Why “charge what you’re worth” is terrible advice

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It’s a pretty common phrase around the freelancing world—“charge what you’re worth.”

But I think it’s doing more harm than good.

In fact, I think it could be completely killing or holding back some freelancers. I know you mean well. But here’s why I think “charge what you’re worth” is pretty terrible advice most of the time.

What’s the main scenario under which most of us give this the advice to “charge what you’re worth” (yes, I’m guilty too):

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A new freelancer asks how much they should charge for something: $50 for business card design? $500 for a website?

So we respond with our emotions:

“charge what you’re worth!”

But let’s take a moment and think through what you’re actually saying when you tell a fellow freelancer to “charge what you’re worth.”

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A new freelancer asks how much they should charge

Here’s a scenario we see all the time in our mastermind group: someone asks you how much they should charge for any given service.

You smirk at them with years of freelancing wisdom behind your eyes (sense the sarcasm) and respond with something like:

“Fifty dollars!? You’re not going to even make any money on that gig after client revisions, monthly overhead, and taxes! Charge what you’re worth!

If you haven’t experienced that before, here’s a real conversation from our free mastermind group on Facebook.

Question:

What do you charge for a logo? I am a web designer who doesn’t usually do logos but lately I have a lot of people asking for them. And now I’m pretty good at them. So I’m trying to price right.

One Answer:

Guys, don’t be afraid to charge what you’re worth. The hesitation of doing so and underpricing yourself is the reason we need to drag new clients through the education process every time. It’s exhausting. If we all charged $1,000’s of dollars as we rightfully should this problem would go eventually go away.

There’s one person’s opinion: if we all charged thousands of dollars for our work—in this case logo design—then cheapskate clients would just start paying the higher prices.

But a few of us disagree.

Here’s Kristin’s response:

That’s like saying someone shouldn’t even attempt a 5K unless they’ve won a triathalon. Everyone starts somewhere.

My response:

What if everyone’s not worth thousands of dollars?

I appreciate the sentiment, but isn’t that like saying if all cars cost $50,000, people would just pay the price for it? We wouldn’t. We’d ride bikes, take the bus, walk or figure out a way to sell a cheaper car to everyone else who doesn’t want a $50K car.

I know, I’m over-simplifying.

But sometimes I worry we oversimplify the problem by just telling people to “charge what you’re worth”—maybe they are.

Maybe someone’s logo really is only worth $50.

I also love how Colleen put it:

It really depends on you as a designer and what your process is and how much experience you have.

So we’ve identified the biggest problem in telling people to charge what they’re worth…maybe they are.

The biggest problem: Maybe they ARE charging what they’re worth.

Just because you wouldn’t charge that much for the time, effort, and expertise you bring to the table on a project doesn’t mean they shouldn’t.

What if they don’t have a portfolio? What if this is their first gig ever? Or what if they simply don’t need the kind of profit margins you do to make their business a success (they live somewhere cheaper than you, they aren’t married and you are, etc.).

Or maybe you’re worried about them taking your clients? If someone’s asking for such a low price (by your standards), you didn’t want that client anyway. It’s the same reason you shouldn’t care that robots are designing logos for super cheap.

The fact is there are always going to be clients who want the $5 version (which is why Fiverr is a massive business now). There will always be clients who want the $50 version. And there will always be clients who want the $5,000 version.

Telling a new designer (who may only bring $50 worth of value in the beginning) to charge $5,000 is deadly. 

Can you imagine? I was 17 when I designed my first real logo for a client. It was awful. I did zero research. I knew nothing.

I probably shouldn’t have even charged them $50. But I learned a ton doing it. And I wouldn’t trade that experience for the world. It allowed me to springboard into $500 logos and beyond.

But if I had waited until I felt like I could charge someone $5,000 for a logo, I never would have learned or progressed as a freelancer.

Here’s the rest of my response in the mastermind:

The question becomes: how does a brand-new designer get to the level where they can charge what OTHERS deem as a worthy number?

