Ultimate guide: How to negotiate as a freelancer

Negotiating fees and rates is a key element to a successful freelance business. This guide will teach you how to negotiate as a freelancer and achieve your goals
Ultimate guide: How to negotiate as a freelancer

Hero image by Surface

How to negotiate as a freelancer

With many industries gravitating toward remote work, more people than ever before are becoming freelancers. Unfortunately, it can be easy to get distracted by the newfound flexibility you have and overlook critical business obligations.

Put simply, you'll need to learn how to negotiate as a freelancer if you wish to get paid what you're worth. This negotiation guide has several negotiation tips that can help you along your journey. Let's dive in.

Determine your minimum acceptable rate (MAR)

One of the most important aspects of negotiation is determining your minimum acceptable rate. As the name suggests, this is the lowest amount of money that you must earn to pay your ongoing expenses. For example, let's assume that between your mortgage, car payment, credit card debt, etc., you need to pay approximately $3000 per month.

Now, let's also assume that you plan on working 40 hours per week, which translates into 160 hours per month. You would divide $3000 by 160 in order to find your minimum hourly rate.

In this case, it would be $18.75.

From here, you have a much better understanding of how much you should charge. If a project is estimated to take you four hours to complete, you should be compensated at least $75. Making less money than this will make it much more difficult for you to meet your monthly expenses.

When considering the above information, also ensure that you never neglect your tax obligations.

Avoid giving discounts for no reason

This is something that new freelancers often struggle with. They attempt to provide discounts to their clients out of fear that their clients will walk away from the project altogether if they don't.

Unfortunately, this only facilitates unfavorable client interactions in the future. The people you work with may become accustomed to paying much less than they typically would when hiring somebody else to complete the same project.

They might also be unwilling to compensate you for miscellaneous costs, such as materials, travel, etc. When factoring in these extra expenses, you could end up with a drastically lower hourly rate. If left unchecked, a situation like this could also make your freelance career unsustainable.

Something else to consider is that people will only value your services as much as you do. If you provide much lower rates than what you should, your clients may begin to question the results that they will receive.

Stand your ground

A core pillar of expert negotiation is understanding how to stand your ground during the ongoing dialogue with your clients. There may be scenarios in which your client attempts to dismiss your proposal and explain why they shouldn't have to pay a certain amount for your services. They might even attempt to convince you that you will never find clients who are willing to pay the rates you have set for yourself.

As you might guess, this is a situation that can easily become frustrating. Instead, you'll need to remain adamant in your proposal as long as you have thoroughly researched and calculated it.

For instance, setting an arbitrary rate for your services comes with the risk of being well above what clients would typically pay. The evidence that you gather during your research can also be used to help justify the rates that you set.

Understand when to walk away

Sometimes, you simply can't get through to the other party. Attempting to do so is a continuous waste of time and resources.

The longer you negotiate with individuals like this, the harder it becomes to walk away. Not only does this add more difficulty to your freelance career, but it can also cause you to miss out on additional freelance opportunities.

Having a strong understanding of when to walk away from the negotiation will help ensure that you use your time as efficiently as possible. Some of the most prominent warning signs that you need to step back include aggressive client behavior, an unwillingness to compromise, and a refusal to listen to the justification for your rates.

Always get agreements in writing

One of the most difficult aspects of becoming a freelancer is dealing with predatory clients who attempt to pay you less than what was initially agreed upon.

A common scenario could involve a client guaranteeing that they will pay a certain amount per project and then refusing to do so after the project has been completed. If you don't have the agreement in writing, you do not have any leverage to prove that you are owed a certain amount of money. For this reason, it's in your best interest to have contracts on hand for your client interactions.

Your contracts should clearly define key details of the agreement. This includes the amount of time that will be spent on the project, the overall compensation, the deadline, etc.

A client who refuses to sign a contract is someone you should avoid working with at all costs. More likely than not, they are attempting to take advantage of you.

Feel overwhelmed by your contract-related responsibilities? We have a tool that allows you to generate airtight contracts and agreements for your clients and ease the negotiation process.

You can check out our proposals and contracts tool to learn more about it.

Charge per project instead of per hour

Many freelancers find it difficult to correctly estimate the amount of time it will take them to complete a project. A great way to solve this problem is through time tracking. When you understand how long it takes to complete a project, you can charge an accurate rate.

You can then use this rate for all of your similar projects. Clients will appreciate getting a flat cost rather than a vague estimate of the hours it will take. In fact, many clients prefer to work with freelancers who charge per project since they won't have to worry about the freelancer exceeding the estimated amount of hours.

Not only does this help streamline the negotiation process, but it also ensures that you make as much money as possible if you use your time efficiently. Even if you spend less time on the task, you will still get paid for the time you would have spent. Just make sure you aren’t spending more time than you estimated to maximize your profits.

Illustrate the value you provide

You can't expect to negotiate effectively if you do not convey value.

After all, clients who don't know you as a professional will need to understand what sets you apart from your competitors. One of the best ways you can do so is by creating a comprehensive portfolio. This should showcase all of your best work, as well as the side projects that are worth showing off.

Your portfolio should also illustrate a certain level of diversity. This could go a long way when it comes to getting you additional projects in the future.

For example, let's assume that a graphic designer also included a page on their website dedicated to their side photography project. Clients who see this may be impressed with the content and higher them for additional projects in the future.

Always start high

Many clients will accept the rates you set, but sometimes they will negotiate for a lower amount. In this case, you'll want to start above what you are willing to accept. If the client accepts that higher amount, great! If not, you’ll still be able to negotiate the amount you need.

As the negotiation continues, they will feel as though they are making progress as your rate drops. However, the amount you agree upon is still likely to be higher than your minimum acceptable rate. When handled correctly, you will receive fair compensation and they will feel good about working with someone who is willing to compromise.

Don't be afraid to let them make the first offer

For larger projects or projects you are unfamiliar with, you might not be able to estimate how much you should be paid. In a situation like this, it's recommended to let them make the first offer.

This will help put things into perspective, and you can either accept it or ask for more. In some cases, their first offer may be well above what you would have received in other situations for the same type of work.

Understanding how to negotiate is essential

Otherwise, you run the risk of falling far short of your goals as a freelancer. Fortunately, learning how to negotiate is a relatively straightforward process that the guide above can help you with.

Want to learn more about what we have to offer? Feel free to get in touch with us today and see how we can help.

Share it!
Our team of career freelancers writes about best invoice practices, what makes a great client, and repeats the mantra, "never work without a contract." We're opinionated about the future of work and will always be on the side of freelancers.
More By This Contributor
Getting everything from your brain in one place
Moxie makes all your systems work together seamlessly with better software, education, and community.
hectic app logo