Apple

This is the conclusion of a 3-part series on how to price your services as a freelancer. Click here for part 1 and click here for part 2.

When Max walked into the warm conference room, he saw two files on the table. On one if them he recognized the name of a competitor. The other portfolio had his name on it. He knew instantaneously what he was up against.

Only a few weeks ago, he had lost a contract to this rival because their bid had been 30 percent lower. Had he just made a big mistake by coming out here in the midst of a dangerous winter storm?

“John Jarvis,” said the CEO, as he walked in. “You must be Max. I’m afraid it’s just me today. I live a few blocks from the office and practically no else dared to come out in this terrible weather.”

Jarvis sat down and took a sip of his coffee.

“Max, when I heard that you were on your way, I only had one thought: This guy must either be totally crazy or totally committed. But looking back on how you’ve handled this opportunity so far, you don’t strike me as insane. On the contrary. You hit all the marks of someone we’d like to work with. All of them, but one.

First of all, you clearly know the value of personal connections. Not once did I receive a generic email or an automated answer to a question. It was clear from the start that you were the go-to person that would not work for us but with us.

You made an effort to get to know your client and his problems first, before coming up with a solution. You learned our language and you translated your ideas into terms we could easily understand and relate to.

Third: you consistently showed us that you could meet all deadlines and manage a project efficiently, even though we were only in the beginning stages. As you know, delays are usually costly. Not once did we have to send you a reminder. In fact, you were the one following up with us!

Now, as you can see, we’ve narrowed our choice down to two offers. Both companies were invited to present their proposals today. Only one showed up. I shouldn’t tell you this, but we’ve had to chase the CEO of the other company down to get his final plans here on time. It was his secretary who sent a response. This morning I found out why.

I’ll be honest with you Max. Your rival made us a very tempting offer that was 35% below your estimate. It was much more in line with current market prices for your type of services. We’re not talking peanuts here, but about a significant amount of money. So, here’s my decision.

Max held his breath. He knew that he had done everything he could to win this contract, but he had been down this road before. There was a lot at stake.

The CEO picked his rival’s folder up from the table; looked at it for a few seconds and threw it in the trash can.

“Congratulations Max. Welcome aboard!”

He went on:

“In this business we don’t really care too much about resumes and infomercials, but we certainly do our homework. I know some of the other people you’ve worked with in the past, and I‘ve seen what you have done for them. Every penny spent on you was a fraction of what came back as a result of your involvement. As they say:

Quality will be remembered long after price is forgotten.

And do you know what impressed me most of all, Max? Not only are you committed and conscientious, you know what you bring to the table and how valuable your services are. At the end of the day, it wasn’t just your competence that sold me Max. It was your confidence.”

His startup coach had been right. Max remembered the day his mentor took out a big black marker and wrote on the flip chart:

A fair price is a price you believe in… plus twenty percent.

“I know you, Max,” his coach said. “As an entrepreneur, your greatest strength is your greatest weakness.”

“And what might that be?” asked Max, puzzled.

“You’re not motivated by money,” answered the coach.

“Let’s face it. You’re creative. You’re an artist. You want to contribute. One of the reasons you’re so good at what you do is the fact that you’re absolutely fascinated by it. It’s a magnificent obsession. You want to be the best you can be in your field. It’s that powerful internal drive that gets you up in the morning.

You don’t do what you do just to pay the bills. You do what you do because it matters and it is meaningful. To you, the ultimate reward is in the result, not in the remuneration.”

“Isn’t that a good thing?” Max wanted to know.

“Well, it’s what made Mark Zuckerberg the youngest billionaire in the history of mankind,” said his coach. “As far as we can tell, he wasn’t motivated by money when he came up with Facebook. Sir Richard Branson didn’t open up his record store to make millions. Steve Jobs co-founded Apple because he wanted to ‘make a dent in the universe’. Jobs once said:

“The only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t settle. As with all matters of the heart, you’ll know when you find it.”

The challenge is to channel that passion and turn it into a profitable product people want to buy.

Now, here’s another basic human need: the need for autonomy. Most people want to be able to direct their own destiny; make their own decisions and create their own future. In one word: they want to be FREE.

The most dissatisfied workers are the ones that are being told what to do. They have uninteresting, low-paying jobs and no hopes of ever escaping the rat race, other than winning the lottery.

In order to gain autonomy, having an interesting, purposeful job is not enough. Being able to contribute to something greater than yourself is nice but not enough. Without money -or with very little of it- we operate in survival mode, focused on taking care of our basic needs. Without money, we’re dependent, we struggle, and we’re stuck.

