ethical pricing strategies in graphic design freelancing

The stakeholders that are affected in this dilemma are the clients or potential clients, my freelance business, other freelancers, local businesses and the local economy. For this specific dilemma, I will focus on two categories for clients or potential clients; small companies and large corporations. For small companies, charging them less could make my services more easily accessible, helping them grow and succeed. It would also have the potential to open a door for them to continue working with me, so that I could help them grow their company for years to come. For large corporations, charging them more money might not significantly affect their bottom line, but it might signal a higher level of quality and exclusivity. For my freelance business, charging less might mean less income in the short term on my end, but it could lead to more satisfied clients and potentially more referrals in the long term. In contrast, charging more could lead to my business appearing to hold a higher standard of quality and exclusivity. It affects local businesses and economy as supporting the local businesses could lead to a healthier local economy and more opportunities for everyone in the community. It could also help my business grow since smaller businesses tend to prioritize collaboration with the local community. This will lead to other small businesses hearing about my services and quality, creating more potential business for me in the future.

This pricing situation presents a tough moral dilemma for me because I am changing my pricing solely based on the previous success of the client’s company. The services that I provide would be the same but the prices would differ based on the client and their background. This itself is the dilemma. Is it right to charge a larger corporation more money just because they have had success in their business in the past? If a large corporation has a larger budget and resources, does this mean that they should be treated any differently than a small business asking for the same services? This dilemma has been one that I often think about and continue to consider to this day.

To address this dilemma, it is important to explore potential alternatives, including the advantages and disadvantages of each option. The first alternative that I thought about is to charge the same hourly amount for small business and large corporations, but rush the small business projects and take my time with the large corporations. In this scenario, the small business would not have to pay as much since I wouldn’t be devoting as much time to their projects. This would ensure that I could keep the prices of my services low and accessible. The positives to this alternative include the small businesses still getting to pay lower prices, and I get to maintain consistent pricing for my business. This would establish my business more and simplify my pricing. The negatives to this alternative would be that the small business projects would be rushed, and therefore the end result may not be up to par for my ideal quality of work. This might reduce the referrals I would get, therefore reducing the advantages of serving those small businesses. It could also decrease the reputation that I have built for high quality work and repeating clients. In the world of business ethics, this alternative may be frowned upon because of multiple theories. Immanuel Kant would likely disagree with this alternative. According to Kantian ethics, individuals should act in a way that respects the inherent worth and dignity of all persons, treating the “humanity in a person as an end, and never as a means merely” (Bowie, 2007). As I described for this alternative, the small business projects may be rushed in order to offer lower prices, potentially affecting the quality of work that I am delivering to those clients. Kant would argue that prioritizing lower prices for small businesses at the expense of the quality of service provided violates the principle of treating each client with equal respect and dignity. Additionally, Kant believes in the importance of acting according to universalizable principles. Rushing projects for small businesses while giving more time and attention to large corporations would not be universal, as it could lead to inconsistencies and unfair treatment of clients.

Another potential alternative would be to implement a sliding scale pricing model based on the client's revenue or financial status, rather than the size of the business. Some pros of this alternative would be that it provides a more adaptive approach to pricing based on the client's ability to pay. It also demonstrates that I have a commitment to fairness and equity in pricing. The cons of this alternative would be that it would require additional documentation and verification of client financial information. This could easily be perceived as intrusive or discriminatory by some clients, which is why I do not think that this is a great alternative for businesses to commit to. In the business world, while Immanual Kant might think that this alternative is unethical, if we look at it from the perspective of the stakeholder theory we can see that it aligns better. The reason that this approach takes on Stakeholder Theory is because it considers the interests of all stakeholders (Freeman, 2007). By adjusting pricing services based on the client's ability to pay, my business would demonstrate a commitment to fairness and equity, aligning with the principle of stakeholder inclusivity. This approach benefits stakeholders such as small businesses, with limited financial resources, by providing them with access to services that may otherwise be unaffordable. It also benefits my business by potentially expanding my client base and fostering positive relationships with a diverse range of stakeholders. However, requiring additional documentation and verification of client financial information that may be perceived as discriminatory by some clients would most likely harm relationships, which would not benefit any stakeholders. This can be seen as a downside of this alternative and is why this is not the best solution to the dilemma. Creating a system to obtain and analyze a client's business’s financial situation and then charging them based on those results would be a very complicated and intrusive process that a lot of businesses would not want to do. Another negative would be the complexity of organizing such a system on my business’s side of things. I would have to obtain and analyze the finances of my potential client and then come up with an appropriate price. This approach would take a lot of time, and as we all know in business, time is money.

