Why We Love the “$500 Client”
One of the questions Matt Medeiros often asks on his podcast is "how do you handle the $500 client?" Here's our answer and why we love them.
by Ryan Sullivan
Matt Medeiros runs a great WordPress podcast called the Matt Report that talks about entrepreneurs who are building a business in the WordPress space. Make sure to get over there and catch up on his ever-growing archive of WordPress business goodness.
One of the questions that he frequently asks people he interviews is “How do you handle the $500 client?”
Now I know there’s no ill will, but the way the question is asked, it sounds to me like the $500 client is something that has to be dealt with, like a stack of unopened medical bills, or a funky gym bag.
And the reality is that with many WordPress consultants or agencies, that’s exactly how they’re regarded. They’re always wondering how they can say “go away” without being rude. Or they setup a fancy form on their website to filter out those that aren’t worthy. There are a number of different approaches.
But why are we so quick to brush off a client based on one project where they might not have what we consider an ideal budget?
Now I’m a realist. Are we going to build a custom eCommerce website for a client with a $500 budget? We’re not. It’s just not a feasible way to run a business. A quality team costs money, and there are plenty of other operating costs that are figured into a proposal for a big project like that, but we’ll never shy away from the conversation.
Sometimes what the client thinks they need for $500, and what they actually need are entirely different things. We had a client approach us just recently with a $400 budget, a 3 day timeline, and visions of website grandeur. If the website he envisioned were a pro wrestler, it would have been Macho Man Randy Savage in the flesh. But after a quick phone call, the suggestion of a premium theme, and a third party booking system, we were able to get the client what he needed. Now we probably delivered Jake the Snake, or Jim Hacksaw Duggan, but the bottom line is that he was thrilled with the solution we came up with.
The proof is in the tweets:
“Drew, thank you for the referral to @wpsitecare! They were just what I needed! They’ve done a great job on my website.”
— Drew Barton (@drewbarton) January 18, 2014
We Love to Move Fast
Nothing feels better to me than completing a task. Well, almost nothing. Ahem. Every time I put a check in a box I feel invigorated and like progress is being made. Sometimes I can get too caught up in the routine of finishing tasks, but for the most part my desire to ship is great for business.
The small budget WordPress client facilitates that. They come to us with issues and we solve them… fast. We don’t mess with RFPs, we’re quick to scope projects, and we’re always trying to cut down our pre-sales time (Spoiler alert: Changes coming very soon to streamline pre-sales even more).
Mini projects make us agile. We can always take on the next client because we’re rarely scheduled out over a week, so we don’t need to turn away business like many of the big agencies do.
Nagging Voice: But Ryan, aren’t you worried about the stream of customers disappearing at some point?
Not really. They haven’t yet, and I know for a fact that there are a lot more people with $500 in their pocket than $50,000. Even Chris Lema, the man who thinks pretty much everything is too inexpensive, agrees that raising prices isn’t always the best avenue. Add to that the fact that we already run lean, and can easily shift our model slightly, focus more time and energy on marketing, or just lay low and provide a great service for our current customers, I feel like the future will continue to be bright for a long time. With WordPress’ continuous trend toward the top, this is item 45,081 on my list of entrepreneurial worries.
Support then Maintenance then Support then Maintenance
We run one of the few businesses I know of where clients pay us to become a long term customer. Don’t follow? We’ve found that nearly 50% of our recurring maintenance clients, came to us initially because they needed some type of quick a la carte service. Either their site was hacked, or a plugin broke the hamster wheel. It could be any number of issues, but when they first reach out, it’s because we provide a service that they need. They pay us fairly for that service, and then frequently they end up having us proactively manage their WordPress sites for the foreseeable future.
How many other businesses are you familiar with that can pull that off? The majority of services online have to bring people in with a free trial, or some kind of referral bonus. It’s almost always “try before you buy” these days.
Once we have a client on one of our maintenance plans, as long as we’re doing a good job for them, they don’t even shop for WordPress help anywhere else. We’re their first point of contact every single time.
Embracing the $500 Client
So what happens when we have a client approach about that 5, 10, or 50,000 project?
