Here's what ice cream teaches you about money & clients

Aug 12, 2014

The profitability of your business is always top of mind. But when you decide to raise your prices, you inevitably face the prospect of losing clients.

Wouldn’t it be even better if they didn’t notice you raised your prices at all? Or if there were no sticker shock for new clients?

According to new research out of the Journal of Retailing, people who buy ice cream are much more tolerant of package-downsizing (decreasing the quantity of ice cream in the carton, with prices remaining the same) than they are of price increases.

In fact, the study found that consumers were 4 times more sensitive to ice cream price than they were to ice cream size.

While the study was done on ice cream, I think the same principle applies to freelancers who sell services to clients. Here’s the basic principle: instead of increasing your prices, decrease what you’re selling.

For example, if you typically quote $5,000 for a project and it includes A, B, and C, you would include A and B for $5,000, but C would be an extra charge.

Let’s say you’re a web developer. You normally quote $10,000 for a full project, soup to nuts. But you’re getting frustrated because while some projects go well, other clients end up asking for more and more sophisticated features, some extra fancy javascript, and that $10,000 fee begins to look pretty meagre.

So instead, include basic website set-up, up to 5 pages, and blog integration for $10,000, but if they want any additional features, it would be $X per hour.

Simply break up the services you already provide and price them separately.

In a similar way, this practice is already common among copyeditors. They often charge $X per hour for proofreading, $Y for a more intense copyedit, and $Z for developmental editing.

This system solves two major issues freelancers commonly face: 1) Not getting paid for all the add-ons in a project, i.e. all the extra “above and beyond” work you do, and 2) Charging two clients with wildly different expectations and levels of project complexity the same rate, which means some clients feel your prices are too expensive and others would be willing to pay more.

What do you think of this system? I’d love to hear how you price your services and if you think this system would work in your industry. (Or if you think it’s a terrible idea.)

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