Negotiating freelance rates with clients can be notoriously difficult. There have been several times recently where I’ve had to discuss my day rate against the project the client is offering, trying to find ground where we’re both happy with the rate.
So when I received this email from Laura, we got into a great discussion about how best to negotiate your rates as a freelancer.
Here’s Laura’s story:
“I am writing to you with a specific question. I have been working on a relatively long term freelance innovation strategy project. During the first phase, which was 12 days, I had negotiated a day rate of 320 – down from 350 a day. The next phase was comprised of about 20 days at the same rate.
After the first phase of 12 days completed, my client requested that I work for 60 days at a reduced rate. We ended up at a figure out 280 per day, approximately 17,000 for 60 days, which has meant 3 months full time.
On one level, I’m quite pleased that I could count on this bulk of work to financially plan. On the other hand, I resent the lower rate. I also think that I could have negotiated fewer days for the same fee, more or less. However, that is done.
My client now seems to want me to work extra days on this project. My question to you is: do I charge him my normal day rate of 350, the initial reduced rate of 320, or the last rate of 280?
I can argue for each rate: this is a new phase, and it will be fewer days, and thus, a higher rate; or it should be at the same last rate because its extra work in this last phase.
I’ve been feeling kind of annoyed at myself for negotiating down so much. Do you really think that is ok, 280 per day?”
How I negotiate freelance rates with clients
Here’s my reply to Laura:
“It sounds like you’ve had a great project, and looking at the fee over 60 days that’s pretty good.
Yes, it is annoying when you are negotiated down, but I think it balances out in the long run. Giving some leeway to your client means they’ll come back for repeat business – and that is extremely valuable compared to the amount of time and expense it takes in finding new freelance work yourself.
However, I’d argue that you should go back to the top rate. This is a “new” project outside of the and you’re working over and above the original project.
You could easily explain to your client that the 350 rate is a 50% discount compared to your top rate, so they are getting fantastic value already.
Plus, you’re REALLY BUSY and have other SO MUCH work on, so you need to charge the appropriate amount 😉
I find this really hard too – charging my top rate where possible is ideal, but the actual negotiating towards that is difficult.
The other consideration is how hard will these extra days be? If they’ll be straightforward, then that may be less stress on being negotiated down and you won’t have to go around looking for new business – which costs time and money.
In the future, it can be best to switch across to value-based pricing in these situations – if the value of the project to the client is £xx, then you should be charging that rather than sticking to a time-based billing model. More on pricing your freelance consultant rates here.
Be confident, charge what you’re worth and ask for your top rate – they can always come back with another offer.”
So, a brief exchange but hopefully a valuable one to Laura – and to other freelancers who find themselves in this situation.
How others handle negotiating freelance rates with their clients
“Never negotiate on rate. Negotiate on scope (i.e., what you’re going to do.) If the math doesn’t work out with what they want to do and the budget they have to do it, do less. Never let your client dictate the scope and the cost of an engagement.”
Simon Horton from Freelance Advice has this, err, advice:
“You should be the first person to mention a figure and you should start as high as you can justify, and have your reasoning to back it up. Why should you be the first? Because it means you set the reference points. You will get a better end result if you negotiate down from £100 per hour than if you go from £50 upwards.”
What would you do in this situation? How do you best negotiate freelance rates with clients?
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