A better alternative for this dilemma may be to offer discounts or incentives for small businesses based on factors other than size, such as loyalty, referrals, or long-term partnerships. The positive impact of this alternative would be that it would reward clients for ongoing support and engagement and it would also encourage a positive relationship with the clients, leading to client loyalty. This would be very beneficial for my business as I could grow a clientbase that could expand through positive referrals or reviews. Some cons of this alternative include a potential for confusion or resentment if discount criteria are not clearly communicated, or it could lead to inconsistencies in pricing and perceived fairness. If I were to offer really good discounts every so often, clients may observe that pattern and wait to do business with me until the discount is offered, creating a situation where my business could end up with an inconsistent clientbase. Another con, similar to the other alternatives, is that it could lead to dissimilarity in cost and fairness for the client. From the Social Contract Theory perspective, this alternative aligns better with the idea of a mutually beneficial relationship within a societal contract. By offering incentives for loyalty and referrals, I am acknowledging the mutual obligations between myself and my clients, and fostering a sense of community and cooperation. "Our approach takes 'moral free space' seriously. It insists that morality can be 'conditional' or 'situational' at least in the sense that two conflicting conceptions of ethics can sometimes both be valid, and that community agreements about ethics often matter" (Donaldson & Dunfee, 2002). In the context of offering discounts based on factors like loyalty, referrals, or long-term partnerships this quote shows the nature of ethical decision-making. Some clients or businesses may see the loyalty-based discounts as fair or mutually beneficial, specifically for fostering positive relationships and open communication. In contrast, others may view them as unfair or unpredictable, especially if the criteria for the discounts are not clearly laid out and communicated. Therefore, seeing the conditional nature of morality is crucial in trying to create a system for this alternative to work.

The alternative that I currently use for my business is a value-based pricing strategy, where the price is determined by the perceived value of the services to the client, rather than going off of the size of the business. It would also be priced on the project scope, or in simpler words, how many people will see the completed project. If a project is going to be seen by many people, the price would be higher since it would hold more value for my company. The pros of this alternative are that it allows for flexibility in pricing that is based on the unique needs and benefits to each client. If there is a very small business that has not gotten any sales yet, the pricing I would choose would depend on the specific service they need and how and where my services would be used. For example, if they only need a flier design that would be used for a short period of time to advertise an event and the business is small, meaning not that many people would be seeing the flier, I would price that project relatively low. In contrast, if I was designing a logo that was going to be used on the website, such as t-shirts, patches or mugs, and the company was a large corporation, I would charge relatively high for that project. 

The cons of this alternative is that it requires a thorough understanding of each client's needs and priorities. If I miscalculate how many people will be seeing the project or if the project ends up doing much better than expected I could be at a loss. The same could happen in reverse. The client could expect the project to do very well, so they are willing to pay a greater amount. However, if the project does not meet their limitations, they may feel jipped or that the pricing was unfair. Unlike the first option, Immanuel Kant would likely agree with a lot of aspects of this alternative, particularly in the emphasis on treating each client as an end in themselves and pricing services based on perceived value. Since this alternative focuses on the value of the project instead of the value of the client, I believe it is the most ethical. Another potential con would be that the subjective nature of value assessment may leave room for biases or preferences to influence pricing decisions, potentially leading to unequal treatment of clients. This unfortunately is the downside of this alternative. 

I believe that the last alternative, a value-based pricing strategy, would be the most preferred alternative because of its alignment with ethical principles, consideration of stakeholders, transparency and justification, and potential for long-term client relationships. By adopting a value-based pricing strategy, I would be treating the client as an end in themselves, as said by Immanuel Kant. This approach respects the individualism of each client by pricing services based on the perceived value, rather than treating them as means to an end. Shareholder Theory emphasizes maximizing profits for shareholders, while Stakeholder Theory suggests that businesses should be responsible, ethically, to all stakeholders affected by their actions. A value-based pricing strategy takes into account the needs and interests of all stakeholders, including clients, my business, and the community. By determining prices based on the value of the project itself, rather than solely focusing on maximizing profits for shareholders, my freelancing business would demonstrate a commitment to ethical decision-making that considers the impact on all stakeholders. Implementing a value-based pricing strategy would also require transparent communication and justification of pricing decisions. By openly discussing the reasoning behind the pricing that my business picks for clients, I would uphold ethical principles of transparency and honesty in my business practices. This would help to create trust between my clients and my business. It would also help to create long-term relationships with clients based on mutual trust and understanding. By pricing services based on the value provided rather than arbitrary factors like client size, my business would demonstrate a commitment to delivering value and meeting the unique needs of each and every client. This can lead to stronger client relationships, repeat business, and positive referrals, aligning with ethical principles of fairness, respect, and integrity which can be seen through Immanual Kant’s ideas, the Shareholder and Stakeholder Theories and other ethical principles.

Overall, this business ethics dilemma was a hard one to come up with ethical alternatives that would not hold an opinionated aspect. This includes even the option that I currently use in my business on a regular basis. It is interesting to explore this dilemma from multiple perspectives and from different theories, comparing the contrasting benefits and downsides of each. Finding what is the best thing to do not only for the company but for the clients or customers can be extremely challenging, especially when you have to consider not only how it affects the company and clients but also the general community and surrounding local economy. Every decision that is made in business has an effect on the local economy no matter how small. Overall, I believe that the last alternative, basing the pricing off of the value of the project itself and how many people the project will reach, while not being a perfect solution, definitely succeeds in being the more ethical out of the alternatives that I have come up with.

Works Cited

Bowie, N. E. (2007). A Kantian Approach to Business Ethics. In A Companion to Business Ethics (pp. 3-16). Wiley Blackwell. https://doi.org/10.1002/9780470998397.ch1

Freeman, R. Edward, Managing for Stakeholders (January 2007). Available at SSRN: https://ssrn.com/abstract=1186402 or http://dx.doi.org/10.2139/ssrn.1186402

  Donaldson, T., & Dunfee, T. W. (2002). Ties that bind in business ethics: Social contracts and why they matter. Journal of Banking & Finance, 26(9), 1853–1865. https://doi.org/10.1016/S0378-4266(02)00195-4