Every now and then, I come across a client who wants me to build them a fancy website or do something online at a reduced price. In a shrinking world, it’s easy for them to pit my bids against development firms in other parts of the world with lower costs of living. Once I was told my rate was too high and referred to a firm in India that billed $4/hr for similar services. Yes. You read that right. Four dollars per hour.
As much as I may want some contracts, I can’t afford to do anything at $4/hr. Yes, it’s money coming in, but many times I spend more than that in fixed costs for a project. If I need to purchase a custom piece of code for $50, I’d need to invest 13 hours on the project just to break even!
As the field becomes more competitive, I find myself expecting to see this sign on the side of the road. I’m actually surprised I haven’t seen it yet.
I mentioned the other day that there are three different elements to a product: price, timeliness, and quality. Obviously I will never compete on price terms with these cut-rate developers. So I invest much of my free time experimenting with new techniques and technologies to keep my product quality ahead of the curve. If a developer can build a widget better than me and only charge $4/hr, I’ll be out on the street with my sign in no time!
The other day I had a specific support request pass through my inbox. I read the request, and, feeling pity for the developer, offered a discounted rate for solving his problem. This was my mistake. He then proceeded to try to negotiate a further discounted rate with me! In the interest of full disclosure, I charge between $50-$100/hour for custom development work depending on the size and complexity of a project. If you want it done more quickly, it costs more. If I need to learn a new programming language to finish things, it costs more. Etcetera.
I bid $75 for a 3-hour project because I wanted to do someone a favor. He came back and asked if I could do it for free. When I said no, he tried $20. Then $50. Then he tried to compare my rates to an Indian firm with the same service offering. Once again, I was placed in direct competition with a firm I never wanted to compete with, on terms I swore never to compete on: price.
The moral of the story is to come to a clean understanding of what terms you will compete and negotiate on. I’ll always give on timeliness, but I hold quality as a personal standard and will not compromise my pricing standards. What terms do you negotiate on? What terms are off-limits in negotiation?