In many ways, I’d almost rather new freelancer charge dirt-cheap rates in order to learn, gain a client base, and build a portfolio.

It’s one of the biggest chicken-and-egg problems we hear about here at Millo: how do I get my first clients when I don’t have a portfolio?

Taking a bit of a hit on income on those first few projects can be really helpful in building your portfolio and may be worth the opportunity cost since it will likely help you land future projects.

Of course, you have to be smart about it.

I did it wrong

Here’s one example of a way I was not smart about it early on. I had a potential client reach out and ask for some work and I offered to do it for dirt cheap because I needed the portfolio boost and he had tons of connections in the local business scene.

So I did the work for extremely cheap. He loved the work and praised me up and down for it.

A couple months later, when he needed some more work done, he came to me.

I quoted him at my real rates and he politely declined.

I think he was a bit shocked.

And it was 100% my fault. I gave him a discount on the early work, but didn’t tell him what my actual rates were—just that he was getting a deal.

So when he came back, he wasn’t prepared for the full price cost of the project and got scared away.

So be strategic about cutting your rates early on.

Your advice is killing people

So what does the freelancer do that hears someone like you tell them to charge what they’re worth?

They increase their price.

Not because they have any more experience. Not because they bring any more value to their client. No, they increase their prices because they’re trying to follow very vague advice: “charge what you’re worth.”

And then no one will hire them.

Because the clients that want Cadillac-level work, won’t hire a new freelancer. And clients that want Volvo-level work won’t pay Cadillac prices.

So they get discouraged and, often times, quit.

What you’re really saying when you say “charge what you’re worth”

The problem is this: what you’re really saying when you tell people to charge what they’re worth is

Charge what I’m worth.

But they’re just not in the same place as you.

And who are you to tell them how much they should or shouldn’t be charging?

You don’t know their situation. You don’t know how badly they need this client. Or how badly they need new pieces for their portfolio. Or how much they desperately just want to make any money freelancing.

They aren’t you.

So that advice ends up falling flat.

We’d be better off to ask important questions like: why do you feel like that’s a good price? How badly do you need this client? What’s your strategic thinking behind low-balling this client on price?

It takes more work, but it yields more success.

You’ll see, most times when someone asks a question in the mastermind, I follow it up with those kinds of questions.

Because every business is different.

Hedging the haters

Before some of you come running with your pitchforks: please don’t misunderstand me.

want freelancers to succeed. I want freelancers to charge what they are genuinely worth. I want the world of freelancing to grow and thrive.

But the knee-jerk reaction to tell someone to “charge what you’re worth” doesn’t always cut it.

It’s time we focus on a better response. A more tailored, compassionate, understanding, well-thought-out response.

When we do that, we all win together.

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About Preston D Lee

Preston is an entrepreneur, writer, podcaster, and the founder of this blog. You can contact him via twitter at @prestondlee.

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Comments

  1. Fantastic piece Preston. As someone following this blog and around the facebook group, I can’t stress enough how much this has been an issue I’ve had to work through, and am still wrestling with. As a designer with only 3-4 years of experience and majority of it being freelance, I’ve always struggled with that phrase.

    I love the sentiment but it’s not super pratical when it comes down to it, in most cases as least. I think new designers like myself, hearing that is encouraging, but only if it can be paired with advice on building a pricing list, or examples of what people charge based on steps taken in a job. Hearing just the charge what I’m worth, and sometimes making the bad move of jumping the gun and charging more than maybe my experience, or the region/ client type allows has hurt my prospects.

    So all that to say, thanks for this piece, and I also hope freelancers continue to strive to charge what they are worth, but after understanding what also is acceptable to the quality of the work, the clients, the experience, etc.

    • Kwade, thanks for the kind words. Glad you enjoyed it! I love what you said here:

      “Hearing [charge what you’re worth] is encouraging, but only if it can be paired with advice on building a pricing list, or examples of what people charge based on steps taken in a job. ”

      I agree. When paired with practical advice, it’s a winner. Thanks for the added insight.

