Competing With "Fair" Wages

Right off the bat, I have decided there is no way I will be able to compete in the software/IT-services world on price. There are a number of offshore organizations, for example, that provide the same kind of business as my LLC, but are able to charge a significant amount less than I can afford to work on. Having said that, however, I find myself struggling to gain traction and compete in a way that allows me to survive (let alone make the kind of money we'd all love to be making).

When competing for projects (especially as a new small business with a small portfolio), what kind of marketing and business tactics work well to sell your organization?

Specialization and innovation. Call most IT/generic programming a commodity and specialize in something that is not yet globally serviceable.

You will never compete in the price arena. Quality, attention to requirements, industry vertical experience and all other extreme value-adds mean nothing when looking at a fraction of the hourly rat.e It is a truth and any business operating in local currency and cost must evolve the business model.

A guy I used to work with and I both used this method to start up own our own (separate) freelance businesses:

You need to build a portfolio and get clients. The only way to do that is to take a few jobs for really cheap. When you do a great job for those clients, they are:

1. Future clients
2. References


3. And you can put that work on your portfolio

As you start getting more clients, you raise your price until you get to a comfortable rate. In IT freelance, it's not what you know, it's who you know.

I use offshore developers, because of the level of talent is easier to attract at far better rates. With that said, it does not mean you need to give up.

Here is how you could adjust your busienss model.
Let clients know the pitfalls of offshoring a project, the communication gaps, the moral difference by not having an on site manager, the poor quality in code, the firms that will take your business and produce poor results for $8-20 per hour.

Then sell yourself as the alternative. Best of both worlds.
Act as a liason between clients and offshore teams.
FOr your regular hourly rate of say $50 per hour, you manage an offshore team.

You give the client a USA point of contact and accountablity.
You will find out that this approach allows you to be more competitive on price, and will teach you to focus on the sales and management side of your business, while offshoring the labor.

You have a unique opportunity that you are in the USA and familiar with its business culture. Teach your prospective clients that they can have the best of both worlds if they go with your firm. Also you will be able to take on a multitude of clients because you will in fact be doing less work.