Wolfgang Beltracchi is a master forger.
He’s forged works by Picasso, Max Ernst (and many other famous artists). and sold them for millions until getting caught.
In the Netflix documentary profiling him (“Beltracchi” – The art of the Forgery), he said something fascinating.
Beltracchi says this:
“It’s easier to sell a painting for $500,000 than it is to sell one for $15,000.”
This comment illustrates the influence price has on the mind of a purchaser.
What does it mean?
It means that price is a way that some (but no all) buyers distinguish and calculate quality and value. Or, in this case, authenticity.
Surely the “Picasso” sketch with the $500,000 price tag must be authentic. Try to sell it priced at $15,000, and who would believe in its quality and authenticity?
Similarly, with client services, a high-priced service will usually make the client think it is of higher quality. (As it should be.)
It seems obvious that price would affect us in this way, but it’s harder to price on the high end because it’s also counterintuitive. And that’s why many freelancers price their work towards the low end; thinking that high prices will drive away customers.
Pricing is a subset of marketing
In fact, high prices WILL drive away customers. But it will drive away the kind of clients you likely don’t want to be serving. When you price high, what you are doing is segmenting the market by using price to repel those prospects that see your services as a cost rather than an investment.
That’s a wordy way of saying that the right prospects—the kind you want to work with—associate your higher price with higher value.
When you present your high prices to that type of prospect, instead of them thinking you are too expensive, they’ll think you are a freelancer that delivers high value.
Here’s an example:
Let’s say you were out shopping and you came across two leather coats. One was $200, and the other was $2,000. What would you think about the quality of the $2,000 coat vs. the $200 coat? You would probably think that it was of higher quality wouldn’t you?
Why pricing too low is a trap
So that’s an illustration of what happens when you price high. But in the same way that high prices can attract prospects that value quality, low prices can repel those very same prospects. Price too low, and those prospects will think your services are of low (and inauthentic) quality.
The point is when you undervalue your work, in some cases, it makes it harder to sell your services. Because clients look to price as a measure of quality.
So the irony is that the very thing many freelancers are trying to avoid becomes a reality.
And if you think that you can use your low prices to get in the door and raise them later, well, that’s probably not going to happen.
Take this excerpt from master Photographer Chase Jarvis as a cautionary tale about what happens when you undervalue yourself:
“I’ve never seen a photographer who came in at a low rate suddenly get paid a high rate.” Chase goes on to say, “you’ll get sold the idea that ‘this is how much money I have right now, and if you just come in and do this you’ll get more later.’ That’s not what happens. Because if you come in at $1,000, when they get $50,000 do you think they are going to go ‘My $1,000 person is going to be a great $50,000 photographer’? Hell no.”
This is one of the reasons Chase positioned himself as the high-priced option from day one of his career. He knew if he priced low, he would be anchored to that price in his client’s mind.
So what’s the answer? The answer is that if price is a way that some (but not all) buyers calculate quality and value, we can use that to our advantage if we focus on delivering a quality service and match it with premium pricing.
Let’s say a client is looking for a new logo. They price-shop for a while, and one price after another is in the $200-$500 range. Then they find a design shop who’s set their logo design price at $2000. For the type of prospect that values quality, this $2000 price tag is immediately going to set this shop apart and differentiate them from everybody else.
They’ve made themselves stick out in a sea sameness by using price to convey quality. And you can do that too.
“Can I just raise my prices and that’s it?”
It takes a change of mindset, and some resolve for a freelancer to decide to pursue prospects who value quality over cost. But the benefits are worth it in my mind.
Now, you can’t just take a $200 logo design and charge $2000 for it—you have to back it up with a quality product or service—but a lot of freelancers I talk with are pricing their services based solely on the fear of missing out on the sale.
Instead, why not be intentional about the way you price your work?
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