What’s a freelancer to do?
- Max could rail at Jan that she is undercutting her severely and driving the market down.
- Max could take Jan aside and say, “Look. I know you are good at your job, and you deserve better pay. They have been steadily paying me four times your rate.”
- Max could lower her rate, accepting that the market won’t bear the higher fees anymore.
- Jan could raise her rates, realizing she is in demand.
This is not an isolated incident. Today, I personally know two sets of editors in different parts of Canada who are wrestling with this very question. Add in competition from foreign editors, and we are all likely to be wrestling with this issue.
There’s this friendly, collegial voice that says, “We need to stick together, and her prices are hurting us all.”
But there’s this legal principle** that says it’s against the law to make “an agreement among firms or individuals to divide a market, set prices, limit production, or limit opportunities.” That’s the definition of collusion, or price fixing.
How the oil companies manage to communally set prices, I’ll never understand.
I am sympathetic toward all editors in this scenario. I mean, the Jans don’t seem to know what the going rate is. How could they? Freelancers tend to guard this like a secret code, and clients aren’t going to tell. If we don’t talk about going rates, how will we know what they are? I also feel sad that the Jans do not believe in their skills. I want to drill confidence into them.
On the other hand, I sympathize with the Maxes. They deserve to be fairly compensated and have spent a lot of time working clients up to respectable fees.
It may be time for the Maxes to mentor the Jans. Or, at least, to open discussions.
How about that legal question? Agreeing with competitors on pricing can be seen as collusion in a free market, and that’s illegal.
This summer, Apple lost a case in which they were accused of fixing e-book prices. Apple and other publishers seemed to feel that Amazon’s pricing was unsustainable and were accused of agreeing to all set higher prices. Yes, the volume of sales is what makes it possible for Amazon to sell some books at a significant loss, undercutting competition so much that they cease to be competitors. But that was not on trial.
Competitive pricing is one of the foundations of capitalism and the free market.
The editors who started the national association in Canada will tell you that sharing information about the market is one of the primary reasons they started meeting back in the late ’70s. Weary of collusion, they have so far chosen simply to share their stories with each other and leave each editor to set her own prices. But an educated business person (a.k.a. freelancer) is in a much better position to know what the market will bear.
Earning a profit is another foundation of capitalism. You are allowed to make a profit, even encouraged to.
My goal has always been to
- charge like a lawyer (hour minimums and itemizing the tiniest expense),
- price like a gas station (based on next week’s predicted cost/value), and
- collect interest like the credit cards.
I’m a bit of a shark that way.
What would your advice be to Max and Jan?
** Laws are not equivalent around the world, but you can examine the ebook price fixing case to understand the argument against collusion, and maybe even for it.