How do you negotiate your rate or price?

[Kevin Lee]

If you're a freelance entrepreneur offering your services for hire, what do you say when the client/employer asks what your price is?

Let's say, you're ambitious and quote a slightly higher than average rate because you believe your time and talents are worth that amount and then the client never returns your call.

What would you do, especially if you needed the money?
a) Stay true to your rate.
b) Lower your rate the next time around so it's more competitive.
c) Call the client back to let him/her know that you'd be willing to do it for less in the beginning if there's an opportunity for more compensation later.

Thanks

[litekepr]

If you're a freelance entrepreneur offering your services for hire, what do you say when the client/employer asks what your price is?

Let's say, you're ambitious and quote a slightly higher than average rate because you believe your time and talents are worth that amount and then the client never returns your call.

What would you do, especially if you needed the money?
a) Stay true to your rate.
b) Lower your rate the next time around so it's more competitive.
c) Call the client back to let him/her know that you'd be willing to do it for less in the beginning if there's an opportunity for more compensation later.

Thanks

Pricing is my least favorite part of being in business I agonize for hours every time I need to figure my prices and I've been getting a lot of comments from people that I need to raise my prices - so I finally finished crunching numbers and am happy with them for now

Negotiating prices in a freelance situation for me is especially tough when the mortgage is due and the bank account is running low. The temptation is there to "make a deal", but I really try to avoid that is possible. Sometimes if there could be future work - I use that as a reason to say that I would be willing to give them a discount on the first job and if they are happy with my work, I'd like to talk about future work. Of course, even if people agree to that to get the discount, there are few guarantees that they will follow through.

Its better not to lower your prices if you can avoid it. Something I offer is a discount for a client who hires me for multiple projects. I offered a discount for a woman who has hired me for 4 projects in the last 5 weeks and she turned it down and said that my time is worth every penny. Love when that happens

Shri

[jvprosperity]

I hate negotiating on price - like everyone else I'm sure. I'd rather find a part-time job to pay the bills than negotiate on price.

When i did websites i made sure that I invested more time with the customer in the concept stage and in getting to know them a bit more. That investment in time in the early stages made them more comfortable to deal with me rather than another designer with cheaper prices because i gave them a sense of comfort that i knew exactly what they wanted and i would deliver.

That comfort and trust i built was something you couldn't put a price on and it demonstrated higher value. I learnt this from a "Webdesign Business in a box" book I had purchased from Sitepoint. Aside from jumpstarting my Web business it also taught me some great interpersonal skills I still use today. Best investment I ever made.

[litekepr]

When i did websites i made sure that I invested more time with the customer in the concept stage and in getting to know them a bit more. That investment in time in the early stages made them more comfortable to deal with me rather than another designer with cheaper prices because i gave them a sense of comfort that i knew exactly what they wanted and i would deliver.

I do similar things with my clients and the majority respond to that added effort - but some simply don't seem to care. They still want to find the cheapest price and don't see the added value. I try to avoid those type of people or at least spot them as soon as possible

Shri

[OmnivoreInk]

I also hate negotiating prices!

In my case, it's for writing gigs. I get people who say, "How much do you want to be paid." My new line is going to be - "Howmuch will you pay me?"

It's the same when you're looking for a full-time job in an office... they never tell you how much they'll pay, it's always "How much do you want to be paid."

Then if you ask for less than you're worth - they'll be pleased to give that to you!

[Tami Szabo]

I have set prices for my coaching fees, but when someone says to me, "That's too much!", I ask them what they are willing to pay.

If it's a reasonable amount or they are in special circumstances, I might negotiate, offer some kind of payment plan, or develop a smaller custom package to meet their needs. I remember that my purpose is more than making money. Sometimes, it pays to be generous and those clients give great testimonies and generate revenue through referring others.

However, if they don't see the value of investing in themselves and their business, I may not negotiate at all. I want the kind of client who realizes she is truly investing in future gains for herself and her business. The resulting value is far greater than the fees I charge.

