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The Only Way to Negotiate Pricing as a Freelancer

Dmitry Kalabin | Kit8.school - advice for freelacers

Dmitry Kalabin

Nov 2, 2024
#012
Liid.app is software designed for freelancers. Originally built for internal Kit8 team use, it was later made public after the team realized it could help thousands of freelancers worldwide automate and streamline their workflows.
Talking about the price of your work is an essential part of any project, yet many people don’t give it enough attention. They might feel anxious when naming the price or struggle to justify it to the client, so that can make the client doubt your competence.

When I started my career, I negotiated prices based on the client’s budget. I’d give them a quote, they’d say it was too high, and I’d ask what their budget they have. Sometimes I’d try to raise the price a bit from what they offered, but often I’d just settle for their budget or, if I was lucky, get something closer to my original quote. If you’ve ever haggled over your work price, this probably sounds familiar.

The first thing to remember when talking with clients is to stay polite. It may seem obvious, but it’s easy to forget. Sure, the client might be rude or insensitive, and their offers might seem unreasonable. But you need to remain calm, especially if they suggest a very low price. Remember, you’re a professional. You’re not complaining about rising grocery prices, you’re discussing the value you’re providing and why it’s worth the price you’ve set.

Most of my project discussions happen over email, which is a great way to communicate. It gives you time to carefully read the client’s proposal, see how it aligns with your own goals, and plan a clear, appropriate response. However, remote communication can miss the subtle connection that direct conversations provide. If you have the chance, discuss the price over the phone. Even a 15-minute conversation can be crucial, it helps establish your presence and lets the client see you as a real person. This can have a major impact on their decision.

Discussing the price with an existing customer
There are two main situations when discussing price: with client you’ve worked with before, and with a new potential client.

With a existing-regular client, you’re usually talking about raising your rates compared to what they’re used to paying. Over time, you increase your rates and inform them of this. In this situation, you understand your value well, can point to key successes your work has achieved for them, and confidently raise your rate.

I recommend doing this once a year. That way, the increase isn’t too harsh and makes sense to the client. My suggestion is a 10-15% increase annually. A 5% increase barely keeps up with inflation, and it doesn’t account for the experience and skills you’ve gained over the year. If you don’t raise your rates at least once a year, inflation will outpace your income, and even if your earnings don’t technically drop, their value will be slipping away.

Mindset
Imagine that you’re not in a tug-of-war with the client over price, you’re just having a conversation. Picture yourself as a shopkeeper, with your services displayed like products on a shelf. Everyone understands what is being negotiated. You’re not just discussing the price, but offering different "products" with various features and specifications.

Focus on the value of your work, not just its cost. You’re here to help the client see the value you bring to their project.

And never negotiate on payment terms. Payments delayed by a couple of months aren’t for you. You should receive your payment on time.

Talking to a New Client
With a new client, you should aim to raise your rate. Since they don’t know your previous rates, this is a great opportunity for you.

Continuing the mindset advice. You’re exploring their vision, figuring out how you can fit into it, and what from your skillset you can offer.

Know your worth. Research the average rate for similar work to stay in line with industry standards. The client might not know either, especially if they’re new to hiring someone in your field.

- For Beginners
Let’s discuss two distinct situations:
In one, you’re a beginner with few orders, clients aren’t lining up for your services, and you naturally worry about getting the next job.

In this case, you might even consider taking on unpaid-free work if it gives you valuable experience you can apply to future projects. Be cautious here, make sure you understand the value of such work. You should genuinely want to do similar work in the future; this motivation is crucial at every stage.

To become more attractive to clients and leave the “beginner” category, focus on improving key factors important to potential clients and separately on marketing to bring them in. These are two different skill sets. If you don’t have enough clients, it’s likely because your offer isn’t appealing enough, or clients simply don’t know about it.

Always set clear boundaries for the scope of work in exchange for the agreed price. A signed document is your ally here. It might seem excessive or slow things down, but even if you’re lucky enough to manage without it a few times, you could eventually learn a hard lesson when a client expects much more than what you originally agreed on. A lack of documentation leaves you vulnerable to misunderstandings about scope.

- For Experienced Specialists
As an established professional, you should receive the compensation you deserve, and the client should get the quality they expect. To achieve this, you need to know your strengths, what sets you apart from others. Identify at least two or three specific advantages you can easily mention, even in a live conversation.

If the client says your rate is too high, ask a simple question: “Is price the main criterion for choosing someone to do this job?” The answer is likely, “Of course not.” They might also mention a cheaper competitor. In this case, ask further questions to find out if that competitor can deliver the same quality or perform additional tasks. Your ability to highlight your strengths through such questions will differentiate you from other providers.

Think of yourself as a strategic partner, aiming not just to meet strict requirements or boundaries, but to offer options that maximize your contribution to the project and justify higher compensation within the set budget. Don’t bargain over the price of the work but rather over the scope of your services. This is why it’s good to prepare different options for the client. The ability to adapt to the client’s needs will also make you stand out.

The highest rate may come with conditions, such as when the client wants to set their own terms, including "unlimited" revisions and changes. Here, your role is to educate them on what the process looks like, both for you and for them.

If the project goals and compensation don’t align with your expectations, be prepared to walk away. You’ll find the right client who values your work and is willing to pay fairly.

As you may have noticed, this article doesn’t discuss alternative price negotiation methods. While details might vary depending on your field or industry, this approach is universal, it’s the only effective way to negotiate your rates.

Ultimately, aim for the success of the project you’re involved in, not just the paycheck. This guarantees future projects and the chance to work with other interesting people. After all, all projects are done by people, and we naturally gravitate toward those who bring positive value into our lives.
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