      Cheers.

  2. I always felt the correct phrase should be “Charge based on your demand”.

    As a freelance designer, our “supply” (time) is a constant. Want to increase your prices while making more money? Increase your demand.

    Sorry if that got a bit to econ but I was an economics major in college lol

    • Guru,
      That’s an interesting take on it for sure. Of course, sometimes price drives demand, yes? But you have to be very careful about it. 🙂

      • Yes, it can. But you are absolutely correct about being careful how you increase your demand. You may end up doing more work and still making less. It is all about finding the right equilibrium for your specific business.

  3. Son of a birch was there (in an email newsletter sent from Millo) who said sort of like that
    “If the client is not paying what you deserve and you don’t even have other work, doesn’t mean you work cheap. Instead you could do something else like for passive income”.
    Because of this advice I lost clients.
    A client who would happily pay me 200, I said no, 700 and he declined. He never came back.
    We should use our mind for many parts of our life. Because there are many spoilers out there.
    Even I earned by making icons on iconfinder.com/WaqasShah but they never reach what the clients pay.

  4. Very interesting read. Maybe rather than telling them “Charge what you’re worth” we should be saying “Charge what the work is worth”.
    Simplistically there are two factors here: the value of what the actual worth of the work is to the client, and the value of what the designer brings(at whatever level they are at). Somewhere in the there is their number.
    I wouldn’t say any logo is worth $5 if you have any amount of experience more than the one commissioning it. On top of it, if their business hopes to profit from the logo there should be some consideration of what that is too.
    I think you hit the nail on the end. We need more tailored responses for these designers. But we also need a more tailored pricing model for our clients.

  5. This was a great piece, a great read. I always hear people try to explain this, but they never have a firm grip on what they are saying so it therefore falls apart. I feel every freelance designer should read this

  6. Hi Preston, I also believe that “charging what you’re worth” is a bad piece of advice and something which will work better might be “charge for the value that you deliver”.

    I recently had a client with a very big budget which I found on upWork. The inquiry was posted less than 3 hours and I hit him with a proposal not very different from the proposals that I sent.

    He was happy to hire me and the budget was that big because they were on a tight deadline. I started to feel guilty for charging more than ten times so I got rid of the feeling by thinking “I’m going to put all my energy and experience in this logo”.

    What I’m trying to say with this, is that a logo should generate money for your client. If your client is prepared to give a big amount of money for the creation of that logo, this means that you have to make it worth it.

    If you shift yourself in thinking “how could this logo help my client in the best way possible?” you will make that money worth it!

    Sorry for the long post, I felt like I had to write it.

    • Mihai, thanks for commenting. Yes, this is the basis of value-based pricing. Instead of charging by the hour or by the project, you charge based on the amount of value you’ll bring your client. Thanks!

  7. As a relatively new freelancer, who has only worked freelance since completing design studies, I find the problem of what to charge really tricky. Clients obviously need to have some sort of an estimate of what the job will cost them, but when you have little experience it’s difficult to know how long the work will take, how many revisions will be required and whether to charge an hourly rate (if so, what that should be) or a cost for the whole job.

    Rightly or wrongly I generally try to estimate how long the work will take me (an estimate which is usually extremely short of the actual hours) and multiply by my hourly rate. And what should an hourly rate be? I’m disinclined to increase prices for fear of losing clients.

    • Judith, this is definitely a tough question. There are a few rate calculators out there, but what none of them take into consideration is how badly you need the client or the job. I would say, if you’re new and just getting your feet wet, err on the side of not charging enough. But be strategic about it and move quickly toward new pricing.

      I’ve found this becomes easy when I bundle my services. Then, I can slowly increase the bundle costs as I go.

      When I see fewer requests, I know I’ve hit a ceiling and I adjust as needed.

      Hope that helps.

      Good luck!

  8. My strategy is to charge what the work is worth to the client, considering their budget, how they will be using the work, where and for how long they will be using it.

