The Three Stages of Negotiating
Posted May 16, 2011 in Managing Clients, Marketing
Negotiate!
The very word sends chills up the spine of the most confident freelancers.
You can reduce the stress of the negotiating process if you do your homework before talking money with the client. You need to come up with a negotiating strategy.
Negotiating should cover three elements:
- What you want to earn
- What you’ll accept
- What concessions you expect if you have to work for less than the ideal fee
Many freelancers don’t realize that negotiations can involve more than money.
If you and the client cannot agree on a fair fee, you might be able to alter the job description so that the client’s price is acceptable. If that fails too, you still might be able to salvage the job by asking for something that is easy and inexpensive for the client to provide and that is as valuable to you as money in the bank. I call these alternatives the three stages of negotiating.
Stage 1: Money
Negotiations always begin with money. It’s what you need to run a successful freelance business and pay your bills, and it’s what your client expects.
When asked to name a fee for an assignment, some freelancers quote exactly what they want and hope the client agrees. Other freelancers ask for a higher fee, which allows them room to negotiate down to the price they actually desire. I suspect good poker players take the latter approach.
Often, of course, the client doesn’t ask the freelancer for a fee. The client names the price, usually presenting it as if it is not open to discussion. But it always is.
Suppose you and the client cannot agree on a fair price. You still might be able to negotiate on a money basis. Consider these strategies:
- If the client balks at the price you name, offer to make it a cap, and say you’ll try to make your final bill less. Unless you’ve put in an undue amount of time, shave something off the price at the end of the job, even if it’s only a few bucks.
- If you anticipate spending a lot to do the assignment, agree to work for the client’s top fee provided the client picks up all expenses. Be sure to specify the types of expenses anticipated.
- If you know you’ll have several long meetings, offer to do the actual work for the client’s price but insist on an additional per diem fee for meeting days.
If a job involves multiple tasks that can be clearly distinguished, such as writing and proofreading or web designing and coding, charge appropriate rates for each task. This way, the client won’t pay higher fees for less costly work.
Stage 2: The Job Description
When you’ve locked horns over money, you might be able to make the client’s price acceptable with small changes in the job. Aim to transform a low fee into a fair one by limiting the number of hours you devote to the job.
The specifics of Stage 2 negotiations will vary with the type of work you do and the assignment under discussion. Some possible points to discuss with the client:
- Can the assignment be smaller? For example, the price may be reasonable for a 1,000 word article but not a 1,500-word article.
- How many times do you need to go over your work? Try to limit the number of revisions to address changes the client requests. You want the client to be satisfied with the finished product, of course, so explain you’ll do extra revisions (beyond the first or second set, or whatever the client agrees to) for an additional fee.
- Do all aspects of the job require your expertise? If not, suggest the client have someone on staff do the more mundane tasks.
- Can you have more time to complete the assignment? If the deadline is extended, you’ll be able to take on other projects to meet your income needs. A client with a firm deadline may agree to pay a higher fee rather than risk losing your expert services.
Be sure the client understands that these small changes will not threaten the quality of the finished product. The company will benefit by retaining a talented freelancer while keeping a tight rein on the budget.
Stage 3: Nonmonetary Compensation
If you fail to come to an agreement after negotiating money and the job description, you still have another option to make a low fee acceptable. First, ask yourself why you want the job. If you really really really want it, think of what besides money you would value as payment. Is there something important to you that costs the client little or nothing?
When I began my freelance writing career, I had solid experience in the corporate setting. I sounded good to prospective clients, but I could not produce a single piece of writing bearing my name as author; all my work belonged to past employers. So when a freelance client would not pay well, I asked for a by-line. I was then able to look for more lucrative work by showing articles with “By Laurie Lewis.”
Managing stage 3 negotiations well can make the difference between feeling that you were played for a sap and being proud of your new assignment—and your negotiating skills. Refuse a client’s offer of something you don’t care about. Ask for noncash payment that is as valuable to you as money. Examples might include:
- Your name displayed as creator of the work
- Referral to potential clients you might not be able to reach easily on your own
- A product or service of the client
- Something the client can easily obtain that would be difficult for you to get
Get It in Writing
Wise freelancers always get a contract or letter of agreement before starting a job. A written agreement is especially important when you’ve negotiated a deal.
The agreement should include all the points you negotiated:
- The fee
- The parameters of the job, including what you’ll produce and what the client will do. Specify any points you discussed during negotiations.
