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Negotiate with Confidence - How to Quote Your Next Project

September 1, 2014

First the big question:

Hourly Rate vs. Fixed Rate?

Problem with hourly rate:

#1 Clients hate it.

#2 The better/quicker you are, the less you get paid?* ( *I know, the better you are the more you should charge)

Problem with fixed rate:

#1 The client can keep you as long as they like until the project is complete.

#2 If the client doesn't know exactly what he/she wants, how do you know what to charge?

 

Let's take the best of both worlds. First, let's assume you need to earn at least $100/hour to stay in business. Always factor that in. Next try and get as much detail from the client as you possibly can. If you think a job will take 24 working hours to complete (aprox. 3 days), then quote the client $2400. And be specific in your quote. Let them know it will take 1 day for prep, 1 day of physical labor and one day of touch ups, or redesigns, or rewrites. .

If it’s a video project, they need to know it will take one day to hire a crew, write the copy set up the location. Then one day to shoot by yourself and half a day to edit and one half day of revisions. All experienced clients should know that every project has revisions.  Afraid the project might drag on and on? Always let them know they are number one but do not be afraid to allude to the fact that you are also very busy and scheduling and timing is not only very important to the client but to you as well. A respectable client will respect the fact you have multiple obligations you are dealing with and you should both work together if a project goes into overtime.  

If YOU miss a deadline, you need to take responsibility. But, If you do finish on time and the client wants to add more work, make sure before you even begin the project that extra costs will incur if more work is demanded beyond what was originally negotiated. Deep down, psychologically, clients respect a company/ freelancer that are direct and refuse to put up with a lot of nonsense.(but keep that to yourself).

The good news is that the client in most cases wants to get the project done as quickly as you do. Work with them to make sure that happens.

Most clients are reasonable too. Know that unreasonable clients, those that lie, manipulate and cut into your rate are not good clients to keep around. Get rid of them. QUICK.

 

Here is a case study I have run into a few times before. In person I met a client and went over in detail what my per day rate was for video production. You get the whole farm, lights, camera action. He then called me and set up a shoot, he paid me my rate! It was awesome. (Let's call that “the hook”. He hooked me in.)

Next time he had a production he asked me for my rate again, I gave him the same great rate and he asked me for a favor, so I went down in price by almost 50%. Guess what? Without knowing it I just told this client how much I’m REALLY willing to work for. That’s right. He kept telling me, "next time we will have more money". Months went by and he kept hiring me on project after project at the same 50% rate. In the back of my mind there was always that “hook“, that one hope that he DOES have the capability of paying my rate but in reality he has no intention of going back to my actual day rate because he now knows what I’m "really worth". Reality is it's hurting your business because you have expenses to tend to. 

When he asked me the 10th time to work at the 50% reduced rate, I said, “Man, I can’t commit to that anymore”. In his mind, guess who was the bad guy? Me! Despite offering 50% discount, saving the client thousands of dollars over the course of many months, the minute I asked ”what happened to our original deal?”, I became the ungrateful worker...and he was on his way to find the next company he could hook into his plan simply because he really never could "afford" me. 

 

This client thinks he’s saving money, but in the end he’s losing trust. Trust amongst his colleagues and trust amongst his clients because he doesn’t have the capability of  maintaining stable relationships. I call this, "monkey on a vine syndrome" because they are always moving from one company or freelancer to the next since they can't maintain working relationships with their help. Go to my network page and you will see a list of awesome creatives that not only I have been working with for years, but I call them friends. And we get the job done!

 

Back to negotiating...The real key is not just the capability to negotiate, but the ability to negotiate with confidence. Express your self worth.

In the event that a current client asks you to lower your rate by X amount and you really feel you want to accommodate and do them a favor, make it clear, be bold, be confident. “I’ll do it this one time, but let’s not make this a habit, OK?”

“Lower self-worth translates into 37 per cent less willingness to negotiate and use of 11 per cent fewer negotiation strategies. Increased self-worth correlates with greater willingness to incur the risks of prolonged negotiation and greater adaptability. In short, the less confidence you have in yourself, the faster you will give up trying to get what you want.” (Greno-Malsch 1998)

Now, if you are REALLY good and confident at what you do then guess what? You, the freelancer, might never need to hear a client try to lowball you ever again! Take the case with renown graphic designer Paul Rand (ABC, Enron, UPS, Ford, etc) 

One of the greatest examples of negotiating with confidence was when Apple founder, Steve Jobs, left Apple to form Next computers and in 1986 he needed a new logo and he approached Rand to help him out. 

Jobs, “I asked him if he would come up with a few options, and he said, ‘No, I will solve your problem for you and you will pay me. You don’t have to use the solution. If you want options go talk to other people.’ The price for the logo was $100,000. Jobs paid Rand based on his “take it or leave it” approach.  After completion Rand had dinner at Jobs' home and revealed the Next logo. Jobs was pleased. End of story. (You can watch jobs recant the whole story here in the 1993 interview.)

 

In the end, this should be your goal, having the capability of being so good the world needs you and not just the other way around. In order to build an extraordinary brand it should feature an amazing customer service. But your client won't ever get the great care they deserve if you over promise and under deliver simply because you failed to set the right boundaries from the get-go, ultimately setting you up for failure. Yes, it is a balancing act but like Paul Rand, we should all strive for courageous excellence by following these two simple rules:

#1 Negotiate with confidence

#2 Be 100% capable of delivering (on time and on budget is a huge plus)

 

- Braden Barty is the Owner of Braden Barty Media

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