I think this is part of my pathological customers thesis: you won’t simply have more headaches at $500 than $5k because the customers are more evil about $500 invoices. You’ll have more problems because _people who get into $500 consulting relationships are disproportionately flakes_. You get less flaky behavior from your $5k clients because people who buy $5k services are disproportionately not flakes; the $5k sticker price is kryptonite to flakes.
Bargain-seeking consulting consumers have irrational expectations for what $500 buys them. The $500 is likely coming out of a personal pocket or a pocket which they treat as personal, not out of a Budget which gets handled like an honest-to-God business. They are disproportionately likely to have overcommitted that $500 — it’s perhaps not their last $500, but your invoice is sitting with a number of other invoices and it may not be possible to settle them all simultaneously.
Many of my consulting friends move up-market and find that up-market consists of businesses run by disproportionately mentally healthy people who disproportionately have money in the bank and disproportionately conduct themselves with professional mien like paying invoices in a fashion that suggests their company has paid an invoice before.
.. Pathological customers: when you give them free stuff, they will demand more free stuff, and if you refuse them more free stuff, they will do their darndest to destroy your business.
.. “Pathological customers: they get things for free and then ask for their money back.” The more money a business has, the more professional it can afford to be (literally) in dealing with you.
.. But we occasionally do get the “pathological customers” that patio11 likes to talk about. In those cases having the ability to give a refund is really nice because it is an easy way to part ways and “fire” customers you don’t want to work with.
..
<span style="color: #000000;">The worst customers, I call them </span><em>pathological customers</em><span style="color: #000000;">, </span>
<span style="color: #000000;"> are attracted to things that dont have a lot of money. </span>
<span style="color: #000000;"> Its amazing how many people have told me this. You raise </span>
<span style="color: #000000;"> prices, and you deal with less crazy people. <strong>At 99 cents, </strong></span>
<span style="color: #000000;"><strong> people have very unreasonable expectations</strong>.
</span>.. folks who pay A WHOLE NINETY NINE CENTS OF MY MONEY have very shockingly high expectations of polish / quality / feature selection (but no desire to e.g. read what the software actually does), whereas if someone signs e.g. a contract for $X0,000 for enterprise software, it lacks a feature, and they ask for it, “Thanks for the feedback, we’ll consider adding that in a later release. In the meanwhile, I suggest … as a work around” makes them absurdly happy.