Never Negotiate Your Freelance Rate

15 years on my own and after having this discussion with clients nearly every single time we begin a relationship, I have learned to embrace rather than fear the situation.

Often times this is a pattern, the person on the other end feels like they need to get a win in some form and the easiest and most obvious to them is always pricing.

Find out why they are asking this question, find out what they really want - 8 out of 10 times for me, it is just them asking because it would be dumb not to ask. Explain your rates, be open and honest about them. If they feel like your rates are too high for them then be willing to negotiate.

It is incredibly important that you negotiate, so many other people I talk to simply balk and let their rates come down some. This is insanity, it is surrender not negotiating. I always, always ask for something in return if I am giving up something and do my best to make sure what I get in return is more valuable than the money discount they are asking for. Often time I use this as a segue with a customer to discuss retainer billing models. Most people balk at it but if it is part of a give and take over the rate they will embrace it. Give me the choice of a project with pre-paid hours at 150/hr vs NET 30 at 165 and I am choosing the 150 all day long.

Another point, if you relax your rate - sunset the change. 'I am willing to do this project at $150/hr but only for this project - future work we do together will revert to the $165/hr rate'. Put it in writing.

I like Merlin Mann's take on this. Basically, charge a lot to paying customers, and give a lot of content away for free so that those who can't afford it can still benefit.

It's obviously a nice situation to be in.

For most all of my speaking, consulting, and advisory work, yes: I do charge a fee, plus expenses. And, candidly, I charge kind of a lot.

Being compensated for my speaking, consulting, and professional writing work is how I’m able to feed and clothe my family as well as fund my lavish, meth-driven, West Coast lifestyle of fast cars, fancy English butlers, and the jet packs that will not be available to normal people like you for years.

It’s also how I’m able to give away almost everything I’ve ever written or said for free. Hundreds of thousands of words and dozens of days of audio and video can only be treated that liberally if there are other ways that the freight gets paid. I don’t apologize or defend this; I just realize it’s not as obvious to everyone as it is to me.

As for how I decide what to charge and to whom or for what? It’s not particularly complicated. I charge a lot to do things I’m great at for people who know it’s a bargain. And, that’s it. Only way to fly. I don’t “dicker” and I never “sell.”

I learned a long time ago to only work for or with people with whom you have mutual admiration and respect—and who already think you’re valuable and great at what you do. In my experience, the folks who expect you to make a case for your own value make for terrible clients. They may be good negotiators and nice people, but working for them is a gut-wrenching travesty. And I don’t do travesties.

With all that said, I do a fair amount of (private, unpublicized, non-ribbon-based) work with non-profits and other deserving groups. And, no, I normally do not charge for this work. So, If you’re working for a good cause or represent an organization that’s trying to do something you know I care a lot about, please ask me. No promises, but I’ll do what I can with what I have.

So, yep. “Expensive” or “Free.” It’s a fee schedule that works.

http://www.merlinmann.com/faqs/hiring-merlin/do-you-charge-m...

I like this.

One thing not mentioned that I've found over the years is that sometimes asking for the higher rate from the start increases the clients perceived value of you.

This was put succinctly by an old boss of mine "serious people charge serious money".

He was full of these another that stuck with me is "Don't charge what you think you are worth, charge what they think you are worth", on one system I built I went in with a price I thought was really high, got the job and then found out afterward I was still significantly cheaper than the other company that had bid on the contract though sometimes that is just the way it goes.

I'm not sure that "never" is a good word to use, here. There are many cases I can think of where it'd be worth your while to negotiate your freelance rate:

- The client is a non-profit or under-funded project that has little money but you can help out because you support the good they're trying to do in the world.

- The client is offering you a huge chunk of work, and the overhead they're removing from your life (finding other clients to fill the time, for example) is worth a few bucks off of your hourly rate.

- The client can offer other incentives to offset the hourly discount. Like a client that wants you to work from the office all the time might be willing to let you work from home.

- It's a project you really want to work on and that's the only way to make it work.

"Clients obsessed with nickel and diming are pathological." This is nonsense. Clients -- just like you -- have every right to negotiate. But freelancers who are unwilling to be flexible when dealing with their clients are, to quote South Park, "going to have a bad time."

Or, you can do what everyone else does. Set your rates 20% higher and give anyone who asks a 20% discount. Or set your rates 10% higher, and give a 20% discount for something that is valuable to you, but not necessarily valuable to the client (e.g. prepayment).

People like to feel like they got a deal. They want to be able to go back to their boss and tell how they talked you down from $250/hr to $200/hr. Why not pad your pricing to begin with and let them feel like they won? This is particularly important for dealing with people for big corporations where buyers are evaluated on their ability to squeeze vendors. In the end, you'll still get the price you need but you can leave them with that warm fuzzy feeling that you gave them special treatment because you value their business so much.

There is nothing wrong with offering a discount. Make sure there are good reasons for offering the discount and make sure that the discount is a line-item on the invoice.

For example, if a client is willing to commit to hiring you (by paying up-front) for a certain larger-than-normal period of time, you may be shooting yourself in the foot by not offering them a small discount to sweeten the deal.

If they ask for a discount, let them know that you offer one - for work done on retainer (payment up front).

An extremely useful rule is to give the discount, but hedge your risk with a limit on the hours for "undefined time". Agree on X hours for meetings, more meetings, presentations, discussions, whatever, and stick to it. This will force the client to use your time wisely, and pay you more if substantial more time is required.

There is a good point in the post that no one seems to mention. Negotiate on the scope. Please, for your own good, do that.

It sucks so badly when you a finish a project for a nice amount of money, the client says 'oh I have this project... can you take a look? I just need a quick fix', and you believe that a quick fix is a quick fix but in reality, it's piece of crap that you are not sure how does it even work. Why it sucks? Because I feel bad to tell the client to go away after he spent $XXXX on me.

And I wish I knew about the retainer contracts when I started... Random hours for maintenance for old projects sometimes can kill you.

Or just quote an inflated price (and don't make it public)

Does it turn away honest customers?

Sure, you want to quote the fair price to the honest customers and a higher price to those who haggle. The trick is finding out which is which.

Now, for companies, always, always quote the inflated price. And for some, there's the possibility of going 100% above. I'm not kidding.

A negotiation, even a small one, demonstrate that the parts tried to converge to a fair price. It's one thing to buy something with a price tag from a faceless corporation, another to negotiate something.

xss sp

Meanwhile, in the real world...