Ask the cubicle expat: Should I lower my rates if a client can’t afford me?

April 3rd, 2008

Thanks to everyone who wrote in with their burning freelance questions last month. I really appreciate it. This question really stuck in my craw, so I decided to give a quick answer now.

Frustrated Freelancer asks: I recently was negotiating a project with a client I really wanted to work for. After I told them my price, they came back with, “We think this could turn into a lot of ongoing work, so would you be willing to come down?” It made no sense. If they are going to come to me with more work (and therefore take up a higher percentage of my time, which is then unavailable for other projects), why would I lower my price? Maybe there is some logic to lowering your price for some situations? I’d love to know.

I answer: Your instincts are right. “We will give you more work later” does not justify a haggle-down now. It’s a pretty weak argument for the client to make. Not only are you forfeiting 5, 10, or 20 percent of your earning potential now, you’re doing it month and after month if you continue to work with this client. And since you’d ideally want to raise your rates in another year or two to keep up with the cost of living (a topic for another day), you’re starting out wayyyy behind where you need to be.

The client’s tentative language (“Would you be willing…?”) indicates they’re just bluffing and trying to save a few bucks. Something more hard-and-fast like, “We’d love to work with you, but $xx.xx is the highest our budget will allow” lets you know there’s no more wiggle room (say, because you’re negotiating with a non-profit organization or a small company with limited funds for outsourcing projects). So my answer would be, “No, but I could do [a price midway between what you initially suggested and what they're now offering].” If you’ve padded your first offer by 10 to 20 percent of what you actually want for the job and a haggle-down ensues, you have a much better chance of coming away with a price you like.

Before you enter into any negotiations with a client, I’d get clear on what “I really want to work with them” means. Would one sample in your portfolio from this company meet your needs? If all you’re looking for is to be able to say, “I’ve worked with Fancypants Client X,” then the answer is yes.

If, however, you believe strongly in the organization’s mission and want to do whatever it takes to forge an ongoing relationship with them, maybe you resign yourself to working for them at a discounted rate (if that’s the best you can do) in the name of community service and make up the difference with higher-paying bread-and-butter clients. Or, if the client’s offering some high-profile work that would get you noticed by other potential clients, industry bigwigs, and perhaps even the media, maybe you do a few pieces for them and reap the rewards in other ways (perhaps press for your business, which leads to more business) before moving on.

But back to the haggle-down at hand: Say the client’s shot down your counteroffer or shut you down with a “We simply can’t afford it” statement. You want to work with this client at least once, but you don’t want to get branded as someone who makes 80 percent of what she knows she’s worth. So you tell them you’d really like to work with them on their campaign to save the polar bears and will give them a 20 percent discount on this one gig so they can afford it. If it’s a for-profit company, you can add that you hope they can come up in price in next time.

Then on your project agreement and invoice, be sure to indicate that you’re giving a 20 percent discount. That way, the client won’t expect the same low price in the future. And neither will any of the colleagues they recommend you to.

Entry Filed under: Ask the Cubicle Expat,Money honey,This freelance life

16 Comments Add your own

  • 1. Mark  |  April 3rd, 2008 at 8:56 am

    I think the request for a lower rate makes sense on the assumption that the client could eliminate unpaid hours spent looking for clients. On that basis one could argue that a lower hourly rate might still mean a higher monthly income.

    But I agree with the writer’s instincts too for a couple of reasons:

    1) “More work later” is not a contract. It is wishful thinking that may or may not happen. A real proposal involve a large project that promises a number of hours per month for some specified number of months.

    2) Having been in this situation, I can testify that nothing is more frustrating than brining in revenue at a rate that barely makes ends meet but doesn’t allow you time to look for better clients. It is a nasty catch-22 situation where you both fear losing the client and also hope you do.

  • 2. Mark  |  April 3rd, 2008 at 8:59 am

    ugh

    “involve” should be “involves”

    “brining should be “bringing”

    I always comment on blogs faster than I should!

  • 3. Cathy Moore  |  April 3rd, 2008 at 9:43 am

    Another approach to consider: If they pay less, they get less. You could say, “I’d be available to do the work at that price if we cut [some easily cut thing] out of the project.” This makes clear that you’re willing to help them but that your prices are fixed. This assumes you’re charging a project fee, which I think is often the best way to go.

    If instead you’re charging for your time, it could make sense to lower your hourly rate one time for a project that will take bajillions of hours. Then it’s common to offer a small discount for that project. But charging by the hour isn’t the best way to go in most situations in my opinion.