    With over 35 years in the profession, I am seldom able to charge what I am worth, because my clients cannot afford me. So I set my fees based on the value to the client, and that means I don’t charge the same across the board. My fee structure is always customized. I’ve designed logos for as little as $500 and for over $6,000, with the amount of work/time involved on my end and rights transferred.

  9. I have been there! When I started out 5 years ago – I was all over the board. I did not price consistently and I often confused myself. I would low ball my own projects, high ball the ones I could. Then I realized I was spending WAY too much time on customs quotes and RFP’s. I just changed everything. Now I charge what I am worth..but I word it different. I charge my client for the value I bring, and for the confidence they acquire when I convert visitors to customers.

    Over time I logged how much time it took me to complete a task, and I assigned that a value. Then I took a look at the work, and how it may benefit them. I assigned that a value. With that metric I was able to find a value I could assign the work I do, and sell it as such. I actually learned this from Foxley!

    “In conclusion, if I provide you a service at a fair price that gets you a speedy return on your investment, can we sign you up today?” –

    it has been working ever since – and I have learned these things because of you guys!

    • I’m a freelance printing broker and a Graphic Designer/Artist. I work for very small local businesses that are struggling with higher minimum wage, mandatory healthcare, etc. and they WILL NOT pay big bucks for a logo or designs. I print their jobs through wholesale printers and vendors as a middleman and take a 50%-100% profit from that. Occasionally I get a new business or a take-over or a re-branding effort. These people cannot afford a logo for more than a few hundred dollars. If I try to charge more, they will get their nephew or niece to do it for them instead. Lots of kids are design trained in school these days. I think the most I have ever charged for a logo was $1,200 because she was a very tough customer and her dad, one of my bigger clients was paying the bill. I still had to argue with him a little for that one, but I still have him too. Most of my logos are $200-$500, but I usually get it right in the first couple of proofs, so I don’t have too much time invested them.
      When I use extra time because I’m trying to catch up with updated technology or trying to learn something, I chalk that up to education. If you get excited and really get into it, it’s easy to burn up time as well. I don’t really charge for that either. The same goes with websites I don’t have to constantly maintain and change content.
      I don’t spend $ on advertising, so I save some money that I don’t have to charge the clients. They are close to me and we maintain a small town general store type of relationship. I’m the store keeper and specialist.

  10. I being a designer learned that ” Charging What you’re Worth” is absolutely not a great idea . Charging what your client is worth is a better approach . Now Question here is how would we know that how much a client is worth and what kind of effort and deisgn fee we should charge in that prospective ? Well Clients Nowadays keep their true potential hidden and only convey very limited type of information . for Example I deisgn Logos & Branding , I also deisgn Arabic Calligraphy logos and many of my clients are big businesses and many are just individuals with small businesses , Now I can not charge both of these equally but both of those will pose as small businesses . If you try to ask them the level of their operations they will play like they have super limited budget and an all that … But here is the trick , You ask about their Audience like .. Who is your Target Audience / Target Market ? now they will not provide you the false or fabricated information . They will come out clean about the target market they have and it also will tell what kind of businesses they are running.

    Entry Level / Midrange / High End.

    So it all come sto extracting the right info and charging accordingly to each and every client.

  11. Awesome breakdown! It’s always important for anyone doing anything to understand the “why” before blinding moving forward. It’s hard to hate this kind of truth. Well stated!

  12. There are lots of great points in here, but I wanted to clarify the main one for anyone who didn’t catch it: the problem isn’t with the sentiment. Objectively speaking, “charge what your worth” is spot on accurate. The problem is the vague and irrational context freelancers present this advice in. With a little more clarity and understanding – as you said – this problem can go away.

  13. I hate to break it to everyone, but “what you’re worth” is a fantasy; it doesn’t exist except in your mind. Ultimately, we always charge “what the market will bear” (http://pragmaticpricing.com/2013/10/19/what-is-what-the-market-will-bear/). It’s up to you to understand the market(s) where you participate. If you leave money on the table, it’s because you were a component within the market. Learn from the experience and adjust your next engagement.