[Ice]

Hi, it would be great to have your thoughts on this:

I just got an offer to do a small project for a London based company. I have never worked with the company before, but it's a reputable company, so there is no doubt that they're legit. The scope of the project is only two days, but there is a good chance that I will get more business from them in the future if this small project works out well. It's a cool company, so I am def interested in building a longer term relationship with them.

For the two days, they offered me a fee of 500 GPB - that's approx. 320 EUR per day. I think that's quite low, I would normally expect 400 - 450 EUR per day. I have worked for 350 EUR before though.

My role will be doing research and strategy work.

I will talk with the company on the phone tomorrow. There are three options:

1.) I can say that my fee is normally higher, but since we never worked together we can do this first project for the fee they put forth and then renegotiate. (The tasks I am being asked to do are not that demanding - normally I take on a more senior role - and I am thinking that future projects might be more complex and would enable me to do higher qualified work, so this would merit a renegotiation).

2.) Or, I can ask if there is flexibility in the fee, since my fee is normally higher. If they say yes - cool. If they say no, I could say that in that case I will have an intern help me on the project, but I will definitely look at the final product to make sure it's done well before I send it over to them. I do have a guy who approached me recently and asked if he can be my intern, so I could use him for this project. But maybe that comes off a bit arrogant or highfalutin if I mention the intern.

3.) Or, I don't mention anything about the fee at all, just try do deliver the best work I can, and if they contact me again in the future, I will say that I would like to renegotiate the fee.

What are your thoughts on it?

[456]

1) Potential option -- reality is, do you Need this work / potential client? If so, you can do this. But be aware it's hard to up the rate once they are used to you at a low rate, despite what they may tell you.

2) Nobody wants to know how the sausage is made. You take the gig or not -- don't explain about interns or who is on the details of the work. Also, "asking" if their fee is "flexible" is dangerous: it belies that you don't have a handle on negotiations, makes you come off as amateur, and of course they will say No.

3) This is better -- if you want to take it, take it. Hit it out of the park -- impress them with the quality. Next time they ask for you, don't renegotiate, just tell them your new rate. "Does your plumber ask permission to raise his fee this new year?" No, he just charges you what it is.

4) If you really want to do this for more money, accept that your only leverage is your power to say No if they won't meet your fee requirement. "I'm excited to work with you guys. However, my day rate is X. I am confident we will exceed your expectations on this one (or deliver great value, however you can word it)."

[H1N1]

I assume you are asking because you need the money. I don't mean this in a bad way, rather that you are just not yet in a position where you are turning down high profile clients left right and centre.

Assuming this is the case, and that as you say, it is a good company with future potential, I would personally make clear in advance of accepting the work that your standard rate, and level of responsibility, is generally higher, but let them know that you like their company and are prepared to do this as an investment. I would think of it a bit like 'holding frame', to borrow a phrase popular round these parts. If you are investing in your long term prospects by making a small financial sacrifice for the possibility of longer term financial gain. Only you can really judge whether they are trying to exploit you. It may just be that £500 is what the business is worth to the company offering it.

Although I don't sell my services for a living, I have had to do favourable rates and take a long term view with many of the products my company has developed, and it is a recent thing that we have the track record to demand full price right off the bat. I never had any trouble raising the prices, because I was absolutely clear in advance that this was a favourable rate to induce them into taking on my product long term, and the product itself added more value in their eyes than the full contract price. If you are confident you can justify every bit of your fee, and leave the company feeling like they've still come out on top, then I don't think you'll struggle to raise the fee further down the line.

[Ice]

(01-07-2015 11:51 AM)456 Wrote:  

1) Potential option -- reality is, do you Need this work / potential client? If so, you can do this. But be aware it's hard to up the rate once they are used to you at a low rate, despite what they may tell you.

2) Nobody wants to know how the sausage is made. You take the gig or not -- don't explain about interns or who is on the details of the work. Also, "asking" if their fee is "flexible" is dangerous: it belies that you don't have a handle on negotiations, makes you come off as amateur, and of course they will say No.

3) This is better -- if you want to take it, take it. Hit it out of the park -- impress them with the quality. Next time they ask for you, don't renegotiate, just tell them your new rate. "Does your plumber ask permission to raise his fee this new year?" No, he just charges you what it is.

4) If you really want to do this for more money, accept that your only leverage is your power to say No if they won't meet your fee requirement. "I'm excited to work with you guys. However, my day rate is X. I am confident we will exceed your expectations on this one (or deliver great value, however you can word it)."

Thanks for the feedback.

1.) Yeah, I would like to work with this client. I think they do interesting work.

2.) Yeah I think you're right regarding the intern. I won't mention that. It's funny though, actually a salary negotiation expert from New York told me to use this line: "Is there flexibility with the rate?" lol.

