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Pricing: A tried and true method for starting working relationships

posted by Joshua on May 8, 2017 in Entrepreneurship, Tips
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How do you price a job when you first start working with someone?

You don’t have a history with them. Go too high and they might choose someone else.

Too low and you lose potential money, and they might think you’re lower quality.

You’re not negotiating a long-term job offer, so you don’t want to go into too much depth.

A friend liked the advice I gave him and suggested I share it. I wrote him:

Pricing is hard in a new relationship.

In a situation like yours, where I suspect they’ve worked in similar arrangements, I say that if they’ve hired people in similar ways before, then I’m comfortable working with the average of what they’ve paid others, or maybe a little more. They don’t have to disclose the numbers of what they paid others. I’ll take their word for it.

If they don’t have such a history, I’ll tell them the range I’ve worked with, which ranges from thousands of dollars per day to almost nothing in extenuating circumstances. I’m happy to discount from the upper number to meet their budget. That usually gets them to say a number.

You still have to negotiate, but I’ve found that this approach starts the process in a friendly and productive way.

If you found this page, you probably just landed a job or are close to it.

Congratulations and good luck! … I hope the advice helps.

EDIT: a reader wrote with his experience:

Hey Josh,

Hope you are well and that semester ended positively.

I wanted to let you know that thanks to your help and guidance, I secured my first 2 PAID consulting gigs. They are part time and long term so I will still keep my f/t job and consult after hours.

Your approach of negotiating my fee was spot on. I used both approaches you suggested (asking what they paid before (if they had hired consultants) and then giving them a range. All the while the focus on building and maintaining the relationship was in the forefront.

Thank you so much again for sharing your wisdom and for continuing to share through your book and blog posts. Please call upon me anytime I can be of help to you.

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