October 15th, 2013 E-Learning

consulting-ratesOne of the most difficult things to do when bidding for service based work is to estimate development hours, and the same dilemma applies for instructional designers bidding on elearning projects.

If you under-estimate, you end up losing time and money. If you over-estimate, you run the risk of losing a potential client.  It really is an art more than a science.

To be honest though, there is nothing wrong with a higher bid, but unfortunately instructional designers go about it the wrong way.  They end-up inflating their hours in order to build-in contingency for rework and unexpected items.

Instead, what elearning developers should be doing is giving themselves a raise by increasing their hourly rate, and the increase in rate will help to offset the costs of scope-creep and any unexpected fires.

Higher rates often have the opposite effect that you would think upon potential clients. In many situations, perspective customers will at least inquiry why your rates are higher than your competition, and this gives you an opportunity to demonstrate why you are the best choice (just make sure you have some valid reasons as to why your rate is higher).

A Lesson Learned in Childhood

I can think of a perfect example from my childhood about when raising rates pays off. When I was in grade school, my family moved to another state. My mother worked at home as a tutor, and now was faced with the difficult task of building up an entire new clientele.

She went to the local high school and asked if she could submit her name to the list of available tutors. Upon which, the secretary gave her a book of over 60 tutors, all of which had their rates listed by their name.

The thing was, my mother’s rate for tutoring was higher from our old town, and she did want to take a pay cut, and she also did not want to be lost among the already crowded tutor list.

So, she found the highest rate within the list of tutors, and DOUBLED it for her rate! Immediately she stood out, and at the same time gave herself a raise in the process.

After two weeks she had a waiting list.

Rate Illusion

There is an illusion about rates sometimes. The thing is, someone would rather pay more money for quality and efficiency than a low rate for twice the amount of hours.

As an instructional designer, your higher rate will command a different clientele – and this is a good thing. The quality of your work will likely improve as well since you need to live up to your higher rate.

So do yourself a favor, take a look at the rate you currently charge and determine if it’s time for a raise 😉 .

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About Justin Ferriman

Justin Ferriman started LearnDash, the WordPress LMS trusted by Fortune 500 companies, major universities, training organizations, and entrepreneurs worldwide for creating (and selling) their online courses. Justin's Homepage | Twitter


2 responses

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I agree with you completely Justin! This is definitely a tough area for consultants in general, let alone in a space like ours which is becoming more competitive by the day. A micro-business community here in Australia called Flying Solo created a great little tool for calculating your hourly rate I know a lot of people who have found this really helpful in setting their rates as it’s based on a calculation rather than just estimating your worth which many people find difficult to do. Love reading your posts – keep ’em coming! 🙂

Hi Karen – Awesome tool, thanks for sharing!

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