Having worked with many small businesses and non-profits, pricing is always a concern. Especially when both are start-ups, or similarly you know they are not bringing in much money.
It is easy to feel for them and not want to charge one's normal rate. This I find especially true with non-profits.
Here have been some guidelines that I try to follow. With non-profits I go into the situation knowing that I am going to give them a break. I usually give about 10 to 15%, depending on the type of work that they have going on at the time. I also express to them that this is my rate for non-profits. So incase they do want to recommend me to other places they are not telling the other people the rate that I am giving them. What I have found that works best is that I tell them my normal rate is X and I am offering my discounted rate of Y. I find that by doing this right away offers a couple of benefits. First, they know that I am offering a rate other than my normal rate and this takes away the negotiation portion of the rate. Second, they know what I normally charge, so if they want to recommend me elsewhere, they have an idea of a rate they can quote.
For smaller companies or ones that I know fit into the start-up category I sometimes will offer a lower rate. I try to be careful on this because we all know how hard it is to raise rates later. Often times I am being called in when there is a substantial about of work to be completed and I know that after wards that it will slow down a bit. So I will make a deal with them stating that with the current project I will charge by the project rather than an hourly rate. In my mind and on paper I am really calculating the project at an hourly rate. But it is never presented this way. I give more vague numbers to them, but in reality I am still offering them a deal. So for an example instead of charging them 12 @ 95.00 an hour and leave them a bill for $1140.00 I will tell them that in my experience that these types of projects average between 12 and 15 hours, and I can do the work for $1000.00 which is just over a 10% discount. I also explain if that for some reason the project takes longer than expected that I will eat those additional hours. This makes them feel good because they have a set price for the work and know that I am not going to run the bill up. They a also know that they are getting a slightly reduced rate, but it is harder to pinpoint. So it is harder for them to say….”well last time you only charged 85 an hour...” Then moving forward I charge my normal rate. In this case it is a win-win. I have a new client and they are getting what they need at a reduced rate.
In the long run, I look at both the non-profit and the small company/start-up company as a win for the industry. Meaning that I am not lowering prices so low as to hurt the industry as a whole. The would not want to do anything that makes that entire industry (as in my case Network Consultant’s) to have to worry about price gouging, etc. As mentioned in the original article, it is hard enough having to pay one’s taxes, insurance, retirement, and all the other items that keep a business running.
Just my thoughts...
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