We give it away.
Nagging voice: Shut UP! What do you really do with it? You take a commission or something right?
Nope. We work with plenty of great partners who specialize in building that $10,000 site. We’re happy to hand the client to them because we know they’ll do a phenomenal job for our client, and in the end, that’s all that really matters, right?
We’ve also found that sending those clients away makes everyone happier in the long run, and frequently turns into more “small” business for us down the road. That’s not why we do it, but it’s definitely a nice added bonus.
High volume with a quick turnaround time is what works for us. In a WordPress ecosystem that’s begging entrepreneurs to raise their prices, we still believe in premium services being available to consumers without a premium price tag.
Not everyone has a Ruth’s Chris budget. Some people can only afford In-N-Out Burger. Both are quality, and both provide great value, and one is obviously significantly less expensive. But let’s be honest, the Double Double Animal Style will outsell that Filet every single day of the week.
So how do we handle the $500 client? We offer them a side of french fries and a milkshake, of course 
This is why we refer you to… everyone. WP Site Care is awesome at fast and impressive solutions… for a bitchin’ price. It’s a good business model– clearly, because WPSC is thriving. You could sell 100 $500 projects, and you have 100 happy customers telling everyone about you. Or you could sell 1 $5,000 project and have one happy customer telling everyone about you.
Marketing potential aside, it comes down to personal preference. $500 clients shouldn’t be looked down upon, but freelancers/agency owners know whether or not it’s going to work for them. In our case, the devs don’t enjoy/do well with quick projects and prefer to be working on a huge build for weeks. It keeps the ADHD to a minimum 🙂
“Marketing potential aside, it comes down to personal preference.”
Exactly that. I get stagnant or bored with big projects (usually, there are exceptions, but they’re usually my own projects, and not stuff for clients), but my preference most days is to knock things out in rapid succession and send away a lot of smiling customers. You rock!
I prefer smaller projects for the same reasons you list – easier to quote, quicker to build, less changes (so project is out the door faster), and happier clients.
But personally I’ve drawn the line a bit higher. My project minimum is $3,000 right now, but that’s after 3 years of raising it (started at $1,000).
My problem with $500 projects is the communication overhead. Regardless of the project size, there’s a certain amount of communication that has to happen. Initial contact email, follow up email, sometimes a phone call to review, communication throughout the project…. I found that on $500, $1,000 and $2,000 projects I spent the same amount of time communicating. That means the smaller the budget, a higher percentage of the time is spent talking and not doing.
I book $3,000+ projects so I can schedule 1-2 weeks of solid development, followed by many weeks of change requests. I’m able to deliver a ton of value in development but not as much in communication. So if I can dedicate a higher percentage of project cost to development, the client ends up happier with the results.
I’ve also found that the larger a project, the more project-specific code that needs to be written. A $3,000 project has a lot of similarities to other $3k projects – I’m able to reuse what I’ve written before and deliver more value in less time. But with a large project where I have to build everything custom and won’t be able to reuse it again due to how specific it is, the value flattens out while the cost goes up.
I create more value with four $3,000 projects than one $12,000 projects. More value = happier clients, which is another reason I prefer the smaller projects.
I totally hear you Bill! I honestly think we use super similar models, but our “projects” already have a lot of project “templates” that help us keep communication overhead minimal, without the client feeling shunned. We’re not inventing the wheel over here, and frankly aren’t writing advance code, but there’s definitely a market for the level of projects we do provide.
Thanks so much for the super thoughtful comment! We’ve got a few clients who are looking for exactly what you provide. Look out 🙂
On average, how many hours would you say you put into a $500 site?
It’s usually about 4 hours 🙂
Not bad.
May I ask if there is a ratio of customers that return for future work? And is that work ever higher dollar?
Almost all of our customers come back. If it’s over $1000 we usually refer it to somehow else. There are a few exceptions, but not many.