I used to be uncomfortable with this process, but I'm not any more. I finally realized the value they receive is worth every penny and more. I'm even considering raising my fees.

Every one of us has something great to offer which is invaluable to someone out there. The more you believe in your product or service, the easier it will get.

[Kevin Lee]

Hi Everyone,

Thanks for sharing your pricing tips!

In my case, it's for writing gigs. I get people who say, "How much do you want to be paid." My new line is going to be - "How much will you pay me?"

Then if you ask for less than you're worth - they'll be pleased to give that to you!

Barbara, I like your strategy on how you turn the question back on your employer. I too feel as if it's better to first hear what the "ball park" figure is before stating my fee.

At the moment, I'm trying to do some private English tutoring and it would be kind of silly to drive 15-20 minutes to teach for 1 hour, make only $20 and then spend another 15-20 minutes getting home. But if I asked for $30-40/hr (what I feel I'm worth), then I might be pricing myself too high, especially if I'm working for a tutoring company.

[Kevin Lee]

Just as an update, I've decided to take a tutoring position for less than I originally asked for. I figure I'll work at the lower rate to start and then prove that I'm worth the higher value by delivering results for the first client.

Any tips on when to try to re-negotiate my price?

[Tami Szabo]

Hi Kevin,

It's pretty common to struggle with setting fees. You are not alone in this process!

During one of my own fee setting times, my own Coach asked me if I'd rather work with clients who could afford to pay me what I'm worth or those who didn't. The truth is that both are already out there!

That question did the trick. If we treat what we're doing as a hobby, we'll have to take on other work to augment our income which actually takes us away from our primary purpose and those we want to work with the most (for me this involves coaching).

Regarding your ESL fees, I have a friend who developed her own small ESL business in Vancouver who wanted to know if I would take on some of her ESL students at $25 hour... she simply couldn't keep up. Plus, she added a minimum trip fee of $5, depending on where they lived. That was 13 years ago!

People will pay you what you ask. Very few will ever up the price. You are the one who decided what you are worth. The key is that we believe our services are worth the price we are asking.

If we feel moved to take on a pro-bono or reduced rate client, that's up to us... but if we're charging our clients/students what we are worth, it won't hit our own pocket book so hard when we feel like being generous.

Regarding upping your price... I've found it's always easier to state the higher price ahead of time, but offer a promo for a certain period of time. This way, they feel they're getting a good deal and aren't surprised when it's time to change things.

One other tip is that you could let them know that your professional fees have increased. You could state what you are charging new clients while making them feel special that you will extend their current rate for "x" amount of time. The key is in offering it in a POSITIVE way to the client.

Hope that helps! I'd love to hear you say you're going to start charging what you're worth.

Regards,

Tami

[Donna]

Just as an update, I've decided to take a tutoring position for less than I originally asked for. I figure I'll work at the lower rate to start and then prove that I'm worth the higher value by delivering results for the first client.

Any tips on when to try to re-negotiate my price?

This is something I always struggle with. In some instances you can use an "introductory price" and then raise it after a limited time.

Donna

[jvprosperity]

Just as an update, I've decided to take a tutoring position for less than I originally asked for. I figure I'll work at the lower rate to start and then prove that I'm worth the higher value by delivering results for the first client.

Any tips on when to try to re-negotiate my price?

I got this from my friend Stuart Knight's newsletter today that speaks to this tread:

Hey there everyone,

Sorry for the late newsletter this week. I've been swamped with
corporate speaking engagements, but here I am with a very quick
thought for you.

As usual, if you like what you read, feel free to pass it on to
someone who will get something from it. I bumped into an old
friend this week who I haven't seen for quite a few years. As we
were talking, she was telling me that she now designs purses for
the high end market of New York City. As we were talking we moved
into the subject of how much she should charge for her bags. I
have to say that I was blown away to find out that her purses come
at a price anywhere from $350 to $1200 for a purse. Being a man,
although I knew there was a market that would pay this amount for
purses, I was still taken back. This conversation moved into us
talking about how much I charge for tickets to my shows, to my
workshops and how much I charge for my keynote speaking
engagements.

