Setting your rates II

Posted on June 11, 2009

I Meant to post this yesterday and just plain forgot, so I’ll try to get two out today to make up for it.

I got some feed back on my post the other day about setting rates. It’s an interesting topic to a lot of people. One of the questions it did bring up was how to deal with negotiating on rates, or specifically dealing with a customer that doesn’t want to pay what you’re asking.

I for one set out my rate at the start in a quote, explain that it’s competitive and that’s what it costs.

I’m open to negotiation if for example you’re offering me a couple of days a week for a month, few months or a year. It costs less to develop and maintain one relationship like that than the equivalent in smaller customers – even if it is putting more eggs than I may like into one basket.

If on the other hand it’s a couple of days then I’m going to be much more firm about my rates.

One strategy for getting paid what you should, and giving a customer a price they want is to determine the budget from the outset then structure a proposal around that. Once you’ve got a number, make sure you can deliver what they want, or negotiate on a cut down version, which you can deliver within their budget. If it’s design work, cut some of the revisions, base the design on a template of their choosing. For coding work cut some of the scope, remove one or two of the lest important requirements.

A lot of times you may just find “you’re too expensive” really means, “we can’t afford it” and there are a lot of great companies out there that aren’t just being cheap, even if that’s the way it may seem on the surface and they’d be more than willing to compromise on the scope to get it done properly within their budget. Then who knows, revisit the rest in a few months time.

Other times you just can’t meet in the middle, you can’t do the work in the time allowed by the budget but don’t give up – there might still be a deal you can both cut. Maybe they offer a service you’re currently paying for, or have staff that aren’t being fully utilised you can borrow. Trading your services for theirs isn’t a bad thing, you still get a client, word of mouth referrals, case studies, testimonials and add to your portfolio and you still get something in return for it. I’ve done this in the past and it’s always worked out well for me, in fact it’s probably lead to more work from and through that client than we could otherwise expect.

If all else fails, my advice is to walk away. It’s hard but the brutal truth is that you’re risking getting stuck in a working relationship where the other side doesn’t value your skills. In my experience that attitude extends right through into how they value your opinions and the result of your labours. To them what you produce is a commodity and they’re probably going for the cheapest quote they can find. Everyone has worked with people like this, it’s not fun and it’s almost never worth the money. In fact, my advice is run – don’t walk.

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Local business advertising

Posted on January 15, 2009

A large part of the assumptions we’re making with goroam are based around the idea that local business wants to capitalise on the Internet to bring in business. But it’s not easy. How do promote a book store, toy shop, cafe or plumber in your local area online, now imagine you have a books and toys to sell, coffees and tea to make or houses without hot water to help – in short, a full time job that doesn’t leave much time for SEO, SEM, analytics and tweaking a website and search advertising strategy.   

We’re not just pulling the assumption out of thin air though- helping local business market online is big business, Yodle’s 700% growth last year and $10M C round is a great example of this trend and from the techcrunch article, they’re not the only ones in the game. 

Yodle competes against a number of similar, venture-backed companies such as ReachLocal(which raised a substantial $65 million in funding to date), MerchantCircle (which raised its $10 million in Series B funding round in November 2007), Ingenio (acquired by AT&T, also in November 2007), WebVisible (total funding: $17 million) and a plethora of smaller companies trying to get their piece of the pie.

So we’ve got the social proof, now we just have to capitalise on it and bring something to market that makes it easy for small businesses to target their services at the people in their area who are interested. 

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While they’re all standing still…

Posted on October 13, 2008

I’ve been a bit lax with the posting again, but I’m trying. Continuing with the theme where I left off last time, starting companies in the downturn (likely to be a recession), the last time we talked the worlds markets were in turmoil, the banks had stopped lending money to us and to each other. Things have continued and are even worse two weeks on.

Now some would say is the time to tighten belts and budgets, for prudence sake. At least that’s what everyone else is doing, and what we’re doing at home to be fair. It’s cheaper shopping, soups and casseroles for the winter. Many businesses are reacting the same, I’ve heard it from them and so have you. Even businesses that have nothing to do with the finacial or property markets are tightening their budgets, and feeling or causing the pinch to be felt.

Is that good news for the nimble small business? Like every other news, yes. Small businesses face unique challenges their larger competitors don’t but they have one major advantage – they can move and react faster.

Don’t get me wrong, I’m not suggesting anyone should go on a spending spree. But neither am I suggesting that now is a time to be completely miserly either. What I am suggesting is that while your larger competitors, or even competitors of similar sizes are worrying about the future and cutting back their development efforts; or cutting back their staff, salaries and benefits. It’s a great time for you to make the leap to the next level, and come out ahead when this is all over- because it will eventually end, one way or another.

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