The 'right' way to charge reduced rates when you start out

If you are just starting out as a freelancer, or switching your focus, you are probably considering working for low rates. If you ask around, a lot of people will say you have to do this to "pay your dues".

I get it. It's total bullshit, but I get it.

You should charge your full rates. You are experienced enough for people to pay you, you should be charging for the value you create.

If you are determined to ignore this advice and work for lower rates to start out and get some clients, I understand.

It's scary to start out and at least you are starting out.

But for the love of all things that are good and holy, take this advice when you do it:

  1. Do not advertise the lower rate as your rate.

    Instead, tell your clients the higher rate is your rate and give them a discount. Put it on your invoice as the full rate, with the discount.

    This will position your work at its actual value and remind your clients of the favor you are doing them. Because you are doing them a favor.

    It also makes it easier to raise your rates when you are finally comfortable charging for your actual value. Because you aren't actually raising your rates, you are simply no longer providing the "I'm new to this" discount.

  2. Money is not the only thing that is valuable.

    When you are starting out, you need to leverage your early clients as much as you can to get new clients. As part of the exchange for working at a lower rate—before you start on the project—ask your client to agree to being a case study for your business.

    Case Studies are a great way to showcase your value to future clients.

    You can also ask for a referral up front, in exchange for the lower rate.

    The point is, by lowering your rate, this is a great time to get some extra non-monetary benefit out of the project.

How to pitch it to your client

It's easier to pitch both of these to your client at the same time. You don't have to get fancy, just say something like this:

Since I am new to freelancing, I'm willing to offer you a discount on my normal rate of $X. With the discount, the cost will come out to $Y. As a condition of accepting this discount, I ask you to allow me to write a case study about this project we do together. If you are happy with my work, I'd also want you to give me a referral for future work.

These two tips will help you get going faster than just working for cheap.

It's easy to get stuck at the lower rate, especially if referrals want the same price their friend got. It's easy to get pressured into doing it. By offering the lower rate as a discount, it's much easier to say no and stick to your guns.

I'd hate to see that happen to you.

Did I already say you should be charging your full rate starting out?