Trade secrets: negotiating fees
I had an excellent time earlier this week talking to a group of people considering working as freelance consultants. Money cropped up. As it does. Specifically, people wanted to talk about how to quote for jobs. The focus was not so much on how you decide what to charge. It was more on the mechanics of the fee discussion. In the interaction with the client, how do you avoid overbidding and risking losing the job? How do you make sure you are not undervaluing yourself through lack of confidence?
Below are some of my trade secrets. They are rules of thumb gleaned, devised and adapted over the past couple of decades. They are for guidance, not to be slavishly applied. They apply to the kinds of work done by consultants in the non-profit sector. They’re about one-to-one, informal negotiating with a new client, not the quite different business of tendering formal bids.
If the size of your invoice doesn’t embarrass you, you’re not charging enough. A highly-successful and determined freelance journalist taught me this many years ago. It’s an upbeat, cheery encouragement for those among us who worry about asking for large sums of money. In our culture it’s generally embarrassing to talk about money at all. It is particularly difficult to talk about the value of a piece of work in direct cash terms. Think about employees you have known and a typical working pattern. How would they feel if they had to submit a written request for their agreed salary at the end of the day or week? Would some of them feel a bit embarrassed some of the time? You bet. Given we’re all working in the same world, it’s unreasonable for freelances and consultants to downgrade their earnings because they don’t keep them largely secret, as employees do. Be bold.
I do quick, I do good, I do cheap. Pick any two. It’s an old favourite, and still useful. Sometimes I say it out loud to clients. It’s a light-hearted way to make a point. Other times it’s just a useful reminder. Jobs often come along with crazy deadlines attached. If you agree to get someone out of a hole by a fast turnaround, make sure you charge more for it. Likewise, be grateful for a job that has no tight schedule and build up goodwill by doing a good job at a bargain price.
In negotiations, whoever mentions a figure first loses. Why? Because that party will never know if the other would have accepted something more favourable. Ask for £800, and if the client readily agrees you’ll be forever wondering if they would have happily paid £1,000 or more. This is by no means a disaster, but it can leave you with a nagging dissatisfaction. On the positive side, if they offer a figure first, you can keep quiet about the fact that you would have willingly done it for less. If they offer a figure that is much lower than you were thinking, that’s your chance to adjust your vision of the job and pare down what you were planning to offer. How they value the work is good for you to know sooner rather than later.
Offer a range of figures. If it becomes awkward, if you are under pressure and feel you have to come up with a price, offer a range, not a single figure. Maintain vagueness as long as you can, indicating that there are many variables and more than one way to deliver the goods. Try to get to the point where you are discussing the fee together, making a common decision that suits both parties. Negotiating a fee is not – despite the previous tip – really about winners and losers. Win—win is the atmosphere you are aiming to create.
Ask what budget the client has allocated for the work. Simple and direct. And potentially very, very revealing. Respond helpfully to the disclosure of a figure by reassuring the client that you can work within it. When it comes to your actual quote, preserve a safety buffer for the client’s emotional comfort. Yes, they are likely to have already knocked off a percentage – but there’s no harm in adding to it. You should be thinking of this as the beginning of a mutually profitable, long-lasting relationship. It’s not one where you have to grab all the goodies at the start. Your warning antennae should be bleeping if the client doesn’t seem to have a budget, doesn’t want to give even a rough indication, or gives a hopelessly unrealistic figure. Some potential clients are fantasists and wannabes who will be trouble all along the way. Much better to see the signs early rather than late.
