Revealed: What’s This Object Worth? How to Value Your Freelance Work

 Picasso Guitar at MOMA

Image by Nika via Flickr

Reading the comments on Friday’s post was very interesting. It’s amazing what happens when you take things out of context!

For the record, the object in question is a sculpture by Pablo Picasso. It hangs in the Museum of Modern Art in New York.

Because society (and art lovers) have decided that Picasso works are rare, remarkable, and valuable, the object is worth millions.  If I recreated the artwork, it would be worth much less.

How to charge for your freelance work?

I asked this question not to make a point about art, but to make one about value.  There was a discussion in a forum I belong to about what to charge.  Someone was hired to fix a problem, estimated at three days worth of work.  He solved it in half an hour.  The question was what was that worth.

Now, obviously, payment terms should have been decided in advance, but the responses were interesting.

“If you work half an hour, charge for half an hour”

“Contract work is hourly”

“Maybe if you charge less, they will like you and hire you again.”

My argument?  If you’re charging by the hour, you’re short-changing yourself.

Knowledge for money, not time

Here’s another example.  Picasso took “a shovel, a piece of twisted wicker, two forks, a gas spigot, screw nuts and a spike.” He put the pieces together and then cast them in bronze to make a bird. Maybe a few hours work? It sold at Sotheby’s for $19,193,000!! Imagine if he’d charged $50 an hour for that bird sculpture. Or the guitar.

Time isn’t the point.  Expertise, knowledge, and value of the work is. You’ve got to charge for value – what they’ve saved by getting you to fix the problem, or what they’ve earned by getting you to change something.

Picasso’s own take on time and talent

Am I right?  Do you agree?  Anyone want to join me at the museum to see for yourself?

Get the Prices You Deserve

MoneyThere’s an old technique that can help you charge more money, and still get more sales. It’s called framing your prices.  The idea is to take advantage of a bit of psychology.

You see, we think we make rational decisions, but we really don’t.

The concept behind price framing is to change the perception of how much something is worth.  A $500 mixer looks expensive until you compare it to a $1500 product. Sometimes, changing the way the price is presented can make a difference too.  A $50/month membership seems a lot cheaper than one for $600p per year (even though the total cost is the same).

Another way to reframe your prices is to bundle products together.  Here’s an example of how it works (I read this story on a site recently, can’t remember where, if anyone recognizes it, please holler and I’ll link to it).

Someone started a virtual cooking school. He started with an ebook for $37. It didn’t sell very well. So, instead of cutting the price, he did something a bit different. He developed a series of videos to go along with the book. The combination cost $77. Sales of the book took off.

Why higher prices got more sales

The $37 ebook looked expensive by itself. But compared against the video/book package, it looked like a bargain. Here’s another example. If you tell a potential customer, “Rewriting your marketing email will cost $300, or we can review your existing email for only $150,” the $150 looks cheap.

Apple does it too

Remember when Steve Jobs introduced the first iPad?  He said that the experts thought the price ought to be $999… then he announced it was “only” $499.  You hear that and think you just saved $500, even though it never cost $999 and that number was pulled out of the air.  Or, think of “list prices.”  If the list price for a cordless telephone  on Amazon is $49.00, but they’re selling it for $29.00, you feel you just saved money.  Never mind that nobody anywhere is selling it for $49.

Try Olympic pricing

Try what Michel Fortin calls “olympic pricing.”  That means  three price levels (bronze, silver, and gold – or budget, standard, and deluxe).  Most people will pick the middle one.  A few will take the budget, and some will want the deluxe. If you only offered the cheapest option, you’d miss out on all those other sales.