Freelancing Mini-Series – Taking Your Negotiating Skills to the Next Level
Let’s take a look at what we’ve covered so far in this mini-series.
Knowing those two subjects, it’s only natural that we now discuss one of the pillars of doing business: negotiating.
Whether or not you want to accept it, you’ve got to be a decent negotiator to be a great freelancer. It’s mission-critical.
And it’s not just because insufficient freelance rates equate to not being able to cover your rent, pay your bills and live the kind of lifestyle you aspire to.
It’s also because a poor agreed-upon rate puts you in an unenthusiastic and unmotivated mindset that results in poor quality work which damages your reputation and prohibits you from becoming successful in the first place.
And that’s kind of a big deal…
Before we look at some strategies to gain leverage, let’s first lay down some fundamental principles from which to operate to ensure the right kind of negotiation mindset.
Principle #1: Never Charge by the Hour
Charging by the hour is just about as common as it is unrecommended. Here are the three primary reasons why you should not do this:
- Your clients don’t want open-ended fees
It makes clients feel uncomfortable when an hourly rate is on the table for one simple reason: you can take as long as you want over a project and fabricate the number of hours spent at their expense.
- You cap your income
The amount of money you make is capped at the number of hours you can work each day.
- You won’t improve systems for working effectively
Getting paid a set rate per job (rather than per hour) forces you to produce more efficient methods to complete work faster.
Principle #2: The Psychology Behind Perceived Value
Consider this example…
Let’s say a client pays a high dollar value for work that is completed very quickly [i.e. in 50% of the expected time]. You know what happens after that. They’re inevitably much more likely to ask you to spend more time on it (usually in the form of revisions). That’s because the perceived quality of the finished product is insufficient for the amount of money paid.
For that reason, it’s worth giving your client the impression that things take longer and are harder to do than they really are.
It’s much easier to do this than to explain to the client that they’re paying you higher rates because of your sheer expertise and the years you’ve invested in studying, developing and nurturing that skill.
Why? Simply because that skill is much less perceivable than the amount of hours you spent on their work.
Principle #3: Supply and Demand
Finally in our trio of important points comes the principle of supply and demand. When it comes to freelancing, it works like this:
Lower quality gigs you do for smaller or less resource-backed companies are more competitive and less lucrative because there are more freelancers in the market who are available to perform said work.
Consequently, you must do two things:
- Develop your expertise to raise yourself above the crowd into the upper echelons of the professionals in whatever market or niche you operate.
- Properly convey yourself as the high-grade professional with the rare and developed skill set that you have.
That doesn’t mean that you should take on very well-paid jobs with blue-chip companies that are far beyond your skill level. Stay within your league or you’ll wind up like this fellow..
But you should always go the extra mile to push the envelope of your skill, studying before each new and challenging role, increasing your expertise and your value at the same time.
Quick Strategic Tips for Leveraging Higher Rates
There are many strategies you can use as treats and incentives to close the sale at higher rates. Remember, it’s important to get creative based on what’s relevant to you, but let’s see some examples to point you in the right direction.
- Offer to get the job done sooner
First up comes capitalizing on the fact that everyone’s in a rush these days. Mention to the client that if they’ll meet you at your requested price, you’ll go the extra mile to finish it within a faster timeframe.
- Throw in some extras
Sit down and make a list of at least 5 bonus things you could throw into a deal with relative ease. Whether that’s an extra revision, a critique on another project, or promising to include at least 2 authority quotes in an article is up to you.
- Offer a discount for paying full fees in advance
It’s important you have a solid background of social proof and testimonials before this strategy, but offering a 10% discount if fees are paid upfront is a great way to maintain your cash flow.
- Volume discount
Ongoing retainers are a valuable asset to the successful freelancer. If people sign on for longer or for more work, offer a discount to compensate for their improved time or volume commitment.
- Show clients the results your will work produce for them
We covered this principle in more detail in this article on finding your freelance rates. But, the bottom line is if you build sufficient rapport and respectfully request the average sale value or lead value, you can calculate the potential upside return for your client. That makes it much easier to justify higher rates, because they’re based on the money you make.
Prepare, develop and practice out of your comfort zone
Practice all of the above strategies and you’ll figure out a way to negotiate with new potential clients that works an acceptable percentage of the time (usually enough to pay your bills et cetera).
But what happens then? You stick with it. And you start to get comfortable…
Because speaking with new clients and engaging in a kind of sales process is a little scary, it’s difficult to push the envelope, think outside the box and try out new things for fear of rejection and losing that all-important retainer.
But, you know what? Failing to try different, scary strategies is the best way to never figure out any new negotiation leverage in the first place. You plateau with your current strategies and forge yourself a terrible, unprofitable little comfort zone.
That means, as a final part to this guide, it’s time to grab a pen and paper. I know, you’re comfortable in your chair right now. But seriously, do it… Next, go through the points here one more time and figure out a specific strategy that you’re going to try next time you’re negotiating with a new client.
That means, formulate the strategy and follow it. Ensure you don’t slip back into your old comfortable middle-of-the-road strategies that produce the rates you’re trying to improve in the first place, and constantly strive to find out what works for you, with your clients and in the type of freelance work you do.
Only by trying new things can you ever hope to break the seal and make more money. Best of luck.