I have no doubt that being in the online business space, you will have heard the term ‘race to the bottom’. This term is used to explain how people who provide the same service compete for business by trying to be the cheapest service provider. Well you know what? I’m here to tell you the complete opposite. That’s right. I’m telling you that you should be racing to the top, aiming to be the most expensive service provider. Hold on tight, because I’m about to tell you why.
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When I started the freelance journey, seeing so many businesses offering cheap web development services terrified me. At times I felt sick to my stomach knowing that I was competing with other businesses that we’re so cheap. I couldn’t get my head around how they managed to charge such minuscule prices and above anything else, it made me doubt my ability to charge people what I thought I was worth. I think this fills so many online entrepreneurs, especially women, with dread. Thinking you have to compete to be the cheapest can be soul destroying.
The businesses and freelancers who ‘race to the bottom’ only end up undervalued, underpaid and overworked. In fact, you need to be doing the complete opposite. Invest in yourself, just like I have done, gain skills of high value to your clients and race to the top just as I did. I started out as a freelance web developer on $20 an hour. Today, I charge $100+ an hour, and most importantly, I’m confident charging those prices.
Overworked, Underpaid And Undervalued
So you know what the ‘race to the bottom’ is all about, and you’re probably pretty surprised to hear me challenging that. This concept seems to be so ingrained in the online business world. If I use Google’s search engine to look for a web developer for example, this is what I can see in the results:
- Save up to 70% in costs on web development
- Websites from just $99
- 8 page website for as little as $299
- $174.99 for a full ecommerce website
I could go on and on and on, but I think you get the point. Companies are competing to be the cheapest, to try and win as many clients as possible. Now let me ask you this. Would you rather have one client pay you $5000 for a website or 10 clients pay you $500 for a website? I know which one I would choose. Does it sound like a dream having clients queueing up for your service? News flash! You don’t need to be the cheapest in your industry to achieve that dream. Join the race to the top and you can be the most expensive service provider in your field and still have more work than you know what to do with. Speaking from experience, I am quite often slammed with work and client deadlines, to the point where raising my rates and losing a few clients is a relief!
There is no logical reason to race to the bottom.
Yes, you might land a lot of clients, but the truth is that you will end up overworked, underpaid and undervalued. Following on from the example above. If a client pays me $5000 to create a website for them I’m going to do a bloody good job. It will be a piece of work that I’m proud of, something I want to showcase and most importantly, something I enjoyed doing. If a client pays me $500 for a website, chances are, it’s not that big of a job, it’s not that challenging, and it’s not going to be portfolio worthy. That’s not saying at all that I wouldn’t do my best for someone paying less, but you get what you pay for. You get me?
Those companies above, preaching ‘$174.99 for a full ecommerce website’ are also going to give you exactly what you pay for. A cheap, out of the box, ecommerce solution. And if that’s all you need, then go and purchase their services, by all means.
If you require a customized, bespoke ecommerce solution then you’ll be forking out a lot more than $174.99 to get the product that suits your needs. I suppose you can think of services like Blue’s dog toys. If I go to the pet store, there are a wide range of dog toys and a wide range of prices. I can purchase a small, squeaky rubber ball for three or four bucks. That small squeaky rubber ball is going to last Blue only a matter of minutes. But if I get Blue his favorite Kong Wubba (with the straps that hit him in the face!) for $10 then
- He’s going to be so much happier and
- The toy is going to last him a lot longer.
Either way, I’ll get what I pay for and the same is true of anything.
Race To The Top
Allow me to explain why I’m telling you that you should be competing to be the most expensive service provider in your field. To be blunt, you won’t get anywhere by being the second cheapest in your field, so you might as well be the most expensive. Now you’re probably thinking along the lines of “I can’t just decide to be the most expensive” and “If I raise my rates, I’ll lose my clients”. Yes, you’re correct. There are steps you need to take in order to race to the top. I’ve done it, so you can as well.
I don’t think for one second that anyone would leave the security provided by a mundane 9-5 job, to be overworked and underpaid as a freelancer. People chose a freelance career for many reasons, one of them being that you are your own boss so you can choose your prices.
You CAN choose to be the most expensive. You just need to be willing to spend the time and yes, money, to get to a place where you can be confident in charging your clients $100 an hour
Keep reading to find out about pricing and what you need to do to race to the top and raise your rates with confidence.
Do You Find Pricing Intimidating?
