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A Client Is Trying to Negotiate My Rate.

<p><strong>Picture this classic scenario:</strong></p> <p>A freelancer is discussing with a new client about an eventual project, in a café. They agree on the communication tools, the project specifications and the deadlines. So far, so good.</p> <p>And of course, the client ends up asking the critical question:</p> <blockquote><p>“What about your hourly rate?”</p></blockquote> <blockquote><p>“60$/hour”</p></blockquote> <blockquote><p>“Hmmm&nbsp;my budget is pretty tight. Would you do it for 40$/hour?”</p></blockquote> <blockquote><p>“…”</p></blockquote> <p>Sounds familiar?</p> <p>First of all, breathe, no need to go for the throat. Even if it is inappropriate, the client often means no wrong, they’re just trying to inexpertly get more bang for the bucks.</p> <p>Like many freelancers, you had a hard time figuring out how much you should charge. Defining a price that reflects your experience and the added value of your service sure isn’t that easy. At the beginning, it is pretty common to second-guess and wonder if you’re asking too much, or too little. And then one of your clients tries&nbsp;to negotiate your fee or asks for a discount.</p> <p>Should you do it?</p> <p>It is a delicate question. There is no good answer, it all depends on business development strategy. Here is some food for thought.</p> <h2><strong>Scenario #1: You agree to lower your fee.</strong></h2> <p>You like this client’s vibe and the project, and you agree to a discounted fee for the sake of the long-term relationship.</p> <p>Fine. There’s nothing wrong with putting water in your wine, but the business relationship won’t be satisfying for any of the involved parties if you feel like you’re getting exploited. It’s hard to produce high-quality work when you feel like someone is taking advantage of you.</p> <p>Primero, make sure you agree to a price that still makes sense. There’s an opportunity cost, and you should consider it.</p> <p>Segundo, your client should know you’re doing him a favor, and that this isn’t your new price, but a reduced price.</p> <p>Tercero, since you did a compromise, you should get something out of the deal. Here are a couple ideas for fair requests:</p> <ul> <li>A payment in 15 days instead of 30</li> <li>Any extra work will be billed</li> <li>A very acceptable deadline</li> <li>No overtime, no work during the weekend</li> <li>The keys to his luxury car (if you feel like pushing your luck).</li> </ul> <h2><strong>Scenario #2: You agree to a temporary discount.&nbsp;</strong></h2> <p>Instead of reducing your fee directly, you can agree to a temporary discount, which will be applied on your first invoices. These invoices should showcase the full fee, and the discount should be stated clearly. Your client has to understand that it is a time framed favor to ease the beginning of the relationship. After that initial period, defined at the very beginning, go back to your full fee. If everything goes according to the plan, your client will be so satisfied with your work that he’ll be deadlocked with you. Yay!</p> <p>There are a couple things to take into account for this scenario. You should only apply this strategy for clients who’ll bring a good load of work in the long term. Reducing your fee on a short term rush project for a low potential client won’t do any good, unless you have major cash flow problems and need the money to fulfill basic needs. Think of it as a business development strategy. You can also do it for startups and charity organizations if you feel like altruistic.</p> <p>&lt;Shameless plug&gt; That being said, it is very easy to apply a discount on invoices on Momenteo &lt;/Shameless plug&gt;</p> <h2><strong>Scenario #3: You keep your ground.</strong></h2> <p>Most freelancers enforce a unique price for all clients&nbsp;and stick to it even in the most extremes scenarios. If you already have steady clients, or numerous contracts, it is more than often the way to go. In any case, clients often don’t understand everything that’s included in a price, it is mandatory to state it clearly. If you include meetings, fixes, research, competition analysis and phone calls, you&nbsp;should mention it.</p> <p>You’ll also see if your client was bluffing. Some business people try to negotiate just about anything</p> <p>And every once in a while, you’ll get the classic:</p> <blockquote><p>“My [step brother/cousin/friend] will do it for half the price”</p></blockquote> <p>Well good for him.</p> <p>Resist the urge to flip the table and calmly explain that your price is taking into account your competence level and experience. He/she has to understand that working with a professional often ends up being cheaper in the long term. Well executed work has a price, and working with an amateur adds a lot of risk to a project. The best you can do is to wish him good luck and step out with your chin up (and watch the project go down the drain from a distance).</p> <p>Happy billing.</p> <p>&nbsp;</p>

I like building cool products and marketing them.

Philip Barclay CMO@Momenteo