[consulting] Gouging Stupid Clients

[Greg Knaddison]

"Price gouging" by lying to your client about the hours as task takes is sleazy.

On the other hand "value based pricing" is a well accepted practice.

I think the most important thing is that your client knows whether you
are charging per hour or per value-added. If you are honest with your
client it's never sleazy.

Cheers,
Greg

On Thu, Feb 23, 2012 at 9:39 AM, Cameron Eagans <cweagans at gmail.com> wrote:
> I guess it just depends on how important client retention is to you. If you
> are charging a LOT, somebody is inevitably going to come in cheaper than
> you. Price gouging is such a sleazy business practice.
>
> On Feb 23, 2012 9:27 AM, "Fred Jones" <fredthejonester at gmail.com> wrote:
>>
>> OK the subject is exaggerated--that was just to get your attention. :)
>>
>> I recently spoke with a client who told me his woes about how he had
>> to wrestle a site away from unscrupulous site builders who built and
>> hosted it and charged exorbitant fees for any change to their
>> (hard-coded HTML) site. He was looking for assistance with his new
>> rebuild in Drupal. According to what he claims, I think his
>> organization was gouged previously.
>>
>> Now I have a client myself who has no understanding whatsoever about
>> what I do. When they ask for a change (and I even ran a training
>> session with them (twice) to tell them how to do little things
>> themselves, but anyway they like to ask me) they ask how much time it
>> will take and what's the price. Usually I say it looks like a half
>> hour job and so I will charge you for a half hour. I don't want to
>> discuss rates here, but let's just say my rate is 100 Yen per hour. So
>> I charge them 50 Yen.
>>
>> But I realize now that if I would say two or even four hours, I am
>> fairly certain they wouldn't flinch, and even if they did, I could
>> whip out a few big words and explain why it's complicated and they
>> would accept that. They would then pay me four hours for a half hour
>> of work. So what I could do, to be honest, is to say, "This will cost
>> 400 Yen" and not mention that it's a half hour job. They don't really
>> care about the time--just the price.
>>
>> I'm sure others have such clients.
>>
>> I'm wondering what others think about this. On the one hand, it may be
>> unscrupulous, because no one (not even Lullabot) takes 800 Yen per
>> hour. On the other hand, however, they are willing to pay 400 Yen for
>> this job and the business majors would say "don't leave money on the
>> table." Wouldn't' they?
>>
>> Fred
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>
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