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Negotiating rates – it’s a bit of a minefield, isn’t it?
We want to get what we’re worth, we want to get near the top end of the range available but, at the same time, we don’t want to price ourselves out of the job.
In a perfect world, freelancers would be paid in direct proportion to the quality and quantity of our work. In reality, however, it is more to do with our bargaining skills. And, although a freelancer will spend years training and developing their core professional skills, they will spend next to nothing to develop their negotiation abilities.
As such, the whole process can seem a bit mysterious – a dark art – and we can feel quite uncomfortable when the conversation turns to money.
To help you achieve your true worth, we’ve put together 5 top tips to demystify the negotiating process, and help you get the best deal the next time you are negotiating your rate.
You need to know your market. Find out the typical rates for your field, your locality and your level of experience. There are usually market surveys available or websites that can give benchmarks (or you can check out our day rate calculator). But also ask fellow practitioners. Pay should not be a taboo subject, as this tends to keep rates low.
You should be the first person to mention a figure and you should start as high as you can justify, and have your reasoning to back it up.
Why should you be the first? Because it means you set the reference points. You will get a better end result if you negotiate down from £100 per hour than if you go from £50 upwards.
If you are worried that this figure will scare your client away (and only if), you can imply this figure is negotiable. You can say things like “typically, my rate is £95 per hour” or “I know some jobs in the area go for up to £100 per hour, so I’d be looking around the £90 mark”. This implies your figure is a starting point for the conversation, and is open to discussion.
You also want to have a clear idea of the lowest figure you would accept. The best guideline for this is your alternative (i.e. what work would you be doing if not this?). Always have a strong Plan B, always make sure you are looking at other opportunities at the same time.
Customers will pay higher rates if they see the extra value gained from doing so. For example, you can point to case studies where you have delivered the client’s exact requirements and proven good value for money.
If you want to move into a higher league for fees, look at the super-chargers in your field and see what they do to get their rates. It may require investment – qualifications, a new website, write a book – whatever counts as credibility in your field. It will pay off.
We are talking about fees but negotiations are never one-dimensional, there are always other factors that come into play.
For example, you might be willing to accept a lower rate if it is a longer term position, if it is strategically interesting, or if they will pay for training. Similarly, you could lower your rate if the contract suit your lifestyle or will allow you to do other work at the same time.
Maybe you can charge on value? If you can earn them a million, charge nine hundred thousand! Maybe you could try something even stranger.
Negotiation is a highly creative process; successful negotiators always look for solutions beyond the obvious. They look for win-win solutions. The customer has a problem that you can solve, you have a problem that they can solve – work together so everyone is happy.
Always, always, be gracious in your negotiation. This is not a battle, you will want to work with them again.
If you needed a heart transplant, you wouldn’t do it yourself, would you? You would go to a specialist. Similarly, with negotiations, it is worthwhile getting help from an expert who has spent years training in this area.
And the maths can be quite simple. What are your earnings? What if an expert charges £450 for a consultation which results in you increasing your income by 10%? It’s a no-brainer, really.
I hope these tips are of help to you, and wish you the best of luck in your negotiations! Any questions or comments? Ask away in the comments!
You've pitched, landed the job, delivered your work...and now it's time to get your money. But how do you do that? Luckily, help is at hand! We give you the lowdown on what your invoice should include as well as links to handy free templates and software.
Payment on account is not something that is widely known about among people who have never been part of the Self Assessment system. Learn more now!