Billing Tip

Everyone once in a while I spot an interesting article that has more to do with the administrative aspects of the appraisal profession rather than art market trends.  Business Insider recently posted on maximizes billing by using pricing psychology. I realize we charge by the hour, but sometimes we also charge by the job. The article states instead of charging even numbers, make it a bit higher yet still reasonable and stop using all zeros. The article points out that when invoicing for value, instead of charging $2,000, charge $2,108.

Business Insider reports.

Whenever you’re in a position to charge someone — as a freelancer or small business owner, for instance — you want to get the most profit possible while still offering a reasonable rate.

This simple trick, coined by the Freelancers Union, may allow you to up your price without turning off customers.

It’s easy: simply cut out extra zeros. Instead of charging an even $2,000, try asking for $2,108.

"Pricing psychology shows that no matter how hard you’ve worked at arriving at your carefully calculated project rate, the first thing a client sees is the number of zeroes,” reports Meredith Lepore in a Skillcrush article on the topic.

Restaurants, retail stores, and grocery stores all employ similar logic to get us to spend more. If something is priced at $19.99 instead of $20, we may be more inclined to buy because it feels like a better deal. There's no sticker shock from seeing a line of zeros, even if the product is only a few cents cheaper.

Using a more specific number also makes it look like you put in extra time to calculate costs down to every minute detail, which shows clients that the charge isn’t just an arbitrary number, explains Lindsay Van Thoen of Freelancers Union.

"If you’re pricing your services right — based on true value — you will not be lying to your clients,” Von Thoen writes. “This is not about misrepresenting yourself. It’s about making the proposal and bid process smoother.”

In the end, everyone wins: You maximize your time and profits, and your client feels confident about what they pay. 

Source: Business Insider