3.) Yeah, I think that's a good option too. But basically it's the same situation as 1.) - I will need to justify a higher rate later on.

4.) Yeah, I could say that, but ideally I would like to try to find some middle ground with them - instead of just saying that's my rate - take it or leave it. That's why I thought I could use the line above. If they say no, I could say that normally my fee is higher. And then shut up. If they don't relent, I can still say ok, I would like to work with them and accommodate their budget - that way at least I would let them know that normally my fee is higher.

[Ice]

(01-07-2015 12:14 PM)H1N1 Wrote:  

I assume you are asking because you need the money. I don't mean this in a bad way, rather that you are just not yet in a position where you are turning down high profile clients left right and centre.

Assuming this is the case, and that as you say, it is a good company with future potential, I would personally make clear in advance of accepting the work that your standard rate, and level of responsibility, is generally higher, but let them know that you like their company and are prepared to do this as an investment. I would think of it a bit like 'holding frame', to borrow a phrase popular round these parts. If you are investing in your long term prospects by making a small financial sacrifice for the possibility of longer term financial gain. Only you can really judge whether they are trying to exploit you. It may just be that £500 is what the business is worth to the company offering it.

Although I don't sell my services for a living, I have had to do favourable rates and take a long term view with many of the products my company has developed, and it is a recent thing that we have the track record to demand full price right off the bat. I never had any trouble raising the prices, because I was absolutely clear in advance that this was a favourable rate to induce them into taking on my product long term, and the product itself added more value in their eyes than the full contract price. If you are confident you can justify every bit of your fee, and leave the company feeling like they've still come out on top, then I don't think you'll struggle to raise the fee further down the line.

Yeah I think that is a very good approach. That's how I see it too:

(01-07-2015 12:14 PM)H1N1 Wrote:  

Assuming this is the case, and that as you say, it is a good company with future potential, I would personally make clear in advance of accepting the work that your standard rate, and level of responsibility, is generally higher, but let them know that you like their company and are prepared to do this as an investment

If the work I deliver is good, I think they will understand that I am used to taking on more demanding work and accordingly charge higher fees.

[joelf]

(01-07-2015 12:29 PM)Ice Wrote:  

If the work I deliver is good, I think they will understand that I am used to taking on more demanding work and accordingly charge higher fees.

Would absolutely not depend on anything, and specifically not on a client somehow having a good faith understanding that they should give you better work & higher rates in the future. Most companies treat consultants like disposable crap even when they are clearly essential to the functioning of the business. If you want something understood man up & spell it out.

[Ice]

(01-12-2015 09:37 PM)joelf Wrote:  

(01-07-2015 12:29 PM)Ice Wrote:  

If the work I deliver is good, I think they will understand that I am used to taking on more demanding work and accordingly charge higher fees.

Would absolutely not depend on anything, and specifically not on a client somehow having a good faith understanding that they should give you better work & higher rates in the future. Most companies treat consultants like disposable crap even when they are clearly essential to the functioning of the business. If you want something understood man up & spell it out.

Yes sure, of course I will have to tell them that I have to charge higher fees than what they have offered me.

[Easy_C]

I think you answered your own question in the OP. You know that the going rate for your work is considerably higher than what they are offering you, and as the difference between what they are offering and the lowest you've done in the past is <10% You should at least try for it.

[w00t]

if you are not willing to work for what they offer I would just tell them my lowest rate at which I accept work. anything less and you have to be willing to walk away or they will lose all respect.

but apart from that heres my standard strategy for negotiating with clients

- when they offer you a paid project, you say "That sounds really interesting... let me just check my schedule and I will get back to you tomorrow with an answer". Shows you got plenty work and are not jumping on any project

- always make them blink first. Let them say a number

- once a number is on the table... raise a legitimate objection and ask the magic line "Is there any wiggle room in the budget?". then STFU and let them come up with something

its important that you have an objection. this is persuasion 101... a REASON WHY highly increases compliance.

if they give you a raise... great. If not you have to ask for something in return... some leeway on the deadline or whatever.

if your marketing is on point you should have to deal with bottomfeeders less and less. then your prospects will quote you better prices right off the bat.

and remember: Its always harder to negotiate higher rates AFTER you started working with a clients. you have to dig yourself out of a hole. better to negotiate good rates at the beginning of a relationship... and then increase those rates further along the line

[Ice]

(01-15-2015 07:42 AM)w00t Wrote:  

if you are not willing to work for what they offer I would just tell them my lowest rate at which I accept work. anything less and you have to be willing to walk away or they will lose all respect.

but apart from that heres my standard strategy for negotiating with clients

- when they offer you a paid project, you say "That sounds really interesting... let me just check my schedule and I will get back to you tomorrow with an answer". Shows you got plenty work and are not jumping on any project

