Each week I receive dozens of calls from potential clients, and it’s easy to distinguish the serious entrepreneur from the simple hopefuls. The realization is most always based on what they’re willing to spend. Mind you, I don’t base decisions on someone’s actual budget (I understand that plenty of startups don’t have much capital), but rather how much of that budget they understand needs to be earmarked for consulting and development.

The ones who make it clear they want the best possible service for overseas-outsourcing prices are often referred to as cheap. But I’m convinced they simply don’t realize the benefits of paying more for such services.

Here’s 10 reasons why small businesses should be willing to pay higher project costs and hourly rates to recommended providers:

Happy people = happy workers.

1. Living costs. It costs money to live, and, believe me, you want the person working for you (even if just under contract) to be able to eat decent food, get exercise and enjoy some quality entertainment. You want them going out with friends on the weekends and catching the latest big-hit movie. Why? Because happier, more relaxed people tend to think more clearly and work with a non-congested mind.
2. Take into account daily, non-billable research. A true professional spends time every day reading articles, news and blog posts from other professionals. This means they’re more likely to know about the latest trends and understand changes in technology. I’m talking about things they need to know just to provide their services in general.
3. Training. Even professionals dubbed as experts have to train constantly in order to learn new things. No one can know everything, and ample training can be quite costly.
4. Software. Sure, there’s plenty of free software out there, but professionals like to use software of choice. For example, I use Adobe Creative Suite Premium. Why? Because it’s recognized and used by thousands of other designers. By using the same tools, not only am I able to work on others’ files (and vice versa), but I’m also able to access support quickly from a large number of fellow professionals. It makes my job easier (thus, I’m happier) and I’m using an industry standard.
5. Automation Tools. Additional software, online tools, or third-party development that help consultants and developers function efficiently costs money. But, the reason you want them to utilize these tools is because, without them, chances are they’re spending more time completing simple tasks than necessary. Think about it: Do you want to pay someone $10 an hour to do a 10-hour job manually? Or would you rather pay $100 and have it completed in half an hour? Automation is something you pay for (in hourly fees), but it also saves you money.
6. Their Relationships. “Branded” professionals have relationships with experts in many fields. Those relationships are often forged during conferences, conventions, over the Internet, in person and via telephone. Not only do professionals travel to network, they also subscribe to networking sites (like LinkedIn), and spend time each week on the phone discussing the latest trends.
7. Health Insurance. Many consultants and developers are independent, and thus, must pay high costs for health insurance. But, guess what? A good many of them aren’t insured at all. This causes worry and work hours lost when things go wrong because even preventative health care isn’t inexpensive out of pocket. Believe me, this goes hand in hand with #1 – a healthy, happy worker is worth far more to you than the alternative.
8. Social Media & Giving. Spend some time watching big players on the social media network Twitter and you’ll notice a trend. They are givers. And while it may be some of your money they’re giving to charities and inspirational projects, it does reflect well on you. Why? Because these big players not only show off their clients – they recommend them. Believe it or not, the people you hire to build your site and plan your strategies, are some of the biggest voices you’ll have in your corner until you grow your own numbers.
9. Technology. You want to make sure the people you hire (yes, even freelancers) can work from anywhere in the event of an emergency. You should be thrilled they use smartphones, carry around laptops and utilize advanced technologies to get the job done.
10. Subscriptions. Whether it’s for industry magazines, online professional forums or association fees, professionals need to spend money to grow.

And, keep in mind something else when calculating someone’s worth and how their rates benefit you in the long run. No eight-hour work day consists of eight “billable” hours. It’s simply impossible. By my calculations, for every single billable hour, at least 1.5 hours are spent performing tasks that enhance knowledge and allow consultants and developers to be who they are – the people whose goal is not to please you, but your actual customers.