I’ll be the first to admit, I suck at pricing. And so many others in my field agree. Maybe it’s because as web developers we very rarely have to do the same thing for two clients. So what we charge one client for a website, would be completely inappropriate to charge another client because they require less functionality. The bottom line is, setting your own prices is hard because you have to put a value on your time and service. A lot of people think that if their rates are high, then they’re being arrogant. On the flip side, if you undervalue your time, then you could end up in some financial trouble.
Sales Funnel Example
I think sales funnels are a pretty good example when debating prices. If you’re hiring someone who will create a sales funnel for you that will produce in excess of $70,000 a month, that’s over 1 million dollars a year, what would you pay them? Half a million? More? Either way, you’re profits will be pretty significant. To get an awesome product or service, what you pay will have to be reflective of that. No one would make you a million dollar funnel for a few hundred dollars. I hope I’ve made my point. If your clients see the value in your service, or you can demonstrate your value to them with real life examples, you’re onto a winner.
What You Need To Do In Order To Raise Your Rates?
The bottom line is that you need to have an awesome service to be able to race to the top. How do you make your service awesome? Speaking from experience, you put in a lot of hard work. You need to learn badass skills that are super valuable to your clients. In my case, I nailed PHP. Something that a lot of developers are scared of, because one wrong parentheses, and you’ve broken a site. In the process of mastering PHP, yes, I broke some sites, I’m not preaching to be perfect. But I fixed all the sites that I broke, and that was a great learning experience. I can now troubleshoot PHP files and fix bugs in sites for my clients, which is hugely valuable to them.
Invest In Yourself!
I cannot emphasize this next point enough. Invest in yourself. Invest in courses to learn new skills. Invest in networking. It will pay off. God knows how much I’ve spent on courses. But I’ve made all that money back, and then some. Each course I have done has ultimately paid for itself because it has enabled me to race to the top and raise my rates. I must admit, when I started my freelance journey, I was hesitant to put money into myself. The first course I paid for was SkillCrush. After that, I had no more reservations. The course not only taught me skills that I needed to be a better web developer, it also provided me with a network. To this day, I am still in touch with some of my SkillCrush alumni. Here’s a list of my top courses and networks to join (both free and paid):
- The Odin Project — Learn web development for free!
- Codecademy — Learn to code for free!
- Skillcrush — Paid online classes in web design, coding and other marketable skills. Julia took a few of their blueprints when she first got started and it was a HUGE help!
- Living The Laptop Life — Free Facebook group for online entrepreneurs – check out the Monday and Friday promo threads!
- CYLL Network — A business and lifestyle community that accelerated Julia’s business growth faster than she ever could have done alone. It literally took her from being a new and floundering business owner to a savagely smart and profitable online entrepreneur.
- The Digital Gangsta — Full-on, no-holds-barred course on all things Digital Marketing, from Facebook ads to email marketing to sales funnels. It seriously has it all.
Invest In Yours Tools
As well as investing in yourself, you need to invest in your tools. Like building a house, if you don’t have the right tools for the job then a few scenarios are bound to arise. Firstly, building this house will take a heck of a long time. Secondly, you won’t end up with the house you were dreaming of, instead, you’ll have to settle for something sub par. And worst case scenario, your house will fall down because the right tools were not used to build it in the first place. In the case of web development, having the right tools increases the pace at which I am able to work, helps and enables me to create stunning websites for my clients, and allows me to deliver rock solid products that my clients have confidence in and can rely on. All of this, helped me raise my rates and race to the top. Hop on over to my resources page to see a full list of business tools I use and love and recommend!
One of the reasons I chose to make a freelance career for myself, was that ability to continue to learn. Yes, it was a huge learning curve for me when I jumped into coding and web development. Almost every other day, I learn something new and I love it. Constantly bettering myself and my service. Way back when I first started out, if a client said to me “can you do X, Y and Z” and I didn’t know how to do X, Y and Z, I essentially told them that I could, and then learned how to do it. Saying no to clients isn’t my strong suit, but by saying yes, I have been able to learn as I go along, constantly improve my services and race to the top.
Learn How To Value Your Time
Get ready for a nugget of wisdom. $100 an hour is not a lot to charge as a freelancer. Here is why.
