How to Negotiate Freelance Rates Strategically and Successfully

By Nicola Brown, Contributor, on June 18, 2018

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At some point in your indy journey, you may have asked yourself: Should I be getting paid more for this? And you’re not alone. One of the biggest challenges freelancers face in the creation of new contracts or taking existing clients to the next level is how to tactfully and successfully negotiate freelance rates. Many indys — even those with years of experience — struggle to secure remuneration that reflects their value. But doing so is the route to financial growth and stability as an independent business owner.

Recently, I negotiated with a high-profile corporate client to secure a 50 percent higher hourly rate than they would typically pay for similar work. Here are some of the strategies I put into practice during my successful negotiation.

Research Average Rates

Go into your rate negotiation well-prepared to back up what you’re asking for. I used the Robert Half Salary Guide and Indeed salary search to research average hourly rates and salaries for my industry, job description, years of experience and specific location. These tools offer some of the largest databases for salary information in the United States.

Whether or not your client has already proposed a rate or an estimated budget for a project, understanding the average rates in your industry and location is an important step. Knowing what others are being paid will enable you to judge whether or not a proposed rate is fair and adequate. It will also give you solid statistics to reference if you plan to come back with a different number.

Compare Rates With Your Existing Clients

The ultimate test of a new client’s value is how their remuneration compares to that of your existing clients.

If you’re being paid below average for your work by your current clients, an average salary is not only a reasonable request, but a step up for you and your career. And if you’re currently being paid above average, accepting an average salary may seem fair from the client’s perspective, but it may not be an attractive enough offer for you to accept it.

If you’ve already landed some high-paying gigs, telling your new client what they’re paying you is a good way to convey how much others value your work, and what the prospective client will need to match to win your business.

Emphasize a Full-Time Salary Equivalent

If your client is new to hiring freelancers, it can be helpful to walk them through what your rate would look like as a full-time salary, and how your hourly rate breaks down to cover your business costs as a freelancer.

Make sure to emphasize all items that a company covers financially for an equivalent full-time position, but does not include for a freelancer. These items need to be reflected in a freelance rate, including the value of benefits, vacation, sick leave, maternity and paternity leave, corporate discounts and gym subsidies. Plus, as a freelancer, you likely present $0 overhead cost — unlike a full-time employee, who needs a desk, computer and other equipment and supplies.

When I’m negotiating with clients, I always build in an extra 10 to 15 percent into the hourly rate I’m asking for in order to cover the “precarious” nature of freelance work. That is, you may only sign a temporary contract or a month-to-month agreement, and you aren’t entitled to the same unemployment and severance policies as full-time employees. Think of this percentage as a form of financial insurance should your relationship go belly up.

Allow Room for Compromise

A freelance rate negotiation is just that: a negotiation. Don’t expect to waltz in and get exactly what you’re asking for immediately. Sometimes that does happen, but you should always be prepared for a bit of back-and-forth. Go in with a higher number than the minimum you’re willing to settle on.

Also, consider other concessions. Perhaps your client is willing to offer more flexible hours, free skills training or some other perks in lieu of a higher freelance rate. It all comes down to what you’re looking for personally. Despite that, always stick to your minimum and be ready to walk away if they can’t meet it. Accepting pay below what you’re worth isn’t just detrimental to you, it erodes the value of the industry in which you work.

Use Positive and Inclusive, Long-Term Language

Throughout the freelance rate negotiation process, use positive language that makes your personality and value clear to your client. Always start on a high note, even if you plan to come in aggressively on that hourly number. Emphasize how excited you are to begin working together, and speak as though it’s an inevitable conclusion to your negotiations. Try using “when” instead of “if,” and “we” instead of “I.” Doing so encourages your client to imagine your new relationship as established (rather than pending) while you iron out the details.

Be specific in referencing a project or a particular initiative for which the client needs help. Express how you already have ideas you’ve been working on, and how you can’t wait to share them with the team. Your proactive nature before the numbers have even been finalized will demonstrate your passion, your commitment to the relationship and your motivations outside of the hourly payment.

The best way to negotiate freelance rates successfully is to be as honest and open as possible. Don’t start your relationship with a new client on the wrong foot: Make sure you don’t undersell or oversell yourself. Be ambitious yet reasonable in developing a well-researched rate with which you feel comfortable. After undergoing these negotiations a few more times, you’ll have a strong set of clients and a healthy financial future as a freelancer.

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