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Why do people expect to pay so little for software?

  • # March 31, 2011 at 11:01 am

    Why is the mind set of people today (low paying clients) like it is?

    Why do they expect people to work for cheap rates or in some cases below minimum wage?

    # April 1, 2011 at 8:55 am

    Your clients don’t value your services, and perhaps you haven’t clarified the value of your your services to them. Understandably it is difficult to comprehend a digital product — there isn’t the tangibility of materials used for them to be able to perceive it. Your process should involve educating your clients of their investment in your services. Also, in most cases you should be stating the rate you work at, they can take it or leave it.

    # April 1, 2011 at 2:11 pm

    Unfortunately people that live in a different part of the world require very little money to make a good living off of. There will always be ‘cheaper’ options, you have to set yourself apart.

    Finding better clients is easy to say, but not always the easiest to accomplish. Usually, your local market will be willing to pay local value. At least, that’s been my experience.

    # April 1, 2011 at 3:10 pm

    If you’re just starting out in the freelance world and have no solid portfolio to back you up then clients will rarely want to pay you a lot of money if you can’t prove that you can deliver. It will be difficult to charge top (or even medium) dollar if you can’t show them why they should be paying you that much. You might have to work for cheap initially to get some projects/contacts under your belt. My first few sites I worked for next to nothing, I would have never been able to charge what I charge now back then, that’s just part of starting out.

    If you really don’t want to work for peanuts though, even to start out, try stating a base price/hourly rate on your website. You mention that to work with you a client needs a realistic budget, and then you go on to say that you can’t tell them what that is. Just state that software costs start at around $x amount, or that you charge approximately $x amount per hour, that way you wont have time-wasters contacting you wanting a software product for 200 bucks. I’d actually maybe rewrite a bit of that content on your site to make it a little more personable. I put my rates on my site a few months ago and since then have actually had a bunch more inquiries, and most of them from more serious clients.

    # April 2, 2011 at 9:32 am

    @molte:

    I totally agree with that, you need to educate your clients as to why your services are valuable to them. Or else they will just want something cheap.

    # April 2, 2011 at 1:35 pm

    Hey guys, thought I would chime in here. There are some very good points here and they seem to point to two topics -

    1. “Selling the invisible” – Many designers/devs that I talk to who are new to the industry look at their services as products – and market them as such. I see way too many small companies saying, “our sites have features x, y, and z.” You all know what I’m talking about – saying “we provide WordPress, Joomla, jQuery, accessibility, SEO (what a joke!), etc…” is how you might sell a product. If you’re creating websites, you’re primarily creating experiences – not products. Consultative selling is the only way to sell individualized consulting services, as any other strategy risks commoditizing the offering and cheapening the perception of value (ever seen a template marketplace?). If you want more info just google around and learn about selling intangibles or marketing services.

    As far as consulting goes, good consultative selling acknowledges and values a way of doing business (its about the relationship – the trust. i.e. – a person to call if something goes wrong, a certain level of comfort and partnership) You’ve also got to emphasize that you’ve got the ability to provide the solution ideally suited to the buyers needs. After all, they’ve come to you for a solution – not a product.

    2. Client education – If you don’t have a process that you can talk about, and how that process is designed to create the best solutions, then you’ve got a serious problem. Clients aren’t dumb. You need to be as business-savvy as your clients if you want to provide a serious service – otherwise, how can you provide a service that meets their business needs? Your clients do not need to be as tech-savvy as you are – that’s why they are paying you. There are dozens of ways to accomplish this task, but it all comes down to creating the experience you provide. Every touch-point should be aimed at accomplishing some goal.

    In closing, these are two big reasons why the general public doesn’t perceive these services as valuable. I think things will turn around, and that this is all a result of a relatively new industry – and of businesses struggling to figure out how to compete in it.

    On a side note, I visited a successful agency’s site a few weeks ago and looked at the form they have for initializing contact and creating a brief. Under “budget” they had (something like) these ranges and descriptions;

    A. $100-$10000; Small projects can be fun, but they don’t really work well within our process. However, we do make exceptions from time to time. Drop us a line!

    B. $10000-$50000; Not too little, and not to much. These projects are just right for us, and we know we can provide an awesome service within our process. Come on in!

    C. $50000-$100000; Sorry, we don’t provide services for large corporations or lengthy projects. We like to mix it up from time to time, and enjoy a variety of projects.

    I thought that was very interesting. The copy wasn’t the same, mind you, but the idea was.

    I’d love to see some feedback here. There should be more than a few posts in this thread!

    # April 3, 2011 at 1:13 am

    Some people are just broke and need/want to get stuff done so try to get it cheaper :-D
    Maybe you could Print out all the code necessary to make a “what ever is close to the software the client wants” that you can find, and show them that you have to type all this crap out and tinker over it and show them just how hard it is :-D or just tell them screw off :-D

    # April 4, 2011 at 2:29 am

    Professional documentation can help, the ol’ GANTT chart, scope statement and “sign-off-sheet” (contract, without the word “contract”) can go along way in showing you’re serious.

    As I’m sure you’ve read, undercharging can make you seem cheap and worthless, you have to state why you are cheap “Portfolio building”, “Late for the pub” ect.

    Vise-versa! You also have to state why you are so expensive, this usually requires previous work, testimonials, professional charming skills or a hostage situation.

    You also need to make sure they are serious, one client took 5 months to pay, no matter how many times they say “I love the site!” they love their money significantly more.

    Also when starting out we were very professional and ethical, we installed a system on “shady clients” allowing us to remotely break their website in the event of communication avoidance, or not paying or 5 months, even if they changed all their passwords!

    We now just charge 20% upfront before starting new projects and hold off on handing them the final files until the rest is paid upon completion, which some clients respect.

    TL;DR – You need to show clients you’re serious about your work, you also need to make sure they are serious about theirs.

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