- Any noncash “payment”
Negotiations don’t have to be scary. Armed with a strategy, you can enter the process confidently and come out a winner.
Your Turn
How do you handle negotiations?
Share your tips in the comments.
Related posts:
About the author: Laurie Lewis has been a freelance medical editor and writer for more than 25 years. She is the author of What to Charge: Pricing Strategies for Freelancers and Consultants, which was just revised and is now available in both print and Kindle formats.
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17 Comments
Laurie Lewis
May 16th, 2011 at 2:45 pmExcited to see so many tweets re this post. We freelancers can never hear enough about freelancing.
Gold
May 16th, 2011 at 3:08 pmBe ready with your answers to the “your price is too high comment.” Is it really too high or you being told that to see if you will drop your price? One of the questions you don’t want to ask is, “How much do you want to pay?” Don’t allow the prospect to tell you the value of your product. Remember if you are selling your own creations nobody can reproduce what you produce. It may be similar but it is not exactly the same. That’s what you selling. Your endeavor.
Christina
May 16th, 2011 at 7:21 pmI would never drop my price…. I would only reconsider what I am putting into a project and I make that clear to my client.
My quotes are created to look like a shopping list. This makes it easy for the client to spend within their budget without them getting the idea they can negotiate a ‘lower’ cost for my fees.
And if a client appears to be confrontational and ‘cheap’ then I’m happy not to get their money.
Laura Spencer
May 16th, 2011 at 9:23 pmLaurie,
Thanks for sharing this very helpful post. I’m loving the discussion on this topic.
Maxim
May 17th, 2011 at 5:04 amI guess the left-handed handshaking on the picture is meant to illustrate poor negotiation skills?
Brian Hatano
May 17th, 2011 at 8:33 amIf price is most important, I think it should come last.
I think the ideal relationship is when each party has a different value, i.e. price, delivery speed.
Then you can sell delivery on your clients value first, while getting your priority last…
Laurie Lewis
May 17th, 2011 at 1:12 pmGreat comments! I especially like Christina’s “shopping list” approach. That’s a way to alter the job description in a way that works out monetarily for both freelancer and client.
Mike Williams
May 17th, 2011 at 11:13 pmI download a book that a friend recommended to me that has some great nuggets about negotiating salary. I found some of it useful in negotiating my freelance rate. It is 1.99 on Lulu. Here is a link if any of you are interested.
http://www.lulu.com/product/ebook/proven-ways-to-get-a-raise/15660335?productTrackingContext=search_results/search_shelf/center/1
Rahul Banga
May 18th, 2011 at 12:27 pmAfter 6 months of working in the field as a freelancer, I have decided to stick to my charges and not change them. It gives the client a small window to negotiate when you tell them that your charges are fixed.
It sets the mind free.
Gold
May 18th, 2011 at 1:44 pmHasn’t anyone ever wondered why does the prospect want to hire you? Do you think it’s because of your price? I know for a fact that there others out there that are willing to pay for the privilege of doing the assignment. Look at the interns. They are willing to work for nothing.
Laurie Lewis
May 18th, 2011 at 4:16 pmGold is right: price is seldom the reason you are hired—or someone else is. A smart freelancer always walks away from a price that is too low.
The point of negotiating in stages is that sometimes you can make a low price fair. You need to enter negotiations knowing the absolute lowest price you will accept and how you might be able to make the client’s price acceptable. If you can’t get the client to pay an appropriate fee or to alter the job to make the price fair, don’t take the job. Never accept less than you know is fair for the job or the services you offer. I call this the second rule of pricing.
Sietse
May 20th, 2011 at 7:10 amThank you for your post, they can be very helpful for the non-frequent negotiators, as many freelancers are.
In my opinion the tips mentioned are not stages in a negotiation process, but helpful tips to create various options in a certain phase in the negotiation process.
I prefer to stick to the following stages:
Inventory: what are we exactly negotiating about;
Expose the interests of parties;
Creating various options that satisfy the interests;
Bargain;
Agree.
The tips are really helpful for creating various options, or earlier to identify the interests, but there is more to negotiation.
Laurie Lewis
May 20th, 2011 at 1:17 pmThank you for your comment, Sietse. As you pointed out, and Brian did earlier, it’s always a good idea to find out what is important to your client. It may not be the same thing that matters most to you.
Saadullah Aleem
January 15th, 2013 at 11:10 amGreat article!
Although its hard to find people willing to pay real money to get the job done.
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