Tips for Negotiating Freelance Rates
Negotiation skills are one of the must-have skills as a freelancer. Knowing what to charge for your services and how to talk to your clients and convince them of your rates can make or break your chances of being selected for a project. In this guide, we will be taking you through how to negotiate with your clients, what you need to charge for your services, and how to talk to your clients. We will also be sharing some tips and tricks to help you get the most of the services you are offering.
How to negotiate with your clients
Negotiating the price to charge for your projects with your clients can be challenging, especially if you are new to freelancing. Setting your rates too high or too low can lead to missed revenue, delayed growth of your project portfolio, and loss of future opportunities that may have otherwise come in through with referrals resulting from successful relationships with your clients.
There are three major things that you should avoid when negotiating rates with your clients. These three things usually diminish the chances of most freelancers landing a project that they clearly have the skills and experience to do to perfection:
1. Focusing solely on the business aspect of the relationship with the client to the detriment of building a rapport:
Despite contacting a client to land a project to get some money, as a freelancer, you should keep in mind that they are humans, and creating a connection would make it much easier for them to trust you with the project they are assigning to you. This is especially true if you are asking for partial or full payments upfront.
2. Attempting to differentiate yourself from other freelancers by offering price discounts:
Although as a freelancer you should strive to offer the best prices on more competitive niches, you should not offer to give a discount to the client upfront to set yourself apart from other freelancers- especially if you have the skills and level of experience required for the job. Offering a discount may make the client insinuate that you do not have what it takes to complete the project or make them think that you do not believe in yourself.
3. Wasting time negotiating with wrong clients:
By talking to clients, you will be able to tell if the client is serious with the project they are offering or are still not sure of what they want. You will also be able to determine if you can complete the project within their set deadlines and budget range. If it is something you will not be able to do, we recommend that you stay away from the project. Ensure that you only take up projects that you will be able to handle and complete successfully.
What to Charge for Your Services as a Freelancer
The best way to determine what to charge for your services as a freelancer is to use the Acceptable Minimum Rate (AMR) formula. AMR formula is a ratio of measurement of performance returns, adjusted for risk. Here is how you can determine your minimum acceptable rate:
AMR= ((Business Expenses + Personal/Living Expenses) Divided by (Hours Worked))
After determining your AMR, the next step is to factor in your taxes. To do this, use the total MAR multiplied by one plus the applicable tax rate.
AMRT=AMR * (1+ Applicable tax)
Setting Your Rates
As a Freelancer, your primary objective will always be to make more money than you would make while employed. However, when negotiating freelance rates, you should always look for a win-win situation.
Do not price yourself too high or too low. However, depending on the project and the level of experience required for the job, you may start your negotiations with a higher price.
This may go two ways: One-it may result in more money than you had initially planned for, and Two-It may push away the client. It is important that when negotiating your rates, you remain flexible and not fixated on the amount you would like to get out of the project.
How to Talk to Your Clients
Knowing how to talk to your clients and not oversell your skills or services is a virtue every freelancer should have. Using the right words, phrases and the right tone can help you maintain a good working relationship with the client and may significantly increase the chances of the client referring you to other clients. Here are a few things that you should consider when talking to your potential clients:
a. Do not oversell yourself
When talking to a client, it is important that you do not oversell yourself or your services. Regardless of how easy the project is or how confident you feel you can complete the project successfully, you must treat each project as something technical, taking into perspective all the things that you will have to do to complete it.
Overselling yourself may also drive away potential clients since they will have doubts as to why you are overly confident in doing the project. It may also make them reduce the amount they had initially budgeted for the project as they may believe that it is too easy to complete.
b. Do not be too formal
Creating rapport is very important when talking to clients. Yes, it is important that you use proper grammar, tone, and formal language, but don’t be too formal. It is important to be flaccid in your conversation, especially when you are conversing on an online platform.
Think of this as calling a customer care line and talking to a robot when you have an issue that needs human intervention; you will most likely not be satisfied with the response given, even if it is the right one. The same applies to clients; when they contact you, they want to feel satisfied with the response given before assigning you a project.
c. Get them to name a price
When negotiating rates for the project, it is recommended that you get the client to reveal their budget and rates that they would be happy to pay. While most clients would want you to name your price first, setting a low or high price may be detrimental to you getting the project. When negotiating, lead the negotiations with questions such as; “What kind of budget do you have in mind?” “What is your price range for the project?”
Although most clients are usually hesitant to name the price, they may be open to giving you a specific range that they are willing to work with, giving you extra information to negotiate with.
d. Seek a mutually agreeable outcome
Great negotiation skills are very important when it comes to freelancing. Ensuring that your client feels satisfied with the amount they are parting with is a skill every freelancer must-have. When negotiating the rates, ensure that you aim at achieving a mutually agreeable outcome.
· Do not solely focus on the business aspect of the relationship with the client to the detriment of building a rapport
· Do not offer discounts upfront
· Do not oversell yourself
· Do not be too Formal
· Get the client to name the price
· Seek a mutually agreeable outcome