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How to Negotiate the Best Contracts as a Freelancer

by Kevin Bellah
Freelance Advice

With more and more companies choosing to outsource work, it’s a great time to be a freelancer. The flexibility and work-life balance are some of the awesome perks to look forward to. However, one of the drawbacks of freelancing can be the often daunting task of negotiating your own rates. 

Not all freelancers have the advantage of expert contract negotiation training. Yet, almost any freelancer can use a few tips to maximize their earnings and increase job satisfaction. Consider these five tips for negotiating your best future freelance contracts.

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Know Your Client’s Perception of Your Value

What’s the right price for your service considering the value you will bring to the client? As part of your pricing strategy, consider what your talents and training bring to a contract. 

Set your freelance rates based on the client’s perception of what results your expertise brings in. For instance, is there a projected sales increase as a result of the service you’re proposing? If there is, instead of charging per hour, you can propose charging based on projected sales value. When structuring your offer, ask yourself these two key questions:

  1. How will your work benefit the client?
  2. What are the positive effects of your work on the client’s revenue?

For example, a promotional video for a small business may only have a limited impact. In comparison, an online sales page for a Global 500 company could result in high earnings. So, be sure to set prices that reflect the impact your services will have. 

Rank and Prioritize

Negotiations can be tense, and you may not get everything you wanted. So, it’s crucial to rank your wants and needs and identify steps you can take to achieve your goals. 

Just as important, rank your client’s wants and needs. What are those items that cost you little to nothing that the client holds in high esteem? 

Lower in your priorities, list the smaller benefits you can do without. Against each item you are willing to concede, name a concession of almost equal value you would ask your client to give up. 

When prioritizing, train yourself to think about what you can say no to without collapsing constructive negotiations. Understand what you can say yes to without compromising your results.  

Once you have established your priorities, prepare to defend them. Get ready for a give-and-take discussion when negotiating your contract. For instance, you can agree to transfer licenses and copyrights for a higher amount in royalties. 

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Create Win-Win Solutions

The freelance model offers many benefits to both the freelancer and the client. Win more jobs by creating solutions that maximize the gains for both sides. When both sides are satisfied with the agreement, there is a higher chance of a successful and long-lasting partnership.

To structure a win-win freelance contract, create multiple offers simultaneously. All proposals should be of approximately equal value to you. If the client rejects all proposals, ask which one they like best, and which parts of the others are most attractive. Their response can provide a vital clue on where to find more value-creation opportunities. 

Anchor High

A few poorly informed have in the past advised against making the first offer. However, when you’re armed with the right information, being the first to name a price can work to your advantage. Anchoring is a cognitive bias that takes advantage of humans’ tendency to rely heavily on the first information received. 

When you make the first offer during negotiations, you can steer towards reaching an agreement that works to your advantage. For instance, if you know you’re willing to agree to a contract for $4,000, you could make a first offer of $5,000. 

If the client knocks the price down, they’re still likely to anchor around the original offer you made. So, if you end up settling for $4,500, the client feels they are getting a much better deal. 

In this case, anchoring high has allowed you to earn much more than you were initially willing to take. Even if the client negotiates down to $4,000, your high anchor provided enough wiggle room to protect you from eroding your margins. 

Negotiate Job Scope and Deliverables

Seasoned freelancers use their training and experience to negotiate beyond price. It is vital to agree on the job scope and deliverables beforehand. This approach avoids scope creep, meaning when a client makes changes to the expected deliverables without prior agreement or adjusting the contract’s pricing. 

It’s rare for a project to proceed without a change in expectations. However, there needs to be some control of when and how changes are introduced. Otherwise, you could end up with a project that never ends because each time you finish a requirement, the client asks you to add more changes. 

To guard against scope creep, document the agreed job scope. In your contract, include clauses on how to manage conflicts. Define a change control process, so any proposed changes go through an approval process. Role-play your negotiation simulation with a colleague or friend to gather confidence in how to handle yourself on your toes.

Final Word

Knowing your worth and the value you bring to a client can guide your pricing. Match and rank your needs against the client’s needs to create win-win contracts. Negotiate beyond price to protect against scope creep. By protecting yourself and your client, you establish yourself as a valuable professional.

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