6 Tips On How To Set And Negotiate Your Rates for Freelance Projects
Freelancers are not only the best in their own expertise, they are also marketing managers, finance managers- and negotiating deals as business managers. Talking about money and prices can be challenging. But learning how to negotiate effectively is absolutely vital to the success of a freelance business. We’ve collected 6 tips to set and negotiate your rates effectively and find the autonomy you seek as a freelancer while building a pipeline of rewarding work. Let’s take a look at each of them!
1. Establish your value
It’s really important that your client knows the value you’re going to bring them. If you can share with prospects what results you’re going to bring to the table, you become a more attractive candidate than someone who doesn’t do that.
Consider the nature of the project and what it is worth to the client. The rate you want to charge is highly affected by the value of the project to the client than anything else. So ask yourself, how will your skills benefit the client? How will it positively affect their bottom line?
2. Build relationships to drive business
Talking about money and prices is a tricky topic. But freelancing is a business, your business, and clients expect you to charge for your work, skills and time. So, the success of the negotiation also depends on their decision to invest in and engage with you.
As a freelancer you build the relationship as the reflection of your own brand and values. Tell your own story, describe your unique skills and qualifications and find common ground to build connections. By answering following questions you easy build your narrative:
-1. What do you believe? Start with an idea that derives from your passion and that motivates your approach.
-2. What led you to this? Help your client understand how you got to this point and why you are qualified to work with them.
-3. How does it drive what you do today? Connect back to them, instead of ending with something about yourself.
You can keep much of this consistent, but vary your story related to the project you’re pitching, the organization and the person you’re negotiating with. Focus on details in your small talk and look for links between your world and theirs. Use the links to let the conversation flow organically.
3. Determine your MAR
No freelancer should enter into negotiations without knowing their minimum acceptable rate (MAR) they are willing to work for. It represents a number that you will not go below while negotiating. You can calculate your MAR with the following formula:
((Personal overheads + business overheads) / hours worked) + TAX
Also, your MAR depends on the total duration of the project, the number of working days per week and years of experience. When you’re just getting started, your MAR will be calculated based on the quality of life that you consider necessary. As your business grows you adjust your MAR to reach the quality of life you want in the future.
4. Seek a mutually agreeable outcome
The relationship with your client isn’t going to last long if you think that squeezing every last euro out of them is a good thing. A good negotiation is about both parties feeling like they have done a good deal. You want to work with clients who will recommend you, come back to do more business and give you a good testimonial.
5. Don’t spend time negotiating with the wrong partners
Many freelancers express frustration because they spend too much time on potential clients only to lose them in the end. Working with intermediaries can be useful as they will negotiate for you while respecting your MAR and overseeing how much your client values your work. This way you strengthen your relationship with the client and save a lot of precious time to write your own story.
6. Ask for advice
Reaching out to intermediaries like NedWorks or your network for some tips on how to negotiate as a freelancer can be helpful. If they’re also in your field of expertise, they might be able to guide you on which employers are currently hiring freelancers and which pay fair.