Episode 33 - Money and Compensation
Peter: Hey, Jen.
Jen: Hey, Peter.
Peter: So I've had something come up a number of times over the last couple of weeks from a number of my clients. All unprompted, none of them know each other, it just happens to be something that is on everyone's mind. And it is this idea of compensation, or money, specifically for freelancers. Now, I know you identify as a freelancer, so I would love to hear and pick your brain on all things money.
Jen: Oh, me oh my. What a loaded topic. Okay, well, we'll give it a whirl.
Peter: I mean, everyone hates talking about it. So I feel like this is a good opportunity to lean into that.
Jen: Well, I hope everybody's ready for some leaning. This is The Long and The Short Of It.
Okay, I know you're going to give some context to this, but I feel like I have to say I'm already nervous, and we haven't even started talking about it. I'm nervous because money and value and worth have such a heavy and complicated meaning and connotation for each individual person. And I hope that whatever we're about to say, totally unscripted, is something that people find useful. And I'm scared. I'm scared. I'm just saying it out loud.
Peter: Me too.
Jen: Okay. So tell me, tell me everything.
Peter: I mean, I should call out that I'm also scared, and I don't really know what I'm going to say and where this is going, but I think that's kind of the point of this podcast. So, leaning into the discomfort of talking about money, I'll provide you some context. So the conversations I've had have all been very similar and centered around, basically, this idea of, "I'm a freelancer, I don't know what to charge," or, "I'm a freelancer, this is what I charge, do you think it's enough?" Now more often than not, I don't think it is enough. And generally speaking, as a really blanket, generalized statement, I think a lot of freelancers don't necessarily charge enough for the work that they do. So what I mean by that is, okay the, the one particular example that came to mind was someone saying, "Okay, so Pete, this is my hourly rate, and this is, sort of, how much I need in a week, so I know I need to book x amount of people to make up that money based on my hourly rate." And so I asked him a question of, "Okay, so what do you do outside of that hour that you spend with them that relates to them in the work that you're doing together?" And they're like, "Oh, well, they can text me anytime, and I'll respond. And I obviously do some pre-work before that hour, and then afterwards I summarize everything and send it to them and a note." And so I'm sitting there thinking, "Okay, so all of a sudden your one hour is more like four or five hours, but you're only charging these people for one hour of your time, which doesn't necessarily feel fair." And you could sort of see their eyes light up like, "Yeah, I know, I know, I know, but I don't know how, and I don't know whether I want to charge more." And it's a struggle that I have a hundred percent gone through, and I still go through every single time I'm asked to give a proposal, or a fee, if you like. And so I just found it interesting that, that others are going through a similar struggle, and that this idea of, "Is it an hourly rate is it a retainer, how do I calculate my hourly rate, am I, am I, you know, over-cooking what I'm worth, am I under-cooking what I'm worth?" this whole struggle has just been right in front of me, especially over the last two weeks. So that's a very quick general introduction, and I have a thousand other thoughts, but I'll throw to you for what you feel about that.
Jen: Hmm. Oh, I feel so many things, and I'm thinking so many things. One is that, a practice I have started with myself and my clients is to define the words that we use. So perhaps we should start by defining, what is "worth," what is "value," what is "compensation," like, what do these words actually mean? What is a "fee?" What is a "retainer?"
Jen: Because if you can actually define what those words mean for you, it becomes easier to talk about them, because you know what you're talking about. And I find it to be easier to, sort of, wrap my brain around the difference between one idea and another when I've taken the time to really ask myself, "When I say 'value,' what am I actually talking about?" So I want to start with that, and I'm sure every person is going to have a slightly different definition, which is why it's so important to ask yourself what these words mean.