And as we were talking about this, we both realized that when you
are an entrepreneur you have no other choice but to charge the
amount that you are worth. If you don't, people will react in
one of two ways. The first is they will gladly take advantage of you
and pay the lower amount or secondly they will see your product or
service at a lower value and won't buy at all.

And as we came to this understanding, I realized that this is true
for all of us whether you are an entrepreneur or not. We all have
to demand the amount that we are worth. If we don't demand it,
people will either gladly take us at a "lower fee" or not see our
true worth and then avoid us all together. What are you worth when
it comes to your love life, to your job, with your friendships, in
your living situation, with your health, your income, your level of
adventure and with your family? What do you deserve? As an
entrepreneur with twelve years of full time experience I can tell
you that you will always get what you ask for. So ask for it and
get it!

You deserve it. Trust me. It took me a long time to ask for what
I deserve and now that I do, I only wish that I asked for it sooner.


Much love,

Stuart

Get these weekly newsletters by going to www.stuartknight.com

Pass it on!

[Kevin Lee]

I got this from my friend Stuart Knight's newsletter today that speaks to this tread:

Hey there everyone,

Sorry for the late newsletter this week. I've been swamped with
corporate speaking engagements, but here I am with a very quick
thought for you.

As usual, if you like what you read, feel free to pass it on to
someone who will get something from it. I bumped into an old
friend this week who I haven't seen for quite a few years. As we
were talking, she was telling me that she now designs purses for
the high end market of New York City. As we were talking we moved
into the subject of how much she should charge for her bags. I
have to say that I was blown away to find out that her purses come
at a price anywhere from $350 to $1200 for a purse. Being a man,
although I knew there was a market that would pay this amount for
purses, I was still taken back. This conversation moved into us
talking about how much I charge for tickets to my shows, to my
workshops and how much I charge for my keynote speaking
engagements.

And as we were talking about this, we both realized that when you
are an entrepreneur you have no other choice but to charge the
amount that you are worth. If you don't, people will react in
one of two ways. The first is they will gladly take advantage of you
and pay the lower amount or secondly they will see your product or
service at a lower value and won't buy at all.

And as we came to this understanding, I realized that this is true
for all of us whether you are an entrepreneur or not. We all have
to demand the amount that we are worth. If we don't demand it,
people will either gladly take us at a "lower fee" or not see our
true worth and then avoid us all together. What are you worth when
it comes to your love life, to your job, with your friendships, in
your living situation, with your health, your income, your level of
adventure and with your family? What do you deserve? As an
entrepreneur with twelve years of full time experience I can tell
you that you will always get what you ask for. So ask for it and
get it!

You deserve it. Trust me. It took me a long time to ask for what
I deserve and now that I do, I only wish that I asked for it sooner.


Much love,

Stuart

Get these weekly newsletters by going to http://www.stuartknight.com

Pass it on!

Hi Andy,

Thanks for the newsletter! And while I think that both Tami and Stuart are right to say entrepreneurs need to charge what they're worth... how can you command a premium price when you don't have the credibility of established brands and don't want to offer a lower introductory price?

For instance, if I saw an unknown brand of t-shirts that looked great, but were priced at $65 USD, chances are I wouldn't buy it. I would rather spend $65 on a Nike shirt worn by Roger Federer even if it wasn't as unique looking because I trust the Nike brand and want to feel associated with "greatness" (i.e. Roger Federer). I believe that people typically pay premium prices for the brand association and not the actual product/service.

[Kevin Lee]

Hi Kevin,

It's pretty common to struggle with setting fees. You are not alone in this process!

During one of my own fee setting times, my own Coach asked me if I'd rather work with clients who could afford to pay me what I'm worth or those who didn't. The truth is that both are already out there!

