Negotiating your rate is one of the most difficult and nerve racking things to do as a freelancer, until you know what to expect and how to do it properly. Tensions, expectations, disappointments, and blood pressure can all be high during the negotiation process. It’s stressful and anxiety inducing for some, and many people don’t want to ruffle feathers or lose out on a potential gig because their rate is too high (or too low). The misconception of negotiating is often that asking for too much will cause you to lose the gig, when in fact the opposite is often true (just be flexible!).
Your “value” and “worth”is based on the context and history of your relationship with the client and their knowledge of you. If you have a referral, then you have more power in the negotiation. Getting a referral to a new client allows you to aim a little higher on your rate (within reason) and establish yourself as the knowledgeable and professional colleague your friend was telling them about.
No matter where you’re at in your career, you’re negotiating prowess can always be fine tuned. Alas, here are my 8 tips to negotiating your freelance day rate:
1. Learn the average rates of other people doing the same thing in your industry
You can do a Google search to get a good sense of the going rates in your market, or simply ask a colleague doing the same or similar job what they currently use as their day rate. Ask multiple people to get a broader range and find the average. Every market and client are different, so you’ll need to adapt to the always evolving changes. If you work in multiple markets, you might have multiple rates based on the averages in those areas.
2. Calculate your worth
Calculate your day rate based on your portfolio, experience, skill, and confidence. There is no right or wrong when it comes to setting your day rate, just the limitations that you impose on yourself. Do you think you should get paid $1000/day? Then get paid that! Just be careful, the more you ask for, the higher expectations will be from the client and the production. Setting your rate too high and not being flexible will lose you clients.
3. Establish a bottom line
Deciding on a bottom line is a crucial component of establishing your day rate. Having a bottom line acts as a filter for getting connected to the right gigs. It allows you to walk and talk with confidence knowing you’re getting what your worth. Once you establish your bottom line, you’ll keep receiving job offers at your previous rates. Negotiate or pass up on these offers, because it takes some time to establish your bottom line rate once you raise your prices. Eventually everyone will come to know what you’re worth.
4. Quote higher than what you want, to get what you want.
If you’ve ever traveled abroad or gone to a flea market, you know how common it is for a vendor to sell you an item at an inflated price. In these instances, three different scenarios can occur: 1.) The customer can purchase the item from the vendor at full price no questions asked. 2.) The customer can make an offer to the vendor and the vendor can accept or make a counter-offer. 3.) The customer lowballs the vendor and the deal fizzles out because the vendor wont go any lower. Sometimes you’ll have a client and no idea of their budget, so in those moments it’s important to know how high you can go without killing the negotiation. Research the company, find out about their brand and industry. If they’re a startup, find out how much money they’ve raised on sites such as www.angel.co to know how much you should quote them.
4. Always increase your rate from client to client
Every year, the cost of living keeps increasing. Does your rate? When you increase your rate on a client by client basis or specific periods of time, you’re able to establish a consistent increase in your income and value. Even if it’s just a small amount, say $50 or $100 each time, you’re still able to justify the increases based on your previous performance and realization that you’ve been working for less than you would like. The better you get at your job, the more you should be paid, and the less time you should spend doing it. Work smarter, not harder.
5. Honor repeat client rates until the 3rd gig, then increase your rate
If you’ve been working with a great team or client and the rate you initially started using with them is lower than your current rate, maintain the lower rate for as long as you feel comfortable offering them a discount. For me, this is usually around the 3rd gig. Maintaining a rate, even for a reoccurring client, can soon become a problem. If you’re not periodically increasing your rates across the board, then clients will start to have an expectation of only paying you that amount. Once you get to know repeat clients better and better over time, asking them to put more money in the budget for you shouldn’t be a problem.
6. Don’t be afraid to ask for more
If a client you want to work with approaches you and offers you an amount that’s well below your day rate, don’t bend over and take it. Ask for more. Asking the client for more money puts them in the hot seat, and if they really want to work with you they’ll find a way to make it happen. You never know what anyone is going to say when you ask that question, but the worst thing that can happen is that the client tells you no.
7. Don’t be afraid to walk away from the gig
Sometimes the most difficult thing to do is turn down a potential gig because the rate is slightly lower than what you want and the client is unable to provide more money. In these instances, weigh your options. Ask yourself these three questions: 1.) Is this project going to benefit my portfolio, 2.) Can I afford to take this project at a reduced rate, and 3.) Who else is working on the project that I know or want to network with. The only time you want to do trade work, collaborations, or low paying gigs is when you’re trying to build your portfolio or want to work with friends and superstars in your industry. Otherwise, say no to a project that doesn’t hit all of your parameters.
8. Use your previous experiences and connections to build credibility + trust
Who’s the biggest client you’ve ever worked for? Do you know anyone who has a connection to the client you’re negotiating with? You might be speaking with a fresh client, but if you’ve been in the industry for some time, you’re bound to know some of the same people. Research your potential client and see if you have any mutual connections or previous clients in common that they might know. If you can establish that you are connected, clients will like you better and be willing to pay you more. Business is all about building relationships.
Now that you’ve read through the 8 tips, ask yourself these 3 questions: 1.) What do you find most difficult about negotiating? 2.) Are you making what you want to earn? 3.) Are you finding enough clients? Think of an answer to each of those questions in your head. Now, answer this: How can you improve your negotiating prowess and ensure you’re able to make a living doing what you’re passionate about, in the city you want to live in?
Please share your own thoughts, stories, and helpful negotiating tips below! #Freelance #2016
Cameron Mark Lewis is the Co-Founder & Executive Director of Coffee & Catchup, the networking and collaboration hub for creative artists and filmmakers in the Bay Area. Cameron is passionate about micro-community building, finding solutions for the freelance economy, and empowering creative artists around the world.
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