Peter: Yeah. I think, ooh, "value" is, I think that's probably one of the core reasons as to why we struggled to put a, as a freelancer, we struggle to put a dollar amount on our work, is often times the value could feel hard to quantify, right? Like, if you're an accountant, you can go to someone and say, "I'm going to save you ten-thousand dollars off your books," then I feel like the, the value of that is obvious. It's like, "I'm going to save you ten dollars, so me charging you," I don't know, for argument's sake, "one-thousand dollars, is a no-brainer for you, cause you're still gonna make nine-thousand dollars." Whereas, when we talk to clients that are, I don't know, coaches or consultants, where the value of what the other person is getting can be a little bit more unstructured or fluid, if you like, and hard to, hard to describe. That, I think, is where we get into trouble. It's like, like what is, what is that worth to someone? What is it worth to Jen Waldman for her to have an "Aha!" moment about her business that then leads to her doing this, this and this. Well, it kind of feels hard for me to define. So I think that, it's a great place to start, but I also don't know, how do we even break it down?
Jen: I know, it's hard. It's really, really hard. And let me throw another - so maybe this is going to be an episode of us asking questions, and perhaps not coming up with any answers - but also, another wrench into the works here, which is, so the clients who I work with who are in the theatre industry in New York City, the overwhelming majority of them are union workers. So what I have access to is all of their salaries. I know, when they are employed as actors, I know how much money they make. And so, I value my contribution to their work, knowing what the return on investment is for that. However, if I'm working with a corporate client, if I'm working with an organization, if I'm working with someone who is in thought-leadership or as a public speaker or something, I don't have that kind of concrete information. So I feel far less bound by these constraints of the realities of what a union wage looks like in a particular industry, and I feel a lot more freedom to value myself and my time and my contribution in a different way. And I wanted to be clear about something: I don't resent the artists I work with at all for the way I value my work with them, because what I get back from them feels like ten-times what I'm putting in. Like, every moment I spend with them, I'm, I become better and better at my job. So their contribution to me is also quite invaluable, and I'm happy to adjust my rates, even though my rates for artists don't necessarily represent my market value. But with my corporate clients, I'm very grateful for the work that I do with them, and I feel really honored to share my ideas and to hear their feedback, but it's a totally different relationship. Like, they're not necessarily feeding my soul the way the artists are feeding my soul. So I'm happy to give the artists a break.
Peter: Yeah, okay. This is juicy. This is really juicy. So I think, a couple of things to underline here: one is, charging different amounts for different groups of people. So it's the classic, "Who's it for?" right? I think, so I think - and I'm not unique in this perspective, I don't think - that pricing, pricing clearly creates tension. But what I think we need to do is deliberately create tension with pricing. And so, tension for a performing artist, to use your example, in terms of the amounts that are required to create tension, is completely different to the tension required or the amount required to create tension for a CEO of a bank, or for one of your corporate clients. And so, what I mean by "tension" is, and why I think it's important is, charging an amount that creates tension ensures that, A) the client shows up in the right way, cause they're like, "Well, I've paid for this, I've paid a decent chunk of money, and so I'm going to show up and offer myself in the right way with the right frame of mind." Also, it requires the freelancer - so in this case, you, or me, or my client, whoever it is that is the freelancer - it requires them to show up in a certain way, cause they're thinking, "Okay, well I've, I've charged an amount that I'm a little bit uncomfortable, maybe, and that's where the tension is, and so I need to show up in a certain way. I need to be prepared. I need to over-deliver, because of the amount that I've charged." So I think, the first point I wanted to just underline was this idea of tension, and we can dive into it a bit more, maybe in a second, but the second thing I wanted to highlight, which I think is so important, is that you can get compensated in ways other than money. Freelancers can get paid in ways that aren't necessarily monetary. And I think this is so undervalued, and so under-appreciated, but so important is, if you determine that working with performing artists feeds your soul, that is worth more to you than a dollar amount for sure. Or if you are a first-time freelancer and it's your first client, and you know that by working with them you're going to get a testimonial, you're going to get experience, you're going to get, you know, practicing your process, that is worth more, potentially, than a few hundred bucks, or an extra zero on your invoice, or whatever. So I think it's really important for freelancers to be clear on what else they're getting out of a contract or working relationship other than the dollar amount.
