How to Get Paid Faster Using Retail Pricing Strategies
If you’re a freelancer, you’re a business owner. As an owner, it’s important to have strategies for getting paid more and getting paid faster. Successful retailers have done this forever.
Let’s borrow some retail techniques to improve our money strategies.
Note, all of these might not work for you, but I’m betting some of them will be perfect.
Here are the five strategies:
1. Discount for Upfront Payment
2. Volume Discounts to Encourage Repeat Business
3. Special Rates During Slow Times
4. Increase Billing Rates by Promoting Your Niche
5. Productize Your Services
1. Offer a Discount for Upfront Payment
If you already get paid 100% upfront for every project without needing to offer a discount, this strategy isn’t for you.
But I know many freelancers would like to get paid upfront but can’t seem to make it work with their clients. If that’s you, maybe it’s time to sweeten the deal.
Let’s take a lesson from the car rental companies. If you’ve rented a vehicle lately, you’ll likely see an offer that gives you a substantial discount if you “pay now”.
Notice the savings under the Pay Now button. Is it enough to lock you in? They want you to pay, not when you pick up the car, not when you return it, but right now. They want 100% upfront, and for that, they’ll give you what looks like a great deal.
Why do rental companies do that? They want to lock you in, to stop you from clicking on a competitor’s site and comparing offers. They’re hoping that this deal is enough to get your business. Also, they want your money in their bank account. Why not collect the money as fast as possible?
Could you offer a discount for upfront payment? Sure, you could. Just put it out there on your estimates, like the rental companies do.
But aren’t you giving away money that could be yours? In theory, yes, but in practice, maybe not.
The reality is that prices for creative work, like rental cars, are very fluid. Let’s say you’ve been charging $500 to write a blog post. For the next client, make it $550, and offer a 10% discount for advance payment. So, you get $495 ($550 – $55) upfront. It costs you $5 to get paid right now.
Another thing to keep in mind—you don’t have to offer the same terms to every client. You could offer 5% instead of 10%. If you already get paid upfront, there’s no need for any discount.
If you’re talking to a prospect who seems very price-conscious, an offer of a discount might be a great solution. Many people love the feeling of getting a deal. A discount for upfront payment may appeal to them.
Client Can’t Pay Upfront? How About Paying Quickly?
Some clients will tell you that their accounting system (or whatever excuse they have) won’t allow them to pay in advance of the work being done.
That’s fine, you have another offer. How about 2% off if they pay within ten days?
This worked for many of our clients. Our default terms were “2% Discount, 10 Days” or “Net 30 Days”.
Again, this 2% incentive worked because they could see tangible savings.
Today, many clients have procurement departments, and they get rewarded for saving the company money. They look for these kinds of offers.
A caveat: if you offer a 2% discount, and the client takes it but doesn’t pay within ten days, you have to bring it up. This could be uncomfortable, but you have to do it. Otherwise, you’re giving money away for nothing. A deal is a deal, and clients have to understand this.
Do it politely, but don’t avoid it. It’s worth the discussion. If, for some reason, they just can’t pay within the time period, don’t offer them a discount.
2. Try Volume Discounts to Encourage Repeat Business
If you shop for groceries in the big chains, you will have seen their volume discount offers. Buy one for $2.69 or two for $3.00. At the ”twofor price” it’s only $1.50 each, how can you not immediately grab two?
Tempted by the volume discounts? Many shoppers grab them.In the creative services business, you’re not trying to sell more at once, but you are trying to get more business from the same client.
I always looked for clients who could give me ongoing business. I wasn’t a fan of one-off jobs.
If you’re meeting with a prospect where you can see the potential for ongoing work, why not offer a discount for volume?
Let’s go back to the blog post example. It’s $550 for one blog post, but you could offer a price of $500 each if the client commits to 5 blog posts. Again, you have flexibility with the numbers, so create prices that work for you. You don’t want to give away your work, but you do want to get clients to give you ongoing work.
If you make this type of offer, you may consider giving the whole discount on the last deliverable to ensure you get all of the work promised at the discounted rate.
