As a freelancer or entrepreneur one of the most important skills that you have to master is negotiation. Negotiating your freelance rate is key to your success.
Negotiation is not necessarily a natural skill but luckily it is something you can acquire with knowledge and practice. Most freelancers would prefer to invest all their time in doing the work for what they were hired instead of the day to day business maintenance such as marketing themselves, writing proposals and negotiating contracts. But the secret is that sharpening these skills will allow you to reap the most value possible from each contract.
So here are some essential tips to get you on your way to negotiate a freelance rate like a pro:
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Benchmark
It is important to understand what the market is willing to pay for your services in your specific location. If you are a graphic designer, a website developer with WordPress expertise or a bookkeeper, you should be able to find information on the going rate in your market. One way to get that information is to visit job postings in your city on different freelance marketplaces such as Upwork or Workhoppers. You might find a consistency in the rate for the specific skill you are selling.
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Understand your BATNA (Best Alternative to a Negotiated Agreement)
It is not enough to know the market rate for your freelance expertise, you also need to understand your own options if the contract is not signed. How is your current workload? What would happen if you don’t get this specific contract? Would you immediately find something to replace it? Are you losing a potential long-term client or is it just a one time shot?
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Understand the company’s BATNA
As important as understand your own BATNA it is also crucial to understand the company’s position for this specific negotiation if they don’t close the deal with you. Would it be easy for them to find your skill in the market? Are they willing to hire a freelancer abroad that may have a significantly less rate? What added value can you provide? Do they need the work right now? Have they received many proposals for the job? What are the consequences if the job was done by someone not as skilled as you are?
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Make the first offer and know your walkaway rate
This may surprise you but it is important to be the one to throw out the first number and anchor the negotiation. Your first proposal will determine the range of the negotiation. The reason is the psychological principle of anchoring. Whatever the first number is on the table, both parties begin to work around it. It sets the stage. Don’t go too low as you will not have room for concessions and don’t go too high as that will signal the end of the conversation. Always keep in mind the value of your time for which you will not be willing to commit.
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Share information, ask questions, and listen actively
Open communication should normally help get to a win-win negotiation. Be sure that you fully understand the clients’ needs and effectively communicate your expertise. Having good understanding of where both parties stand results in the best possible proposal, one that really reflects your understanding of the requirements for the project. Your proposal will emit confidence that you can deliver on time and on budget.
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Be flexible and propose bundle options
If the negotiation is not going the way you wanted, be prepared to change it. It is good practice not to concentrate only on the rate. You might want to consider offering additional end products that the company will see as beneficial and stay close to your target income. in addition, you can look at the scope of the project and consider reducing the features of the deliverables that may not have been valued by the other side anyway.
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Keep it professional
Always remember to leave behind your ego. Emotional discussions are not productive. Don’t react to them. It is better to come back at another moment with a different proposal than engage in a heated discussion. Understand that it is definitely not personal when a client does not agree to your rate. Put yourself in their shoes and you will be able to empathize with their objections.
There is a lot to learn when you decide to become a freelancer but negotiating the price of your work is top on the list. Don’t be afraid to experimenting with different techniques until you find the one that best fit with your style. But always remember to be prepared before you approach the table of negotiation. The main objective is to maximize your freelance rate.