Jen: Yes. And I wanna, I want to go back to tension for a second, cause it's funny when I, as you were introducing this topic, I started writing down words, like what words do I think need to be defined, and "tension" was one of them. So, that's interesting. So I like how Seth Godin talks about creating tension in terms of valuing whatever your product or service is as a freelancer. And the thing he talks about is the - what you're putting out there should be expensive, and it should be worth more than what you're asking people to pay for it. And immediately what comes to mind are two big-ticket items that I have - actually three - that I have spent on in the last couple of years. One is Seth Godin's altMBA, which, when I sent in the payment for that, I had to like, take a breath. But what's funny, Peter, is I got the value of the dollars I put in on the first day. The first day was worth what I paid for the entire month. So everything after that felt like bonus, and I left that program thinking I got a steal. The other was the writers' retreat I went on in February. It was expensive. And again, I, now that I've been through it, I think it's worth at least three times what I paid for it. And then, most recently my website, the time and attention and detail that I got from the web designer I was working with, Tony Howell, when we finished, I said to him, "You undercharged me, I would have happily paid you more than I did, because the work that you did was so above and beyond what I would have ever expected someone to do for me." So I think that's really important, that we have to, we have to deliver beyond even our promise.
Peter: Yeah, I love that. So I guess the, the call-out that maybe I should have made at the start is, when we're talking about these, these freelancers in general, we're not obviously talking about charlatans, or people trying to just make a quick buck and rip people off. What we're talking about is, to be honest, our listeners, which are generous, thoughtful people seeking to do meaningful work. And so I think that, like, frame of, "I'm a generous, I'm a generous freelancer seeking to do meaningful work with meaningful people," and so I love this frame that you mentioned of like, "Yes, yes it's expensive, but I guarantee you're going to get more than you paid for," because the types of people that are to this and the types of freelancers we're talking about, you can almost guarantee they will overservice. They will over-deliver. And so the fee is, it's almost redundant, because it's, like, "No matter what I'm going to charge you, I guarantee you'll get more than you paid for." And so I think that is such a useful idea to get your head around. And I love the, the altMBA example is a great one. And, you know, I could think of a number of conferences that I've been to that are also good examples of, you know, paying a few hundred dollars to go to a Ted conference, but witnessing one of the talks, the first talk and being like, "Okay, it was worth my money just to hear that and there's still seven more talks." So I think these examples are littered all around us. It's about getting our head around, that could be, that could be us, being expensive, but over-delivering.
Jen: And you know when you've had the opposite experience - I won't name the name of the piece of theatre I recently saw, but I spent a lot of money on it, and then I left the theater thinking, "Wow, that's two and a half hours of my life that I will never get back, and I resent the fact that they charged me that much money for that ticket. It was not worth that." And there've been other times where I've gone and seen a piece of theatre, and I did not love the piece, but I thought, "That was worth what I paid for it."
Jen: So yeah, it works on the flip side as well.
Peter: It does. I know we've moved a little bit away from your idea of definitions, but I'm gonna keep pulling this thread.
Jen: Okay. Pull it.