So, in the above case, the “normal” price is $550. Bill that for the first four blog posts. When they complete the fifth one, apply all of the discounts. That means the last post is just $300. You’ve billed $550 X 4 ($2,200) plus $300 which is $2,500, or $500 per post.
Lastly, you may want to put a time limit on your offers. In the case of the blog posts, maybe the client has to commit to the five posts within six months.
Look at your projects. Is there an opportunity to offer volume discounts? If so, try it. They may not go for it, and that’s OK.
As a business owner, you have to be prepared to test pricing offers to find what works with any given client. Remember, it’s not one size fits all. You can use different offers at various times for each of your clients.
3. Could You Offer Special Rates During Slow Times?
Retailers do this very successfully. Many will have sales in January and February to encourage people to buy after all the spending of the holiday season.
Could you do something like this? Sure. I’ve seen tweets from writers saying I’ve got an opening on my calendar during the next few months.
Try that with clients too. Let them know when you want their business (next month, for example). You don’t have to be specific about the discounts (but you could if you think it would help). You could say, “Take advantage of my very best rates during this time.”
The point is to reach out to clients to let them know, to prod them to start the project at a time that suits you.
Think about your own buying habits. I bet you respond to these types of reminders. Clients will too.
4. Increase Your Billing Rates by Promoting Your Niche
When prospects first encounter you, will they immediately recognize your niche, your specialty? Is it obvious on your website or your social media presence?
It should be. Here’s why. People expect to pay more for niche expertise.
A clearly defined niche with proof of expertise. Clients love it!Let’s look at retailers. You go into the “Organic Green Grocer”. Everything is organic. You already know it will cost more, but that’s OK because you appreciate the difference organic makes.
You visit the “Paris Perfumes” store. Are those perfumes premium-priced? Of course, they are. These are not your department store perfumes.
Assuming you have a niche (or are working on developing one), make sure your prospects know about it. How can you amplify your niche?
First, by simply including it wherever people find you. Will they know what you do from your Twitter profile? Take lessons in defining your niche and expertise from Michelle.
If they go to your website (you do have a website, right?), is your niche immediately obvious?
On your site, be sure to reinforce your niche with the examples in your portfolio and testimonials from clients. You don’t need more than ten portfolio pieces or five testimonials.
5. Productize Your Services With a Few Options
Have you ever bought a new car or truck? When you visit a dealer, you have two choices. You can buy one that’s already been built and available on the lot. Or you can order a vehicle that the company will create with your preferred options.
But note, they won’t build you a custom car from the ground up. About 90% of the car is pre-determined. The other 10% are pre-defined options. So, you could choose color, engine/performance options, interior and exterior trim, etc., but only from the manufacturer’s specs.
Some creative businesses lend themselves to these types of offers. For example, if you’re a programmer building websites, you can easily productize your services. Define a basic site and then a list of options. Create and communicate a standard building procedure. Let the prospective client know that you need a decision for each option.
What are the benefits of productizing services?
Your job becomes easier, and you can work faster since you already have the framework for most of your work.
Having a product makes it easier to define what you do, and by exclusion, what you don’t do.
You avoid wrong turns and dead ends. You have proof that the way you work is successful, so you’re not redoing work.
Clients are comfortable because they see you have a structure. You’re not just winging it. Limiting their choices is actually a good thing. You’re not asking clients to determine all of the project parameters. You’ve done it for them by providing specific choices.
Your portfolio is coherent with projects that follow a pattern. Again, this makes it easier for clients to say yes.
If you do productize your services, create a form to help clients choose their options. Make it easy and obvious to understand.
More money talk here. Learn how to increase your billing with detailed estimates.
Also, one of the most popular posts on the site: the best pricing models for creative services. Choosing the right pricing model is an easy way to boost your income.
Learn all about money strategies that grow your business in my book, How to Start a Successful Creative Agency. It’s the essential business guide for graphic designers, copywriters, filmmakers, photographers, and programmers.
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