Other People’s Finances Are Not Your Responsibility

A conversation evolved in one of the small business groups I’m in recently. I should point out that I am a freelancer, and the people in the group are mostly freelancers, coaches, online educators or content creators. In short, they are solopreneurs, working alone, outsourcing when necessary but rarely managing full-time employees.

The conversation was about negotiating on rates when people can’t afford your services, and it was surprisingly divisive. Around half of those involved insisted that your rates are your rates, and you always stick to them, unless you proactively decide to run a sale or package as part of your marketing strategy. The other half were equally insistent that negotiating is fine. It’s just part of being in business.

It reminded me of a piece of advice I was given early in my career.

Other people’s finances are not your responsibility.

At first glance this may seem harsh, and unempathetic. But we are talking about business here. If you want to help out a friend financially, support a family member, or make a large donation to charity, that’s fine. When it comes to business, however, whether someone can afford your rates should not dictate what those rates are.

There are exceptions, of course. When you’re starting out, you may need to negotiate a little because you simply don’t have enough clients. If you lose a big client and need to get another one quickly, you may benefit from offering the new client a great deal. I would argue, though, that those are marketing decisions you make to meet your business objectives.

It’s different when you have a fairly full client roster, but are constantly approached by potential new clients who know what your rates are, cannot afford them, and use their own lack of resources as a reason you should discount your services for them.

No-one will talk about a lack of resources of course. They’ll refer to having a tight budget, or not having the cash flow to pay you that much right now. The fact is, whether someone can afford your services should not dictate what you charge them for those services. It should simply dictate whether they get to access those services or not.

Is It a Gender Issue?

It seems like it might be. Most of the solopreneurs in the group arguing that you have to take your clients’ ability to pay into account were women. With a few exceptions, most of the men in the group were willing to stick to their rates, no matter what.

As women we are conditioned to always consider other people’s needs, to compromise and to try and keep everybody happy. That doesn’t mean for one moment that every woman entrepreneur thinks like that. Simply that, as a demographic, we are more likely to.

For that reason, it’s even more important to set fair rates and stick to them as a woman business owner. The gender pay gap is still a reality, in spite of equal pay legislation, for a complex set of reasons. One of them is simply that women often accept a lower rate than men, for doing the same job, whether as an employee or an independent contractor.

Charging lower rates as a woman doesn’t mean you will ‘steal’ clients from your male colleagues by under cutting them. It just means your male colleagues will get the better clients that can afford to pay higher rates, and will probably have to work less for the same amount of money.

Is It a Mindset Issue?

This also came out in the discussion. Many of the people who were willing to negotiate just had a different approach and mindset when it came to setting rates. Specifically, they were focused on time over results.

When a business employs a copywriter, for example, they are not paying for their time, but for the results their copy can bring them. This is why top copywriters writing for large corporations can charge so much. They are not being paid for the few hours they spend writing copy, but for the (potential) million dollars in sales that copy brings in.

A top consultant can charge hundreds of dollars an hour because their client is not paying them for that particular hour, but for the 20 years of experience they bring to the discussion, that could save the business hundreds of thousands of dollars.

Is It an Empathy Issue?

Yes. Without doubt, there are business owners who give away too much for too little because they have empathy with those who really can’t afford their services. There are ways to get around this.

Some online educators offer a scholarship or bursary system which those in genuine need can apply for. Some offer ‘pro bono’ work, again to those who can demonstrate a genuine need. Some volunteer in a community organization that serves those who might need their services but really can’t afford them. Financial planners might offer their services occasionally to a non-profit credit counselling service, for example.

Doing this allows you to refer everyone who says they can’t afford your services to a system that might allow them to access them for a lower rate, or even for free. And guess what? You’ll never hear from most of those people again, because sadly, many of them can actually afford your services. They just don’t want to pay you what you’re worth.

Ultimately, other people’s finances are not your responsibility as a business owner. People can either afford your rates, or they can’t. Set up a clear rates page on your website (like this). Charge what your services are worth. Then set up a way for those in genuine need to access your services, if appropriate and practical.

That’s it. Your work is done. Get on with supplying stellar results to those clients who are willing to pay you what you’re worth.

Karen Banes is a freelance writer specializing in entrepreneurship, parenting and lifestyle. She writes articles, website content, ebooks and the occasional award winning short story. Her work has appeared in a range of publications both online and off, including The Washington Post, Life Info Magazine, Transitions Abroad, Brave New Traveler, Natural Parenting Group, and Copia Magazine. Learn More About Karen