As developers, we hear the echo chamber on Hacker News and others shouting at us to raise our rates. We are worth it. In theory they are right, we are worth it and we should be charging an industry standard rate. However, there are some instances when it’s OK to lower your rates.
Here are 3 times when you should consider lowering your rates:
1. Building Your Portfolio
This is definitely the case when you are first starting out. If you don’t have a solid portfolio, why should a client trust you to build their project at full rate. You have no credibility and they would be better off using a large shop that charges the same rate, but has hundreds of apps under their belts.
Even if you are not just starting out, this can be a great strategy to employ if you are wanting to land a client that will “look good” in your portfolio. We have done this in the past when we have wanted to break into certain markets. We found some of the leaders in those markets, given them a killer deal (or built small projects for them) so that we were able to put their logo on our website.
This strategy has proven to be incredibly successful for Pixegon
2. Longer Term Engagements
Our overall goal is to make money and provide sustainability as indie software developers. If you get an opportunity for a longer engagement on a project you enjoy working on, this often times can be much more valuable than trying to get your full rate.
Example:
3 month gig at $125/hour VS 6 month gig at $100/hour
- 3 months * 172 hours * $125 = $64,500
- 6 months * 172 hours * $100 = $103,200
In my opinion, I would MUCH rather be working on a larger contract at a lower price than a shorter one at a higher price. At the end of the day, it’s all about the contract value and sustainabilty.
3. On The Job Training
As students of computer science, we should be able to build anything right? Well, sort of. In the past, there have been instances when clients have asked me to work in unfamiliar territory. Whether that is using a programming language I have never written in, or working in a field that I don’t know much about.
Rather than just declining these types of contracts and pigeon holing yourself into one area of practice, try giving the client a discount while you come up to speed. This benefits both you and the client. You, get on the job paid training to learn new concepts and expand your area of expertise, and the client gets their product built for a significantly lower cost.
Final Thoughts
Rates are a weird thing. I would encourage you to constantly experiment. Raise them, lower them, exchange some for equity. Find out what works for you and your clients.
