123. How To Negotiate With Clients

verb: to obtain or bring about by discussion; try to reach an agreement or compromise by discussion with others.

 

early 17th century: from Latin negotiat- ‘done in the course of business’, from the verb negotiari, from negotium ‘business’, from neg- ‘not’ + otium ‘leisure’.

 

 

 

 

In negotiations, both parties want to believe they have a fair outcome. Working with a client who believes they received the short stick does not make for good relationship.

 

As soon as you begin discussing a project, you are negotiating. Both you and your client have goals for the project, and negotiation is how you bring your goals into alignment. In a successful negotation, both client and creative respect each other.

 

 

 

It’s your choice if your creative rates are negotiable. If you decide to negotiate with a client for a lower fee, (rather than modifying the scope of work), the following advice is offered:

1. Decide on a Minimum Acceptable Rate (MAR). What is the least amount you will do the work for? Consider your costs for the project, your overhead, your taxes, insurance, marketing expenses… The formula is:

business overhead + personal overhead / number of hours on the project = MAR

The downside of this is, you cannot accurately project the number of hours you will invest in a project.

2. Do not compete on price point. A client will always be able to find someone cheaper. Be aware of what your competition charges, and be aware of what they do and the level of their work. Compete on expertise and experience. This means you need to establish your reputation outside of the negotiations. Grow your skill, gain experience, brand your business to target the clients you want to attract. The lower the quality of work, the more competition you will  have.

3. What is the going rate for similar work done by similar freelancers and firms in your area? In the client’s area?

4. Consider the non-financial benefits. Will this project lead to sure exposure in your target market? Will the client refer you to colleagues and influencers in their industry?

5. What is the potential for future work with the client? Negotiating a “get to know you” rate on a first project  may be advantageous if you are assured that there will be more work from the client in the near future.

 

 

Just as the client is interviewing you, you need to interview the client. Strategies for negotiating when you have established your pricing include:

 

Do the research on the client.  Obtaining background information on the client’s business is simply a matter of searching online — LinkedIn, their web site, social media. Find out what the client is doing currently, what problems you observe with their visual and/or verbal messaging, and think about ways you can solve those problems. Bring your conclusions to the negotiating table.

 

Ask the right questions. In discussion with the client, you will have already done some discovery. The information you learned in your research is the basis for further inquiry. It also lets the client know that you are aware of their enterprise and are asking intelligent questions. This puts you in a position of strength.

 

A couple of examples: “I noticed that you are included in an online list of clients who have stiffed freelancers in the past. What can you tell me about that?”  “In doing a graphic audit of your current web site, I noticed that it’s not mobile-friendly. You’re probably losing visitors, which means you’re losing customers. What do you think about that?”

 

Find out the client’s needs. You will want to know their ideal customer profile, their geographic reach (local, regional, national, international, worldwide), how they will use the work you create, how soon they need it. Look for opportunities to up-sell or cross-sell. Example: I design and edit a bi-monthly news publication for a trade association. I recommended adding an online version, and now design, edit and manage the print and web editions. This increases my role with the client and my income.

 

Ways to charge the client less and not discount your creative fees No matter how you price, the key is to not reduce your fee. Instead, reduce the scope of the project:

Reduce the number of concepts you develop.

Reduce the number of reviews and revisions

Reduce the number of deliverables.

Limit the geographic distribution of the work.

Limit the rights being transferred — the duration and the specific rights.

Be willing to decline the project and move on. The client may come back and agree to your full rate, but if not,

you have not lost anything except some negotiating and research time.

 

Offer a discount or reduce your fees. Never, ever, ever devalue your work or that of your creative colleagues by offering discounts. Instead, modify the scope of work to fit the client’s allocated budget.

 

Agree to throw things in (add-ons). Here’s an example of an add-on request and how you might respond: Client: “While you’re doing the web site, can you add a logo? I don’t have a logo. You’ll have to create it and then just add it to the top so people will know it’s me.”

 

Designer’s response: “Sure. I can create a logo for you for between $X.XXX.XX and $X.XXX.XX. That will be a separate project and one that should be done first before I develop your web site.”

 

Client’s response to Designer’s response: “Whaaaaa? Can’t you just do it as part of the web site?”

Designer: “It’s a separate visual asset, and you’ll use it on more than just your web site. Developing an effective logo requires thoughtful strategy. It is foundational to your branding program and is therefore a separate project. I will submit a proposal for the logo project. Let’s talk about what you want your logo to do.”

 

Project additions are scope creep. You will want to submit a change order, or a new contract or letter of agreement for each added deliverable.

 

Agree to an exact amount verbally. Always state a range or ballpark amount. For example: “My fees for designing a web site range from $X.XXX.XX to $X.XXX.XX, depending on what features and functionality you need.” Put an exact amount in writing only when you have all the information about the project.

 

Agree to do something for less if the client gives you a credit line. Credit lines are meaningless. Do you work just to say it was you who did the work? Or are you working for a living?

The only exception to this is an in-kind sponsorship for a non-profit. Be sure that the organization understands the full value of your services, that you have a written agreement for the sponsorship including their 501(c)3 number, and that you follow up to enforce the terms of the sponsorship.

Rush. Even when you come to an agreement, take a day or two to consider it before you submit your contract. If the client is supplying the contract, read it carefully several times, and wait a day or two before signing. Time will give you a different perspective.

 

Ignore red flags. If anything about the client makes you uncomfortable, stop the negotiations and decline the project. Do not agree to anything you’re not comfortable with.

 

Do not give chase. Sometimes a prospective client becomes uncomfortable during negotiations. This can be due to a number of factors, ranging from in reality they have no budget to not being able to bully you. A client may go silent and unresponsive, which may mean they have changed their mind, found someone else, or cannot proceed with the project. If they do not respond to your first follow up query, do not pursue the client. Do not call them and offer to work for less and throw in your firstborn if they’ll give you the project. Let them go and turn your attention to attracting your best clients. Clients who do not communicate are not your best clients.

 

Your best approach to negotiating is to be seen by the client as a trustworthy, professional peer. Be specific, be confident, be a problem-solver for the client. Clients naturally look out for their own interests, and will often (not always) come up with a larger budget if they understand the quality and value of the work you are creating for them.

 

Negotiations are not arguments. Although you and the client will differ on many points, this process is not a debate in which one or the other party needs to prevail. Work for the mutual benefit of both.