I’ll argue the problem isn’t the $500 client. The problem is the people willing to build that client a custom site for $500. WordPress has a bit of a PR problem (the word “free” is often interpreted by prospective clients as “zero investment”) and that problem is amplified when consultants do work for what is essentially no pay. You are right that a $500 client can be served by some simple solutions, but more often than not the $500 client is instead offered product that should cost far more. As a result that client will devalue the product sold and think of WordPress and the people that build things for WordPress as cheap.
If you provide a $500 client with services worth $500 like you do then you are right to embrace them. If on the other hand you provide a $500 client with services worth $1500 or $3000 or $5000 you are not helping them or yourself or the community.
Totally agree. A $500 fee is valid when services are worth that – templates and free plugins.
We’ve come across the opposite of the $500 custom site and seen companies charge $5,000+ for templates & free plugins and then charge $150/hour for support because they did it wrong from the start.
As someone who’s just getting started in this space (there’s a lot of us:-)), the $500 client is perfect in three ways:
1. They all want premium service. This is something we can offer. That is, what we lack in know how, we can make up for in communication and revisions (the flip of what Bill Erickson is talking about below… We all want to get to the optimized and efficient developer rate, but it can take a while.Until then, we still need clients, and we can WOW them). .
2. We don’t have to be the best, we just have to be good enough to get the first iteration of what is probably their first site out there. That’s when what they *actually* they need really comes to light (as oppose to what they *think* they need.
3. They pay for our learning curve. I’ve been freelancing for exactly 4 months. With each client, I have to start drinking from the fire hose that is the wealth of WP resources and community out there. It’s awesome, and exhausting, but then you know what to do, and you write that down and save that information (speaking of the Matt Report, Andrew Norcross talks about this in his interview; go check it out).
All that to say, if you’re a “$500 client”, you are beautiful to me!
Thanks for the post Ryan!
Please take all the $500 clients. For my team, a website is more than functionality and template designs. We spend more than $500 on strategy & scope and companies pay for our expertise in our niche market.
And I think that’s the exact attitude I eluded to in the post. For me it’s about finding the best solution for the client. Your service may or may not be that, and we have to be honest with ourselves about who we’re serving and whether or not what we provide is self-serving, or if it really is great for the client. In the same way you want us to “take all the $500 clients,” we understand when clients come to us and are looking for something more, and we pass those along to agencies and shops that we trust. It’s not a question of which is the better service, it’s a question of which is the right service for the client.
Great post Ryan! And thanks for the reference to the podcast 🙂
When I ask the question, “how do we deal with the $500 client?” It’s to explore the unique scenario’s you’ve described above. I’m looking to see what unique angles other WordPress folk take to bring more value to the table OR how they pass them along to a better fit.
Like you, a lot of our clients come in with that kind of budget — sometimes a call + theme + premium plugin = success. Other times it’s turning $500 into a monthly support/consulting fee while they get their hands dirty. Then there’s the occasional client who’s hollering like a WWE wrestler and wants an Amazon competitor built over the weekend — thanks, we’ll pass 🙂
One thing I’ll add for folks working in this space to hone in on as fast as possible — do they VALUE your time and expertise? If they won’t agree to a phone call or a few e-mail exchanges, history tells me it’s not going to be a healthy relationship moving forward. Obvious to some, but if you’re a new freelancer, you might be saying yes too soon.
So I agree, there’s plenty of ways to help the folks that have low budgets while keeping *your* business healthy and profitable. Here’s to success in 2014!
Awesome. Thanks Matt. Great insight about finding out if people value your time. That’s probably the kicker right there. It makes a world of difference. Thanks for the awesome comment & killer podcast 🙂
I have thought about started a new side business for this exact client. The process would need to be streamlined and like you say, expectations set. In my 17 years of building websites, I would generalize that this type of client is generally the most needy, which does not go hand in hand with a quick turnaround. I would also like to generalize that these are the people sometimes least likely to pay because they don’t realize the value in what they are getting they just want it cheap – gross generalization I know, but of all my clients that stiff me or or late payers, they are ALWAYS the under $1,000 client – always. But, on the other hand, sometimes I feel that this is a market I am missing out on, and I would like to serve these clients, but I need to put in place a tight structure. In addition, building on any theme is not a good idea as each theme has different levels of learning curve, short codes, documentation, etc. So I find that sometimes it takes me 3 hours just to get comfortable with a theme. You need to offer just a few designs, X number of pages, and then have add ons for SEO optimizing, ecommerce, etc. You also need to get payment up front (chasing payments also adds on to time). It is doable, but I feel only with an extremely strict process. It seems like you have found that. Do you track your time to the minute with an app? I do, so I know exactly how much time it takes. Someday I may go for this market.