Using the example of $100 an hour, after deductible taxes, you’re left with $75. Do you still think this seems like too much to charge? How much of your time is not paid for? Doing your accounting, sorting out advertising, updating your social profiles and more. If we say just an hour a day then this take another $10 off your hourly rate and you’re down to $65 an hour. Your lunch breaks aren’t paid for. The time you have to spend finding and landing clients. I offer my clients 30 days of free technical support after the launch of their site. I don’t get paid for any time spent on that. When you think about it, a lot of your time as a freelancer goes unpaid.
What about holidays and sick pay? After all, we’re still human, we get ill and need a bit of R&R like anyone else. When you put $100 an hour into perspective, it doesn’t seem so extortionate.
Another way to look at your pricing is through how much you have invested in yourself and your tools, to make your service top notch. Not only have you spent money on courses, you have spent time completing those courses and learning new skills, in order to provide a badass service for your clients. You didn’t get paid for that time you spent improving your skills so by raising your rates, you can almost think of it as a backdated payment for the time you have spent learning, racing to the top and making yourself the best person for the job.
Referrals, Referrals, Referrals!
100% of my work comes from referrals. If a friend says to you, “go to this restaurant and try the chicken because I had it and it was delicious!”. What will you more than likely do? Go to that restaurant and try the chicken. All because someone you know and trust referred you. If your friend also told you that the dish was $10, but a week later when you go to the restaurant the dish is $11, you’ll still buy it, wont you? In essence, this is the exact principle I have used to get from $20 an hour to $100+ an hour. When someone gets referred to you, they’ve more than likely been told how much you charge and are prepared to pay you that much. If, when they come seeking your service it turns out, like the chicken, you’re a few bucks more expensive than they thought, it’s not going to be a deal breaker.
Perhaps you’re thinking something along the lines of “But if I keep raising my rates, eventually I’ll get too expensive for my clients and they’ll go elsewhere”.
Yes, this is true. It’s happened to me. Each time I have raised my rates, some clients have turned around and said something along the lines of “This is great for you, but unfortunately I can no longer afford that. Thanks for all your help and good luck” and we have parted ways. Other clients have replied with “Awesome, well done! Keep up the good work”. So yes, raising your rates will mean that you lose a few clients, but the ones you retain, will continue to refer you, and so the cycle continues. If you’re seeking justification for raising your rates, look and see how far you’ve come with measurable milestones. Have you learned new skills or invested in more valuable tools. Are you completing tasks more efficiently? All of these things are stepping stones in the race to the top.
It Will Take Time To Race To The Top
Everything takes time. I didn’t go from $20 an hour to $100 an hour overnight. The race to the top takes time, persistence and hard work. To make more money, you’re also going to have to spend more money. I’m not assuming that you have the funds ready and waiting to enroll yourself in courses or buy the best tools in the industry. If you do, awesome! Otherwise, it’s a case of knowing what courses will benefit you and your business and what tools will make you better at your job, then actively saving for them. Hop on over to my resources page to see which tools and courses I recommend for web development.
Women Racing To The Top
I suppose you could call me a feminist. As a female entrepreneur, I am super passionate about empowering other female business woman and get a lot of inspiration from fellow female entrepreneurs. I don’t think I would be where I am today without the network and support from other business women, who are, like me, racing to the top.
What I’m about to say is super controversial, so hear me out. I think it is really hard for women to a) start an online business and b) feel able to race to the top. I could do a whole blog post about this subject, and I might… But the fact of the matter is that being a online entrepreneur is a lot more suitable for woman but at the same time, it seems that barriers, such as the ‘race to the bottom’ mentality, stop a lot of women from pursuing this dream.
We don’t make progress by staying still. We make progress by challenging what we know, breaking barriers and moving forward. I believe that being an entrepreneur is more suitable for women because it gives us more freedom. Freedom to earn the salary we deserve. Freedom to have children and raise them as opposed to relying on child care. Freedom to pursue the hobbies and freedom to have a career that we love. So ladies, stop feeling constrained. You chose the freelance life so you could have more freedom. Take that and use it to race to the top of your field and be confident doing it.
I hope that you can see the point I’m making. I hope that reading this has changed your perspective on ‘the race to the bottom’ and encouraged you to instead, ‘race to the top’. When all is said and done, the key ingredient to racing to the top, is being passionate about your service and freelance business. After all, if you’re not passionate about your business, who else is going to be. If you’re not passionate about your business, you’re not going to invest time and money into it. If your passion is lacking, you’ll stay at the bottom. If you believe in yourself and your business wholeheartedly, you’re going to race to the top.
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