- always make them blink first. Let them say a number

- once a number is on the table... raise a legitimate objection and ask the magic line "Is there any wiggle room in the budget?". then STFU and let them come up with something

its important that you have an objection. this is persuasion 101... a REASON WHY highly increases compliance.

if they give you a raise... great. If not you have to ask for something in return... some leeway on the deadline or whatever.

if your marketing is on point you should have to deal with bottomfeeders less and less. then your prospects will quote you better prices right off the bat.

and remember: Its always harder to negotiate higher rates AFTER you started working with a clients. you have to dig yourself out of a hole. better to negotiate good rates at the beginning of a relationship... and then increase those rates further along the line

Hey w00t,

thanks a lot for the answer.

Yes, your tips sound definitely very good.

I have talked with them and I did not negotiate the day rate, but I tried to add some more days to the project - I think they calculated too little time for it. They sounded like they were open to adding more days to the project. We will review the allotted time for the project after the first half is done.

I am pretty positive that I will be able to to provide them with very high quality work. If they wanna do a follow up project, I will raise the rate. Until then I have hopefully some other stuff lined up so that I will be able to walk away from the project if they won't budge on the rate.

[456]

Awesome tips all around -- somewhat related to w00t's advice, one more tidbit:

NEVER lower your price without taking something away. Like w00t said, it could be a deadline leeway. Remove certain features or trim back the complexity of a certain feature even if that features doesn't cost "the amount lowered from the price"; it shows that nothing is free.

In tech, you don't want clients treating you like a real estate purchase with some arbitrary "500? How about 400? 450? Okay fine." That works for bargaining at the flea market, or with a house price, but it's not a good look for consulting services. You want to go from 500 to 400? Then I must remove SOMEthing.

[Beyond Borders]

(01-07-2015 11:51 AM)456 Wrote:  

2) Nobody wants to know how the sausage is made. You take the gig or not -- don't explain about interns or who is on the details of the work.

I agree with this.

But not so much with this:

Quote:

Also, "asking" if their fee is "flexible" is dangerous: it belies that you don't have a handle on negotiations, makes you come off as amateur, and of course they will say No.

This is advice often given. If the plan is to cringe and just accept their stated price if they say "no," then yeah, that's a pretty weak position to come from, and they'll likely read it in your voice.

But if you're looking to negotiate, saying, "Is the budget flexible?" is a great way to say exactly what you're trying to say. Which is that you want to open up the conversation for negotiations.

The question just says it in a manner that shows you're willing to hear their side and consider. And contrary to a lot of negotiation advice, that's actually a strong position to come from - because people want to work with others that are reasonable and accept their position, who know how to talk with others in a diplomatic tone, who bring it up when the rates aren't exactly ideal but approach it in a tone that suggests a desire to explore options and find something that works for everyone.

There is nothing inherent in "are you flexible" that means you plan to hop on board if they are not. The mere presence of the question communicates that there's a very good chance you'll turn down the work if they are not at least a little flexible. There is not a necessity to be explicit or aggressive to negotiate the rate, especially if that isn't your usual style.

So to make a short story long, I think it's very decent "opener" to use when you want to negotiate. It's low impact, it's clear what you want to talk about, and it communicates you value harmonious discussion.

I'll also say that in my experience, people do not always say "no" when you ask this question. Many people instead break down their budget situation and tell you if they can go higher.

If they do say the rate is flexible, they'll often mention how much more they can pay. If not, you may have to mention a higher rate, so have one in mind. And most importantly, be willing to walk away if it doesn't quite cut it.

As Woot said, it's often best to mention an objection or reason the rate doesn't sit well with you - I often do this as I ask the question. Believe it or not, the "reason" can even be as simple as saying "My usual rate is quite a bit higher than that. Is their any wiggle room in the budget?"

It sounds goofy, but "my rate is usually higher" is an effective reason. Psychological studies have shown, for example, that if you ask a random stranger to get up out of their seat and give it to you, concessions go up dramatically if you offer a reason, even if that reason is weak or makes no sense at all.

An in the case of "I usually get paid more," the reason is quite strong in some ways. In any case, offering some type of "reason," as others have pointed out, brings your questions from a place of much greater strength.

I see you already negotiated; it sounds like you're taking the right approach by questioning the amount of time they've estimated for the project.

[Ice]

Hey thanks a lot for the answers.

Yeah my reasoning was that for this project I will first negotiate the time allotted to the project to make sure that all my time that I'm using for the project is paid for. As I mentioned, I think I can deliver very good work on this project if I don't have to cut corners due to time constraints.

If they want to do a follow up project, I will already have established a favourable time frame for me. Then I will negotiate the day rate. I think if I deliver good work on this project, I will be in good negotiation position next time.