Why you should never tell a prospect your hourly rate

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Here's a question I get all the time:

"I’ve been approached by a small company to do (fill in the blank). I told him that I work on a per-project basis and that I don’t work for hourly fees, but he insists that I give him my hourly rate so he can compare."

There are many reasons that your hourly rate is none of your prospect's business, but the main one, is this:

Your hourly rate is not your price. 

If you charge $100/hr and your competitor charges $50/hr, this client (who is clearly not your ideal client) has nothing to go on but the numbers and will most likely choose the creative professional with the lowest rate, without knowing anything about the quality of the work or, most important, how long it will take. 

My recommendation to the designer who asked this question is to give him an actual project fee (or even a range) for his project and then ask him to get the same from his other candidates. That way, he'll know what he'll actually pay. 

(Plus, this interaction will tell you a lot about whether you actually want to work with him.)

So, in an effort to educate this prospect just a little bit, whether he ends up becoming a client or not. here's what to say:

"Here's why I can't give you an hourly rate: it will tell you nothing about my price. You don't know how long it will take me. I could be very quick or very slow -- and you would have no way of knowing. Instead, I propose you tell me about an actual project and I will give you an estimate."

Then, this designer should move on to better clients. 

That said, you do need to have (and know) your hourly rate and you need to know how long it takes you on average to do your work (and your marketing). That's why tracking your time is so essential -- and that's why I am happy to share a new -- and free -- time tracking system from Function Fox for freelancers.

Find it here: https://www.functionfox.com/free/

Listen to my conversation (here and below) with Corina Ludwig, President of Function Fox on today's podcast, where we also talked about etiquette for video calls and the evolution of working remotely.

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