Wages are one of the touchiest subjects of the entire freelance lifestyle. When you’re a third-party worker looking into an organizational system from the outside, the question of compensation can be confusing, intimidating, and overwhelming.
When negotiating wages, freelancers are often worried about one of two things happening. Either they raise their rates too high and lose work or they don’t raise their rates and miss out on additional income.
This is where negotiation comes into play. Here are a few tips to help you set good rates, create a financial strategy, and ultimately ensure that your wages are a win-win for both you and your clients.
Understand that Negotiating Goes Both Ways
Before any action steps are discussed, it’s worth pointing one crucial thing out. Negotiations are a two-way street. In other words, you can’t approach a negotiation as a chance to get more money out of a client. It has to be an honest discussion that breaks down, among other things:
● If you are getting the compensation that you deserve for your work;
● If the client is getting a proper value from your work that justifies the labor;
● How you can find a happy middle ground that is beneficial to both parties involved.
In other words, negotiations are about compromises, voicing your desires, and discovering what possibilities exist to enhance a relationship through potential changes such as higher pay for you, better results for the client, and so on.
Set Your Rates
Negotiations start with your rates. If you set these from the get-go, it can save you many uncomfortable conversations down the road.
Unfortunately, freelance rates are anything but predictable. On the one hand, you can set your own rates, and that’s always wise to do thoughtfully. Research rates that have been:
● Reported in industry studies;
● Set by other freelancers;
● Paid by employers.
From there, consider what income you need and then use all of your gathered information to set a rate that will work for you. Also, consider estimates of your freelance floor and ceiling within your industry. How much higher can you adjust your rates as you gain experience? How low to your minimum value is your rate right now?
Once you have your own rate set, you can begin to look for work. As you do so, you’ll find some clients that ask for your rate. Others have preset rates that you’ll have to accept, at least at first. However, if you can put your best foot forward, you may be able to adjust the initial rate in the future.
Create a Financial Strategy
Next up, create a financial strategy. This isn’t just a nice way to organize your money. It’s a critical part of setting yourself up for effective negotiations in the future. If you can create a firm financial foundation for your self-employed activities, it empowers you to walk away from clients that are abusive with their pay.
Your financial strategy should start with short-term concerns like getting business insurance and setting up a budget. The latter should consider recurring expenses like a mortgage, rent, or a car payment. It should also factor in discretionary spending and should be designed to help you live below your income (which can fluctuate.)
From there, consider long-term financial goals like saving up an emergency fund, setting up healthcare for yourself, and creating a retirement option like a self-directed IRA to replace any 401(k) contributions you might have gotten from a past full-time position.
A good short- and long-term financial strategy can provide a solid foundation to negotiate from.
Learn to Stand Up for Yourself the Right Way
Once all of your financial plans are set, you can boldly enter into negotiations with clients. In the hiring process, make sure to sell yourself by highlighting your unique skills and experiences. Focus on past success and showcase the quality of your work. This can help you demonstrate that you’re worth every penny of your rate.
If you’re negotiating with a client that you are already working with, things can get a bit trickier. After all, you don’t want to damage the rapport that already exists between you. With that in mind, when negotiating for a higher rate with an existing client, make sure to be personable and understanding.
Don’t fall into the emotional extremes of being either shy or aggressive with your demands. Instead, focus on presenting yourself assertively. Explain why you need to raise your rates, zeroing in on win-win factors like the desire to provide the highest quality results. Point out that lower pay adds pressure and stress that can impact your work.
If you have a firm financial foundation in place, you will have options as you negotiate. Ideally, you’ll be able to get a bump in your pay. However, if the client is unwilling to work with you, you’ll be prepared to walk away as well.
As a quick aside, every client is not the same. Don’t be afraid to prioritize clients and compromise quicker on rates when you value the work, the client, and the pay. At the same time, don’t compromise too much with a client that is low pay or where you don’t value the work.
Negotiating as a Freelancer
Negotiating successfully with your clients can feel tricky. And the truth is, confronting clients over the issue of compensation is never fun.
However, if you can take the time to set the stage beforehand, it can help you enter each negotiation with confidence and control. Solid finances and researched rates can inform each decision that you make. This allows you to lobby for better pay based on real facts and results and empowers you to walk away whenever a client isn’t interested in hearing you out.