or listening to podcast. My brain is just too focused on that content to allow for a moment to breathe and think. 

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Written by Jordan P. Anderson

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Jordan P. Anderson is a cinematographer and content strategist based out of the Washington, D.C. area. Jordan takes on projects by first understanding a client’s business and their needs as a company. Knowing the core strategy, Jordan is able to produce effective and compelling video content to help solve the client’s pain points. In total, Jordan has worked on over 400 videos and campaigns aimed at solving his client’s problems.

3 Tips to an Effective Strategy Meeting

The first meeting with a client is crucial. Making a good impression and setting the tone for the relationship should be priority. In the initial meetings, you’ll work with your client to develop a strategy and then a game plan.

Here are three tips for your next strategy meeting:

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1. Ask “Why?” 5 Times

Many clients when you sit down with them have a great sense of the in’s and out’s of their business. Problems arise with clients and they will seek out a creative firm- perhaps it’s a marketing issue or positioning issue or an even deeper issue that the client can’t articulate. Usually, the client will seek out the creative firm that specializes in what they believe to be the solution.

“We need a new website!” (Google search for Web Design firm).

“We need a new landing page video!” (Google search for Video Production firm). 

For the sake of example, a client has recently booked an initial meeting with your firm and they present their problem. Then, they proceed to self-diagnose: “We aren’t attracting enough views to the website because it’s boring and we need YOU to make us a landing page video,” the Client says. What most firms will respond goes something like this: “Yes, I see what you mean. We too think a new video will do just the trick. Let’s start planning the video.”

Rather than letting the patient self-diagnose and tell you what prescription they’d like, instead, begin to ask the first “Why?” question. 

“Perhaps you’re right about a landing page video. Why do you believe a new landing page video will attract more views to your website?”

The Client answers with a very logical answer.

Ask “Why?” to that logical answer. Keep asking “Why?”

The more “Why?” questions you ask, the deeper the issue goes thus revealing the true nature of the problem. 

Learn to ask better questions that get to the heart of the real issue. Only from there, can you truly help your client.

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2. Don’t Interrupt the Client

This second tip isn’t so much about manners but more so about what it reveals about how you feel about the client. When the client speaks, you listen. You continue to ask penetrating questions about their business, but after that, shut up and listen. 

Interrupting the client shows that

1) you’re not listening to what they have to say

and

2) that you lack patience.

In conversation, half of the time, we listen to the other person and the other half, we think about what we’re going to say next. Many of us only think about what we want to say next. When you’re speaking with the client, especially for the first time, you want to be the best listener possible. 

Interrupting the client shows that 1) you’re not listening to what they have to say and 2) that you lack patience. We are here to serve the client. Develop that serving mentality. We should be making the client feel listened to, appreciated, and understood. It is a rare occasion for business owners to feel this from another firm. 

Your client relationships should be associated with good feelings and a sense of appreciation. These good vibes will lead to your clients actually wanting to engage with your firm more and more- instead of avoiding you.

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3. Remove Your Bias

We briefly mentioned bias in Tip #1 by letting the client self-diagnose themselves into your wheelhouse. As a filmmaker, yes video production is my specialty, but it’s unfair to force my preferences onto the client. 

The appropriate course of action is to honestly understand a client’s problem and try to help them solve it. If a client doesn’t truly need your services, then it’s more beneficial to your firm that you recommend the actual solution. Nothing can jeopardize your firm’s reputation more than taking on a client to give them the wrong solution. We are not vacuum salesmen. Everyone does not need a vacuum. This is what separates serving from selling. We are not selling the client anything. We are here to help them. 

Sometimes you have to say in the initial meeting that your firm may not be the best firm for this problem, but would be happy to give some recommendations.

Your clients will respect the fact that you haven’t take advantage of them, and this third tip will reward your firm many times over in reputation and client relations.

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Written by Jordan P. Anderson

 Processed with VSCO with c8 preset

Jordan P. Anderson is a cinematographer and content strategist based out of the Washington, D.C. area. Jordan takes on projects by first understanding a client’s business and their needs as a company. Knowing the core strategy, Jordan is able to produce effective and compelling video content to help solve the client’s pain points. In total, Jordan has worked on over 400 videos and campaigns aimed at solving his client’s problems.