Lessons from The Office

Michael and I just finished watching Season 5 of The Office. I've found wisdom for writers in past episodes, and this season held a particularly fine little gem: a lesson in why we shouldn't price ourselves too low.

Spoiler alert — if you haven't seen this yet and you don't want to know what happens in the season, click away!

...
......
.........
............
...............
..................
.....................
........................
...........................
..............................

Basically, the boss, Michael Scott, quits his job and starts his own paper company. He scores quite a few Dunder Mifflin clients by offering low low prices, but it turns out the prices are too low. He and his employees, Ryan and Pam, have a conversation with an accountant that I think is all too applicable in the writing industry, too:

Accountant: Your prices are too low.

Michael: Lowest in town!

Accountant: Why do you think Staples and Dunder Mifflin can't match your prices?

Pam: Corporate greed?

Ryan: Our pricing model is fine... Over time, with enough volume, we become profitable.

Accountant: With a fixed cost pricing model that's correct. But you need to use a variable cost pricing model... As you sell more paper, and your company grows, so will your costs. For example, delivery man, health care, business expansion. At these prices, the more paper you sell, the less money you'll make.

Michael: Our prices are the only thing keeping us in business.

Accountant: They're actually putting you out of business.

It's the last two lines that I think are the most profound. Listen up, newbie writers! You might think you can learn to write faster, turn out more articles per hour, and become profitable "over time, with enough volume," and maybe that will work for a little while, but that's not how you stay in business. You need to think about your long-term goals — whether you still want to be freelancing five years from now, for instance.

Michael Scott goes back to the office and starts calling up clients to raise their prices, and of course they just go back to Dunder Mifflin, because the only reason they'd left in the first place was for the lower price. i.e., You can't quote a client a rock-bottom price and expect to be able to raise it to a more reasonable rate later on.

Naturally, the show has a happy ending: Dunder Mifflin (not realizing that Michael Scott is about to go out of business) buys out the fledgling company and gives Michael, Ryan, and Pam jobs again. But my idea of a happy ending is NOT going to back to work in an office. I like working for myself just fine, thanks! So I have to set my rates to enable me to continue doing that.

What's your happy ending?