You might be the most promising painter of your generation, but you need money to buy canvas, brushes and paint. You need money to rent a studio and promote your art. You want to be able to take trainings and hone your skills. The better you become, the more you will require: more expensive canvas, better brushes and the highest quality paint… a bigger studio. Someone’s got to pay for that!

You might think it’s mundane, but one way we express how much we value things, is by putting a price on it. Rumor has it that super model Heidi Klum‘s legs are insured for $2.2 million, but one leg is insured for $200,000 less than the other because of a scar.

What I’m trying to say is this: money is a means to a beginning. That beginning is called “autonomy.” As long as you lowball whatever it is you’re offering, you’re telling the world that you don’t believe that you’re worth a penny more. That’s not the road to independence. It’s a road to nowhere.

In 2008, Dara Torres became the first woman in history to swim in the Olympics past the age of 40 in her fifth Olympic games. On July 5th of that year, she qualified for the finals in the 50-meter freestyle breaking the American record. In the finals she broke that record for the ninth time, winning a silver medal, only one hundredth of a second behind the German girl who won the gold.

The hours and hours of resistance stretching and time in the pool played a huge part in this phenomenal achievement, but it didn’t win Dara the medal. She won because she believed she could do it.

You might not operate this way, Max, but people tend to not value things that don’t cost them much. That alone should be reason enough never to devalue your talent.

If you want your business to grow, you’ve got to start thinking long-term. Today you might be offered a dream deal. But what about tomorrow and the day after tomorrow?

Not only do you need money to cover costs, you need it to invest, to expand, and to contribute. Passionate people have a tendency to be stuck in the now, absorbed in the moment. But even those who have reached the top will tell you that you need to think ahead if you want to stay ahead. If you want to manage your career, you have to learn how to manage your money.

“But what if a client can’t afford me?” asked Max.

“And how would you know they can’t afford you?” countered the coach.

“Well, because they’d tell me!”

“And you always believe what clients tell you?” asked the coach. “Oh please… The two oldest excuses in the book are not enough time and not enough money. Time is something all of us happen to have the same amount of. It’s how we choose to use our time that matters. Not having enough money is a comparative deletion: compared to what?

If you’re stuck in the middle of a snow storm and you absolutely need to be somewhere, are you going to nickel-and-dime the only driver who’s willing to take you to your destination? It boils down to this: what’s it worth to you? Does the added value or benefit outweigh the cost?

The more valuable your product or service and the greater the need for it, the more leverage you’ll have to name your price.

Listen to me Max. Never assume you know how much or how little a client can afford. You don’t. Do your homework instead. Ask questions. Make your offer as relevant as you can… not to you, but in the eyes of your client. Make it irresistible.

Think about all the objections they might throw at you. Be prepared to answer the most difficult question they could ever ask you. It may never come up, but if you have an answer to that question, you know you can handle anything else that comes your way. That’s how you prepare for negotiations!”

“Max, are you okay?” asked John Jarvis.

“For a moment it looked like you were lost in thought.”

“I guess I was processing what just happened,” said Max. “Thank you so much for choosing me. I couldn’t be happier!”

“Well, the feeling is mutual,” said Jarvis. If all of this works out -and I don’t see why it shouldn’t- we’re looking at long-term cooperation. And by the way, call me John.”

Max stood up from his chair.

“Can I ask you something, John?”

“Sure, Max. Shoot.”

“Just out of curiosity… you mentioned that my competitor didn’t hand in his plans on time, and he wasn’t here today. Any idea what happened?”

“I know what happened,” answered Jarvis.

“His secretary told me this morning that his company went under. Apparently, he had a tendency of over-promising and under-delivering. His work looked great on paper, but in reality, he couldn’t meet minimum quality standards. Because of his aggressive pricing, the money that was coming in wasn’t enough to keep the company afloat.”

Jarvis put on his winter coat and said:

“But let’s not worry about that, shall we? Let’s just say that Karma is alive and well in this country. More importantly, we need to get you home safely. I can’t afford to lose you at this stage of the game. We’re barely out of the gates. Let me call our driver. He’ll take you to a hotel near the airport. This storm is not going to last forever.”

“That won’t be necessary,” said Max. “There should be someone waiting for me outside.”

“You mean that black SUV in the parking lot?” asked Jarvis.

“Yep, that’s my driver,” replied Max. “His name is Anatoly but his friends call him Stoly.”

“That’s not your driver, Max,” said Jarvis.

“What do you mean?” asked Max.

Jarvis smiled as he opened the door. He shook Max’s hand and said:

“Don’t give that man any tips. I paid him a fortune. Stoly works for me!”

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