That question did the trick. If we treat what we're doing as a hobby, we'll have to take on other work to augment our income which actually takes us away from our primary purpose and those we want to work with the most (for me this involves coaching).

Regarding your ESL fees, I have a friend who developed her own small ESL business in Vancouver who wanted to know if I would take on some of her ESL students at $25 hour... she simply couldn't keep up. Plus, she added a minimum trip fee of $5, depending on where they lived. That was 13 years ago!

People will pay you what you ask. Very few will ever up the price. You are the one who decided what you are worth. The key is that we believe our services are worth the price we are asking.

If we feel moved to take on a pro-bono or reduced rate client, that's up to us... but if we're charging our clients/students what we are worth, it won't hit our own pocket book so hard when we feel like being generous.

Regarding upping your price... I've found it's always easier to state the higher price ahead of time, but offer a promo for a certain period of time. This way, they feel they're getting a good deal and aren't surprised when it's time to change things.

One other tip is that you could let them know that your professional fees have increased. You could state what you are charging new clients while making them feel special that you will extend their current rate for "x" amount of time. The key is in offering it in a POSITIVE way to the client.

Hope that helps! I'd love to hear you say you're going to start charging what you're worth.

Regards,

Tami

Hi Tami,

You're right, I shouldn't "settle" just because I'm doing something I enjoy or I'll have to work another job(s) I don't enjoy to make a living.

With the high price of gas, travel time and time used to prepare for each lesson plan... I'm really working 2 hours for that 1 hour of pay

I'll keep you posted if (or when) I'm able to turn things around.

[Kevin Lee]

People will pay you what you ask. Very few will ever up the price. You are the one who decided what you are worth. The key is that we believe our services are worth the price we are asking.

Hi Tami,

You're absolutely right. In "Think and Grow Rich", Jessie B. Rittenhouse says "For Life is a just employer, He gives you what you ask, But once you have set the wages, Why, you must bear the task. I worked for a menial's hire Only to learn, dismayed , That any wage I had asked of Life, Life would have willingly paid" (Napoleon Hill 35).

I think the same can be said when setting prices on eBay or Craigslist, especially when people are trying to haggle you.

[GT Bulmer]

Hi Kevin,
It's pretty common to struggle with setting fees. You are not alone in this process!

During one of my own fee setting times, my own Coach asked me if I'd rather work with clients who could afford to pay me what I'm worth or those who didn't. The truth is that both are already out there!

That question did the trick. If we treat what we're doing as a hobby, we'll have to take on other work to augment our income which actually takes us away from our primary purpose and those we want to work with the most (for me this involves coaching). ...

Regards,
Tami

Hello, Kevin, Tami and all:

I totally agree with Tami's statements, quoted above.

It is tempting to drop your price to get the client, but then you undervalue your worth and make it much more difficult to set a fair rate in the future.

I know it is tough to do, but it is better to determine your value, set your rate and go after the clients who respect and appreciate that. Of course, it is then up to you to prove that you are worth what you are charging.

As a freelance writer, with one of my local corporate clients, not knowing entirely what the project entailed, I set my price low, but fair to both of us ($400 per quarterly project). I justified it because they were hiring me for a series of writing projects over the course of the year. At the end of the year, knowing what was expected and what was involved, I requested a 40% increase, which they granted without blinking an eye. By market standards for such services, it is still a good deal for them and fair compensation for me. We are both happy and that's the bottom line.

It has lead to several other similar projects with local corporate clients, and I have received calls over the past month from a few other potential clients who are putting some plans together and wanted to know if I was interested and available.

If I felt "guilty" or worried about my "high" price, I might have charged half as much. I'd still be getting the work, but I'd have to work twice as hard to make the same money ... and that is definitely not fair value for my efforts. It would take me years to gradually raise my prices to gt to where I am right now.

Determine your worth, set your prices, look for the clients who respect that. You will be much happier in the end.

GT