We do keep pretty tight reigns on things. I think you’ll get a lot better picture of how we streamline the process when we launch our new website next week. If you ever decide to address these customers, I’d love to hear how you decide to take it on. It’s a fun ride at any rate!
I’m not sure you can lump all “$500 clients” together. I take each client on a case-by-case basis and, after explaining my rates and services, they still are in the game and I get a good feel for them, we’ll proceed. Many clients start out as $500 clients, but through referrals, scope changes and add-ons, they can be worth much more.
I charge $95/hr, minimum 4 hours, and can tell if the potential client balks at that, it’s probably a good idea to refer them. Whether we do business has more to do with feeling out their attitude, expectations and potential for more or better business. Expectation-setting is very important, especially when they’ve seen people offer websites for $295 on Craigslist or whatever. I go through what they get for their money, which they may have no idea our work is so involved, and sell value, vs a boxed commodity, which is how some people view websites.
Love the approach! There are definitely clients that we don’t work with either based on some of what you mentioned. It’s not about having the lowest price, it’s about serving that clientele that has a limited budget but still recognizes the value that’s being provided. Thanks for stopping by 🙂
My whole business is built around these $500 (or less!) clients! Sometimes they come in with outsized expectations, and we have to help them see what’s possible within their budget – all while we are careful not to give away more than what they pay for. But since this is what we do, we’ve gotten pretty good at setting those boundaries.
One thing that really helps this business model work for us is that we focus mostly on nonprofits, and within that vertical, the niche of faith communities (churches, temples, mosques). Because these organizations tend to have very similar needs, we can be very nimble in putting together what they need quickly – for instance, we’ve already identified go-to plugins for common needs.
This niche of clients generally don’t have much more than $500, but they want something just a little nicer than they could do themselves on Weebly or other DIY site-builders.
I agree, this is a good model for folks who need a first website. And WordPress is great for allowing them to update text. I’m having a hard time finding a photo editor to recommend to these folks that is both easy enough AND optimizes adequately. Do you have recommendations for the first-time client?
p.s. Great article and attitude, thank you!
I’d love to give you some suggestions, but nothing I saw is going to be as useful as this post: http://www.mattcromwell.com/optimizing-images-for-wordpress-like-a-pro-for-free/ Hope that helps!
A theme-based option is the only way to go for those with minimal budget and it’s not the sort of client most developers want or can make money out of, although you seem to have a viable system and certainly the market potential is high if you have the systems.
But my solution is not to turn them away, but help them get setup on wordpress.com using their premium pack and theme that allows me to help with some minor branding, tips and sort out their email etc. This way it’s still around their $500 budget and less stressful for all. Normally the biggest issue is just getting them to understand the widgets and menus.
Using wordpress.com there’s no ongoing hosting, theme or plugin overhead. But when they do have a real budget later and a real business focus, I can help them migrate to a hosted site, especially if we steer then to the right premium theme provider initially. Here’s my meetup group talk on this topic. http://tinyurl.com/mebnsag
Just found this post, and my problem is underquoting; I too can get `bored’ and prefer the quick projects. Is there an example of a site that would come under the `$500 site’ project, mainly so I can see what others consider a $500 site.
I loved your post even though I would never take on such a low budget client. I stumbled on it when I was searching for tips for clients on tight budgets. I never take on clients with a budget of less than $3,000 because small budget clients are usually very high maintenance and it takes a lot of time to build something awesome from scratch. I do agree that if you only have $500, then a premade theme is your best bet. After paying for the theme, hosting and domain registration, there’s only about a couple hours left for customizing and inserting content if you want to hire someone which is not really feasible unless you are hiring a developer from India.