Top 5 negotiation strategies for freelancers
Time is money, especially if you’re a freelancer who charges by the hour. In order to generate as much income as possible from the limited time you have, it’s crucial to secure the best rate possible for your services. That means negotiation, and we know that can be a daunting thought.
To help you with these conversations, which can be difficult, Virtual HQ have put together five great negotiation strategies for increasing your profitability as a freelancer.
Establish a minimum rate
First off, establish a minimum acceptable rate (MAR) that you’re willing to work for – and say no to any work under that price (aside from special circumstances, discussed a little later). This strategy keeps things simple: Deciding that you won’t commit to a client for less than your MAR ensures you’re fairly paid for your work and, as you won’t feel exploited, maintains your morale and motivation, resulting in higher-quality work. Everyone wins.
Now, in order to charge the correct MAR, you have to work out how much it is first. This handy freelance rate calculator is especially helpful for this, as it takes your desired annual salary, taxes, expenses, and even a little wiggle-room for time off and sick days into account, in order to calculate your ideal minimum rate.
Always start with your ideal rate and work downwards if necessary. By starting high, you don’t risk going below your MAR as easily. It’s difficult – almost impossible - to go back upwards if you feel you need to charge more later on in the negotiation.
With this strategy, at best, you’ll earn your ideal rate, and at worst, you’ll agree to your MAR. This is a simple and effective skill, however, it still takes a certain amount of courage as it is easy to be nervous about potentially pricing yourself out of work. However, chances are, the client will expect you to start high – so getting into the habit of doing so is crucial.
Charge on a case-by-case basis
Set your rate on what you think the client can afford: If they’re a successful, established business, set your initial rate higher, while starting lower for smaller, growing companies.
If you want more of a guide on how much to ask for, you can ask their budget first. This can save you time as they might not even have a budget that allows them to work with you.
Offer one-off/special rates
While you have a MAR, be prepared to work for an initial, discounted rate on some occasions. This is a great strategy for a client you really want to work with, whether that’s because of the nature of the work or the credibility that it provides as part of your portfolio.
However, its key to be clear that you’re charging them a special rate and when you deliver excellent work, you’ll be able to negotiate upwards for the future projects. Even if they don’t offer you future work, you’ve generated some income and can add the project to your portfolio.
Charge per project, instead of per hour
Instead of an hourly rate, you can charge a client for a completed project or outcome. To do this, you’ll have to estimate how many hours it’ll take to complete, potentially adding a few hours as a buffer, to account for complications.
While this can be a little daunting, as you’re conscious of undercharging, it does have a number of advantages: Firstly, clients can view this positively, as they’re no longer concerned how you’re filling each hour you work for them, they just get the desired product or service. Secondly, it allows you to focus on the problem you’re solving for them, and the value it provides, rather than simply trying to fill hours.
We understand that fee negotiation and invoicing as a freelancer can be daunting, whether you’ve just started out or you’ve been working for yourself for years. However, each of these strategies, while simple, is deceptively powerful. If you can develop the habit of employing them in future negotiations, then it won’t be long before you’ll earn your worth as a freelancer and ensure that every hour you work is more profitable than ever.
Every client will be different, and every project will present completely unique challenges and excitements. It’s all part of the fun of being your own boss – and hopefully, with these seven tips, your future negotiations will be a breeze!