I recently wrote about raising one’s rates (see Business of Editing: Raising Prices). Although the article focused on raising rates, I did, somewhat off-handedly, mention lowering rates. No one commented on that possibility, and I suspect that very few readers even contemplated the wisdom of lowering one’s rates.
I’m here to tell you that sometimes it is a smarter business move to lower one’s rate than it is to either maintain or raise one’s rate. I’m sure the resistance barriers are already rising.
Let’s begin with the obvious. The decision whether to lower or raise rates rests on many of the same factors regardless of which way you lean. It makes no sense to charge $100 an hour when all your direct competition is charging $25 an hour. Similarly, it makes no sense to do the reverse, at least not with such a great spread; perhaps a smaller spread will work.
But what is not obvious is the reason why lowering one’s rate can be a smart business move. Consider why businesses generally lower prices or charge membership fees or issue loyalty cards with rewards. Now recall that you, too, are a business. You want exactly what your credit card company or your grocery store wants: repeat and loyal business. It costs much less to work with repeat clients than to find new client.
When I think about my rates, I consider the types of clients I deal with and what I want from those clients. I want to “lock them in” to me; I want them to ask me first to undertake an assignment and I want them to be reluctant to hire another editor. When those projects that are worth $20,000 in fees come around, I want the very first reaction to be to call me.
I understand that quality of editing is important. I also understand that many, if not most, editors rely on the quality of their work to bring in repeat business. I know I certainly do not skimp on quality. Yet that is what all of my competition does as well.
As I have written previously, I want to keep myself and those editors who work for me busy all year-round, not just a few weeks or months a year. Thus quantity of work is important to me. The question becomes: How do I get the quantity at the least cost and effort? One important answer is that I offer a discounted price to clients who are willing to offer me assurances that I will be called first.
Does this always work? No, it doesn’t. Some clients have corporate policies that prohibit such negotiations; others take the position that they cannot accurately forecast when and how much manuscript will arrive and thus cannot agree to “guarantee” an amount of work. Some clients have other reasons why such a proposition wouldn’t work with them.
But there are clients for whom this does work and it works to both our benefits: I am assured a steady supply of work and they are assured some money saving, along with a high-quality edit. Not only does it not hurt anything to try to work out some arrangement for repeat business with a client, but even if it doesn’t work out, the client recognizes you for what you are: a businessperson.
Of course, all of the above fits my business model and works with publishers. Such an approach is difficult to take with authors because most authors cannot generate enough work in the course of a year to make such negotiations worthwhile. An editor needs to evaluate his business and his wants and needs before considering fee reduction. But every editor should think about whether this is a concept that can be made to work for you in your business.
In a way, this hearkens back to the concept of effective hourly rate (see Thinking About Money: What Freelancers Need to Understand for a discussion on EHRs). What good does it do you as an editor to have an hourly rate of $50 if your EHR is really $20? High EHRs depend on not only the rate and expenses, but the number of hours you are actually editing. If you charge $50 an hour but only edit 20 hours a week, your EHR is $25, not $50 — and that’s before considering expenses. To my mind, I would rather work 40 hours a week at an hourly rate of $40. (And, no, I’m not advocating hourly rates; it is just that using an hourly rate makes the examples easier, less complex, more pointed, and much shorter.)
Lowering one’s rate can have several advantages. Such a move can increase the quantity of work. It can also “lock-in” a client. And, it can make a wholly new-to-you client willing to talk seriously to you about adding you to their list of editors.
Something else to keep in mind. Lowering your rate for client A does not mean you have to lower your rate for client B. Each client should be considered individually. I think an editor should have standardized base rates for certain types of work but then the rate should be adjusted based on the client and even on experience with a client. Editing services are unique to each client and sometimes to each project and one’s rate should reflect that. However, some clients offer the possibility of a quantity of work over years, which work is of a similar nature and thus requires a set rate.
Also necessary to keep in mind when thinking about rates is whether it is possible to make use of economies of scale, which is something every business has to consider. In manufacturing, the concept is illustrated by the idea that the larger the quantity you buy, the lower the individual piece price. Although editors do not work like a manufacturer, the basic concept can still apply.
I know that I can edit certain types of books more quickly than other types without loss of quality because I know that I have tools available to make the work go faster. (See, e.g., Business of Editing: The Logistics of Large Projects, wherein I discuss using my Journals macro. Also see, e.g., The Commandments: Thou Shall be Efficient.) Knowing that I have certain efficiencies in my business allows me to be flexible with rates for clients whose books are ones to which I can apply those efficiencies. Lacking the ability to apply those efficiencies would prevent me from lowering my rate and would induce me to raise it.
The bottom line is that for the right client and for the right return, editors should consider whether to lower their rate and not reflexively dismiss the possibility. As with raising rates, lowering rates should not be approached willy-nilly. Doing either must be the result of careful evaluation of what benefit (and harm) will accrue to you. What editors must overcome is the reflexive response that one should never consider lowering one’s rate, let alone actually do it.
Whether to lower or raise one’s rate for a client is a business decision and must be approached like one — objectively, not emotionally.