Peter: Well, I think you, I mean you mentioned Seth, and just this idea of tension, and the idea that it might be expensive, but you get more than you pay for. I think all of this is under the umbrella, which again, maybe I should've said at the start, is that money is a story. Compensation is a story. It's a story for the person, the freelancer who's putting out, "This is what I'm worth. This is the story I tell because of that." And it's a story to the people who see that. Like, you see an amount, you see a proposal with a dollar amount, or you see a product, and it's worth this much, and that creates a story in your head of, A) whether it's worth it, B) what you get for that price, and C) what it'll help you do. And I think everyone knows and has examples of this, of, we will pay money for things that we think will solve a problem for us. You know, this idea that I've talked about a thousand times, that people don't change because you tell them to, they change because they fall in love with a different version of the future. If you have a product or a service that someone looks at and goes, "Oh, I could see how that will change my corner of the world and will help me do x, y and z," people will pay for that. And so the story that we have as purchasers, but also as freelancers, is so important to get your head around, of like, "What story am I telling? What story do I seek to tell?" And I think, like, a really boring example of this is the story we all tell ourselves when we look at a wine list. You know, we look at a wine list, and we think the most expensive one is obviously the best bottle of wine. That's the story I'm telling myself. Who knows if it's true, but I look at a wine list, and I go, "That's the best bottle of wine. The cheap one, obviously a bit cheap and nasty, so, ah, you know, I'm, I'm not quite cheap and nasty, maybe I'll get the one in the middle, because that'll be a roundabout, you know, halfway between the best and the worst." And I think it might be true, but it also might just be a story that we've completely made up, because you know, blind taste-testing and all that sometimes shows that people can't really tell the difference. It's just about the story.
Jen: Mm. What just came up for me - okay, we're ping-ponging all over the place here. So -
Jen: - listeners: seatbelts on. What just came up for me is the idea that when we don't take the time to have these conversations with ourselves or trusted collaborators before the request comes in or before the inquiry happens, then we're in scramble-mode, and everything feels urgent, and it feels like opportunities are slipping away, and like, "I just have to do whatever it takes to latch onto this thing right now." So, what I have been doing a lot with my clients, and I don't know how you approach this with your clients, but we talk about things ahead of time before they become urgent. So, as an example, here in New York, we just are coming out of the time of year that's known as "audition season," when all of these American theatre companies from around the US descend on New York City, they cast their seasons, and then they leave. And during this time, I am fielding multiple requests a day from clients who are like, "Oh my gosh, I got this offer. Can you help me figure out what I want to do?" And so this season, what I've been trying to do is ask people to read the contract before they go to the audition. Now these are union contracts, so the contract is available to them before they even audition. And it's like, you know what the first offer is going to be. The first offers going to be minimum. First offer equals worst offer, right? And know ahead of time what you're going to ask for so that it doesn't feel like this urgent scramble when the thing comes in, and if you look at it and you go, "That experience is not worth the dollars that are associated with that contract," don't go to the audition.
Jen: So I think you can also look at this in terms of your speaking engagements, my speaking engagements, like, these are things we should be thinking about before push comes to shove, so they can be, we can be thoughtful and considerate of ourselves, and the time and effort and energy that goes into putting these things together.
Peter: Yeah, I love it. I, I just wrote down, like, it's almost thinking about money as a filter; that money is almost, it could be a filter to the work that you want to do. And if part of that filter is, "I know I need to hit a certain amount in order to survive, and straight off the bat I can see that this is not going to, this is not going to hit that mark," then it's not even, it's, it's gone. Like, it's eliminated from my filter, and I keep moving. So yeah, I like that idea of - I think the, the other point that you mentioned in that is having the, having the guts, almost, to, to like, talk about this upfront and openly, because, I mean, we have all been in a situation, I've certainly been in situations where you have a bunch of promising conversations with a collaborator, you seem aligned, you're like, "This is going to be great," and they're like, "Perfect, this is our budget." And you go, "Wow, we are so not aligned on this. Like, you've just quoted me a hundred dollars, and I usually charge a thousand," or whatever that number is - I just totally made that up - but you've wasted all the time, and you've gotten yourself excited, and you've got all this energy about how great this collaboration might be, and then right at the end you're like, "Okay, so should we talk about that?" "Yeah, we should probably talk about that money thing," and like, it's a little bit awkward. So it's almost like, what would it look like if the filter came upfront, and we talked about that at the start as part of the discussion around what problem we are trying to solve, what thing we are working on?
