The freelance writing business is, by its very nature, a different beast. Many freelance writers, at least in the beginning, think about what they do more as a freelance writing job rather than a small business. If you don’t believe me, just think about the success of this website. Note that it’s the Freelance Writing Jobs network, not the Freelance Writing Business network.
This difference is important in a number of ways. Small businesses have expenses; employees don’t. Small businesses have to do marketing; people who have jobs don’t.
Small businesses often have sales or offer discounts – employees don’t. When’s the last time someone walked into a job and said, “hey, can I get paid less this week, please?”
One of the best ways to keep clients coming back and ordering more and more work is to offer a discount structure. There are a few components to setting up your discount structure, however. Skip one, and the whole thing just sort of falls apart:
Step 1: Setting your Regular Rates
There’s been plenty written at Freelance Writing Jobs and other places about how to set your rates, so I won’t go into all of that here. The long and short of it is that you need to decide on some standard pricing. Know what you’ll charge for articles, what you’ll charge for blog posts, what you’ll charge for website copy.
Step 2: Defining your Discount Tiers
Next, you want to decide what kind of discount levels you can offer. Your discount levels should reflect your overall business strategy. If you want to do more website copy, for example, you might offer a discount on website copy for clients that order blog posts.
Volume is a great way to tier your discounts, as well. You can set these up by production – say, a 10 percent discount on more than 5 blog posts per week – or you can set them up by cost – say, a 10 percent discount on orders over $1,000 in a month.
Step 3: Adjust your Standard Rates and Calculate the Discount Structure
Now, you need to make sure that you can offer a discount and still make money. To do that, it’s worth it to bump your standard rates up slightly, if possible. Just raising your standard rate by two to three percent will probably be enough to cover your discount structure.
You may not feel terribly comfortable with this. You might compare it to a department store than never actually charges full price, and that their products are always “on sale.”
This analogy breaks down, however. Your discounts are a marketing strategy. As such, they are a cost center – an expense. To cover your expenses, you have to adjust prices, in the same way that a retailer in a strip mall would have to adjust prices to compensate for increased rent.
In my experience, this kind of discount structure has been a tremendous boon to my overall business, and helped push my business in the direction I want it to go.
From an enterpreneurship program that I was involved in: When providing a discount, list it as a line item on the invoice. That way client is reminded he/she is getting a break. It also makes it easier to remove and explain to client down the road (e.g., if volume levels aren’t reached).
Another suggestion: Provide all discounts at end of contract/year. This way client doesn’t attempt to take discount early, then end relationship. Again, this is most appropirate for volume discounts.
Interesting. I know for sure I would have a problem with offering a client an artificial discount. I like being honest with my clients. If I specifically raise my rates in order to offer a discount, that just doesn’t fit my definition of running an honest business.