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How to go from $25/hour to $75/hour in 2 weeks

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I’ve been helping a friend earn more money, and tonight was a breakthrough.

Here’s what happened…

My friend has a full-time job, but recently she’s been doing some freelance project management on the side for a small consulting firm, where she earns $25/hour.

After a while, she realized that $25/hour doesn’t really add up to much, and she was getting frustrated with the owner’s poor management skills. (You know how it goes: Very disorganized, non-responsive, took days to get back to emails…)

But I encouraged her to stick around for 2 things: to get referrals and raise her rates. The client knows my friend has been doing a superb job, so she was happy to refer her to a colleague at a different company.

At this point, my friend talked to the new person — a guy who runs a different company — but was skeptical of getting too involved. “I don’t really want to do this for $25 an hour,” she told me. “And I realize that it’s not just the time I’m working…I have to deal with managing clients, who are just really unresponsive.”

I suggested a few things she could do. She went into her first meeting using my Ask Without Selling technique. Then she then went back to him with a proposal.

“You wouldn’t believe it,” she told me on the phone. “I quoted him $50/hour and he didn’t even blink. Shit! I should have asked for more!”

I love it.

There are several non-obvious things going on here:

  1. When you get referred to someone, you don’t drop your rate — you raise it. Many people mistakenly drop their rate, thinking that the referrer will divulge the rate they currently pay (they won’t), or that you should discount for your client’s friend (you shouldn’t). In fact, you should raise your rate since your client has removed all risk by vouching for you.
  2. There are many other options besides quitting. If someone’s paying you — even if it’s under your desired wage — you don’t just quit. Quitting is one of the worst things you can do. There are many other clever ways to help your client and yourself — like asking for referrals.
  3. By charging more, you get a higher-quality client: First, they can afford your higher rate, which means they’re more financially successful and therefore probably have better business skills. Second, since they’re paying you more, they don’t want to waste your time.

So the guy didn’t flinch at $50. How does my friend get to $75/hour?

She needs to package her services properly

I suggested she offer her baseline services at $50/hour, as she discussed, but also offer 2 higher tiers: For example, she could include marketing services for $60/hour, and project-manage the entire project for $75/hour. I just made those options up — she knows her business best — but the important point is to offer increasingly valuable options.

Do you know why it’s critical to offer more than one package? There are 2 reasons, actually:

  1. He might actually pick a higher tier, which would be money in your pocket — and a new hourly rate
  2. By offering 3 options, she’s shifted the prospect’s decision from “Should I buy her services or not?” to “Should I buy $50, $60, or $75/hour?”

Imagine how implementing even one of these techniques could change your earning power forever. If and when my friend closes the deal, even if it’s for $50/hour, she’ll have doubled her hourly rate. That lasts forever — and it only goes up.

You can use these same techniques to earn more money, whether you have an idea yet or not. And the techniques I covered today only scratch the surface.

I teach my very best techniques in extreme detail — including scripts, videos, and case studies — in my Earn1k course. Get a free sample of my Earn1k course here.

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50 Comments

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  1. Also, charging more can actually be a marketing ploy; especially if the original base price is below the general market rate. Even as an accountant I’ve been told straight up that I didn’t get a job because I had underbid and that they were afraid that I might start haggling later on to boost the price or charge extra for additional services as a way to get around my original low price. A higher price means that you’re confident in your abilities and that you see yourself as a professional and an expert.

  2. This is a great story. I charge by the project, not by the hour, and have discovered that at most levels, the more you charge, the better you’re treated. But at the most stratospheric levels of pay, clients sometimes revert to treating you terribly—they figure they’ve paid for the privilege.

  3. The right information at just the right time! I’m in a similar situation, and this article just gave me a road map to higher profits! Thanks Ramit.

  4. Excellent advice and I think this part is a huge, key insight:
    “By offering 3 options, she’s shifted the prospect’s decision from “Should I buy her services or not?” to “Should I buy $50, $60, or $75/hour?” ”

    I’ve never thought about it that way before, but the idea of changing the framework of their thinking is very interesting. I do have issues with this though:
    “Many people mistakenly drop their rate, thinking that the referrer will divulge the rate they currently pay (they won’t)”

    When I refer someone to a service I’m using, it’s often because I think I’m getting great value (not necessarily a cheap price), so the price paid very frequently comes up in conversation. I may not divulge it voluntarily, but if my friend asks me (which is quite common), I tell them most of the time. Maybe I’m a special case, but I also ask people how much they pay for services that they refer me to at times. So what are you supposed to do if you quote your $50 rate and the new client balks that they know you’re charging others $25?

