Banking

Should you charge the same rates to all clients?


Do you have "One Rate to rule them all", or do you vary your rates by client?  There are a number of good reasons to bill at different rates:

  1. The kind of work you do for each client varies, and the price that each of these markets will bear also differs.
  2. Your clients are located in different geographical areas, which affects the supply and demand for your class of services.
  3. You've had some clients for a long time, and you haven't been able to bring up their rates as quickly as new client rates have risen.  Besides, you like to reward long-term clients for their loyalty.

Of course, you can also present arguments for the other side of the coin:

  1. Keeping everyone at the same rate makes billing and accounting a little easier.
  2. When a prospect asks for your rate, you don't have to think about it.  You may be able to keep clients from trying to negotiate you down by responding "that's my rate".  If everyone else is willing to pay it, then so should they.
  3. You don't have to worry about keeping the rates you charge other clients a secret ("and in the darkness bind them").

In my opinion it depends on how homogenous is your client base, as well as the types of work you perform.  Because the best determinant of price is the value your client perceives, the more their needs differ the more you should be willing to vary your rates.  Refusing to tailor your rates to your clients can create a huge disadvantage, either in potential income lost or in too much price resistance.  On the other hand, if what you do is basically the same thing for everyone, then your services can become somewhat commoditized and you gain some advantage from having a uniform rate that you've researched and tested on the market already.

Do you ever negotiate your rate?  Lots of bright people will tell you that Everything's Negotiable, but I try not to let my clients feel that way.  From the time we first start talking, I begin thinking of what to say when the "how much" question comes up, so I don't have to fumble around for an answer and increase the perception that I'm flexible.  At any one time I tend to start all new clients at the same rate, just to make that moment easier on myself.  When I'm increasing an existing client's rate, I give it long thought before saying anything — and then announce my new fee with at least a 30-day lead time.  But I must admit that a couple of times I have had to negotiate with their response.  It helps if you have a number of other clients you can fall back on should the one you're dealing with say "forget it".  Even though so far that's never happened to me (knock on wood), having the ability to walk away from the negotiation enables you to present your case more confidently and assertively.  After all, you don't want to lose your precious income.

About

Chip Camden has been programming since 1978, and he's still not done. An independent consultant since 1991, Chip specializes in software development tools, languages, and migration to new technology. Besides writing for TechRepublic's IT Consultant b...

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