Jen: Yeeeees! Here's the thing, deal-breakers first. You've got to figure out what the deal-breakers are. Otherwise, there's no point in talking about the minutia.
Peter: Mmm. Yes.
Jen: And I think a lot of people waste a lot of time talking about things that don't really matter to them because they're afraid to say the thing that matters.
Peter: Ooh, Jen Waldman, that is rich. And that extends beyond just money and compensation. This idea of -
Jen: Of course it does.
Peter: - doing the hard part first, doing the hard part first. And that is why I certainly think about, and I know you think about, and a lot of people think about, like, identifying what is the hard part. It's one of my favorite questions to ask people. And I've mentioned on the podcast, I ask myself that every week: "What is the hard part?" and then, "What does it look like if you just do that first?" So, I love that you related that to money.
Jen: This is just making me think of something - so I think, for a lot of people, the hard part is, "I don't know what I'm worth. I don't know the actual number that I'm worth." So I want to just share this experience I had: a friend of mine, who is also a speaker, he does a lot of speaking engagements, told me about this podcast that he listens to, which is for speakers, so I listened to a couple episodes. I don't think it's made for me, but whatever; I'm glad it exists, and it's empowering a lot of people to go out and share their stories. So, yay for that. But on the episodes, the host often points people towards some sort of free resource. So on one of the episodes, he says, "Well, I've built a speaking-fee calculator, so go to this website, and you enter this criteria, and then I'll tell you how much your talk is worth, and what you should be charging." So I was like, "Oh, this is so interesting. I'd love to find out if what I'm charging is like what other people would be charging as well." So I, I decided, "Okay, I'll put my next keynote into the criteria." So I entered the things I say all the - and then it spits out a number that is literally one tenth of what I would charge someone. And I thought -
Jen: -"Whoa, if I was not such a naysayer all the time, I could have fallen for that." Like, I could have looked at that number and thought, "Oh Jen, what are you doing? You are overvaluing, you are fleecing people, some other speaker is charging a tenth of what you're charging. Who do you think you are?" But then on the other hand, I thought to myself, "Wait a minute, I know how much work goes into this keynote, and if someone else is doing the same kind of event I am and charging that, that amount, they are so devaluing the value of their contribution." So it was a real sort of like, whoa, either I am on a different planet, or he's on a different planet, and maybe there's a planet in the middle, but I'd rather say on my planet. And by the way, I don't think I'm overcharging people. I, I'm charging what the - less, probably, than what I think the value is that the people who hear the talk or do the workshop actually get out of it.
Peter: And I think the story that - again, back to stories - the stories that people would tell themselves that hire you versus hiring someone that's a tenth of the price, does this idea of "the race to the bottom." I think too many freelancers are caught up in this idea of the race to the bottom: in order to win work, we think we need to be cheaper. We think we need to be, like, the cheapest, because that'll help us get work. And while that might work every now and then, it's not sustainable. And so the alternative is, instead of trying to be cheaper, what if you tried to be better, what if you tried to be more remarkable? What if you tried to be more joyful, more engaging, more interesting, as opposed to less from a dollar point of view?
Jen: Mmm. Yes. Ooh, it is really getting me all sorts of fired up.
Peter: Yeah. And I'm not even sure we got anywhere, but it felt like a topic worth thrashing on, cause I know so many people think about this, myself included.
Jen: There are probably multiple episodes to discuss our relationship to money and value and worth. What I, what I think we started addressing today is the idea that we have to get right with ourselves before we will feel comfortable asserting what our contribution is worth to other people; that it takes some self-reflection and self-awareness and willingness to acknowledge that your contribution has value, and for the audience that is in receipt of your contribution, what you are seeking to do is over-deliver on your promise and have them go, "Wow, that was, that was expensive, and that was a steal."
Peter: Yes. And while It might've been a little bit thrashy, that is The Long and The Short Of It.