    • Chris, a few short answers to your question:

      1. Then they are not the right client for you
      2. For a business owner, the value of having someone else vouch for a consultant/vendor is often worth $25/hour, easily. Personally, if someone vouched for a specific key person in my business, it’d be worth at LEAST that — and sometimes $100+/hour
      3. You need to convey value, not price, and there are techniques to manage the referral process
      4. This is a little more complicated, but I cover several techniques for offering introductory prices in my course. If you employ them, you can deftly sidestep this issue and offer true value for your old and new clients

  5. As a long-time independent contractor, I’d warn against offering different prices per hour for different services. It suggests that an hour of your brain is worth less if you’re “just” doing X instead of Y. Also, most projects require a mix of skills, so this approach becomes unwieldy.

    It’s simpler to find a rate and stick to it, and it’s better yet to charge by the project because then you’re rewarded for being efficient and it becomes a lot easier to charge by value (charge more for work that will net the client more).

    If you want to offer differently priced packages, add to or take away from the amount of work included in the project. For example, if you quoted $3k for the project and the prospect said their budget allowed only $2500k, you can offer to take something out, like, “I’d be happy to do the work, but for that fee we’d only be able to do one round of revisions.”

    If you do consulting-type work, you can also offer packages based on an hourly fee, with the hourly rate going down for packages of more hours. I offer packages of 2, 4, and 8 hours for brainstorming with clients. The 2-hour package is based on a higher hourly fee than the 8-hour because of the hassle of ramping up new clients.

    If you do charge by the hour, $50/hr is basically minimum wage for skilled work from a contractor. That’s why the guy didn’t blink. If you charge much less, you’ll just get cheapo clients who treat you badly, and you’ll give the impression that your work or business skills aren’t great.

    • Cat, this is a very good point. You are absolutely right — package deals would be optimal here — but there are some extenuating circumstances that made it impractical to list them here. So for simplicity’s sake, I just listed the hourly rates. But everyone reading should know the differences between the different bundles you can offer, whether hourly, project-based, commission-based, retainer, etc.

  6. Ah yes I’m also very surprised but the “3 options” advice.

    So one question Ramit, do you think that we should adapt the amount of money to each client? I’m asking because I was considering offering 3 different packages of services at different prices on my website with their price. I noticed that people usually don’t tell the price until after the client already showed some kind of interest. Can you explain why? or maybe refer to another article. I supposed you already wrote about that and I missed it :-)

    • I have an entire module on pricing in the full Earn1k course. You can join to get it. Some of my students have told me that the pricing module alone was worth the price of the course.

  7. Ramit,
    A slight tangent to this pricing discussion. I currently work full time but I’m thinking of trying out some of your ideas and picking up a bit of consulting business on the side. How do you suggest I deal with my current employer? I don’t want to lose my job but I’m a little hesitant about telling them “hey guys, I’m also going to do this other work…”

    Have you dealt with situations like these before? What do you recommend?

    • Check your employment contract. But usually they don’t include anything about working on the side, especially if it’s non-competitive. And I wouldn’t mention it to your employer.

    • Ramit,
      I have to disagree. I have worked for over 15 years doing consulting and workshops on the side and in each case I first checked my employment contract and then explained it to my employer. Across the board they said as long as it was not a competitor, they were fine with it. By the way, I took vacation days to do this. It’s a nice way to earn vacation money.

  8. Charging more after referals definately makes sense. I would think of the first few clients in freelancing as internships in the corporate world. You would charge lower because you have very little reference and no freelance”experience. After you have worked for low wages of interns (or no wages) you came out with references and the ability to ask for more because of your experience. Of course, none of this matters if you didn’t do your job well. Ramit, what would you say about pre-screening clients, how do yo utell if hte person is going to be a bad reference regardless of what you do? Do you think, some people are impossible to please?

  9. This is something I’ve always heard of to do… but never really tried. (so this post is kinda a kick in the rear for me)

    In fact I still haven’t gotten into the freelancing bit, though as an engineer I’m sure there’s a lot I can do.

    But anyways, this is a perfect example of what most REALLY successful people say- don’t wallow in the mud. If you always try to underbid the other guys, you’re seen as lower quality AND you don’t get what you’re worth.

    Instead of being the bottom of the food chain, why not be the top? Instead of selling a low quality, cheap product or service why not sell the best and get a premium rate for it?

    Nice post Ramit! Oh and its cool knowing that your friend only needs to work 40 hours to make that extra $1K- that’s nothing!

    • Justin, hearing you describe yourself drives me crazy since there are only some small, WELL-UNDERSTOOD barriers holding you back. Come join me. If I don’t kick your ass into earning back the cost of the course (and far more), I’ll personally refund 100% of your money.

  10. Awesome idea. I’m really stoked about the class, and I’ve been saving up for whenever you open up the registration again. Any idea when that’s going to be?

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