  • 4. almostgotit  |  April 3rd, 2008 at 10:49 am

    Yes, absolutely… don’t drop your price. But if you really must work for less than you’re worth, the key is never to let your real price drop from view! ALWAYS invoice at your full market rate, and if a discount is necessary, then itemize it separatetly as such. I’ve seen folks itemize this as a “nonprofit discount,” but that could be a slippery slope too… are you prepared to give the SAME discount, always, to this and every other nonprofit you ever work for again?

    And please. Do ask yourself, very carefully, whether you absolutely must work for less than you’re worth. What’s in it for YOU? If nothing, then DON’T DO IT. There is no virtue in pointless self-deprecation or martyrdom here. If you must be purely altruistic, then think of all the other free-lancers who will suffer… or benefit… in future because of the example you are about to set today.

  • 5. Michelle Goodman  |  April 4th, 2008 at 6:43 am

    all great suggestions. thanks, everyone, for weighing in.

  • 6. cmdshiftdesign  |  April 5th, 2008 at 3:11 pm

    So weird that this ended up being a post this week cause I just dealt with a situation like this yesterday!

    I quoted someone on a website, then then emailed back and listed some revisions they had to the number of pages, etc, and asked for a new quote (the scope of the site got smaller) But then at the end she asked “could you do it for $x” (which was just a bit lower that the absolute lowest i would ever go)

    I revised my quote based on the change in scope and it was less but not as low as her suggestion.

    we’ll see what happens.

    but yea, no way im going to take on something for less than i want, it would just make me angry throughout the process and id dread dealing with a similar situation for any of their future projects.

  • 7. sabrina helas  |  April 13th, 2008 at 1:08 pm

    i think this is such an important topic! thank you for posting it!
    i know i have dealt with this so many times and definitely had/have struggles with it. what’s funny is in my experience usually its my corporate clients who try to haggle me to come done in price. go figure..
    ps-cant wait for the new book
    =)

  • 8. Amy T  |  April 16th, 2008 at 3:18 pm

    GREAT TIMING!

    I am on my way to a client meeting with whom I can smell this debate coming. Good suggestions from all, and thanks to Michelle for providing such a great forum for these issues.

    New book: Yay!

    (And that is my cheerleading for the day….)

  • 9. The Anti 9-to-5 Guide &ra&hellip  |  April 25th, 2008 at 9:13 am

    [...] Here’s what the New York Times has to say about charging your clients enough money. (Here’s what I — and some of you — have to say.) [...]

  • 10. harlemwriter  |  April 28th, 2008 at 11:33 am

    What do the freelance writers here think about the pay-per-word system? I write for a ton of magazines and hit the $2/word max everywhere. I can often wrangle extra if the story runs longer than expected, or they add in sidebars, or we go through seventy rounds of revises. I’ve also had luck asking for a bit more upfront if the piece seems particularly reporting-heavy.

    But I’m at a point where I’d love to start telling editors “my word rate is $2.50″ or whatever from the get go…and I fear they would all immediately die from shock because the $2/word is such an ingrained standard everywhere.

    Any thoughts on what it takes to move up?

  • 11. Michelle Goodman  |  April 28th, 2008 at 12:27 pm

    HW, I like pay-per-word if the piece pays at least a $1/word, isn’t too technical, and has no more than one minor revision. Otherwise, my hourly rate (when you do the behind-the-scenes math) won’t be so great.

    Next time you get an assignment, tell your editor, “All my other clients pay me $2.50 a word. Can you come up in price?” Worst that can happen is they give you $2.25 or say no. (Or say $3/word, and be happy if they come down to $2.50.)

    I know writers making everything from $.20/word (not saying that’s a good rate; that’s just what some smaller places pay) to $5/word. From where I sit, $2/word looks pretty good. If I got $2/word to write a book, I’d be a very, very happy camper. :) But I realize you can’t compare indie book publishing to newsstand magazine writing when you’re talking about pay…

  • 12. harlemwriter  |  April 29th, 2008 at 11:53 am

    Great advice, Michelle, thanks!

    And yes, agree that if I could get $2 pw for books, I’d stop complaining! As it is, I use the magazine stuff to finance my other projects (oh and pay my rent), which I realize aren’t really that particular magazine’s priorities, but are good reason to try to bring them up a bit in price.

    Thanks again. Great blog!

  • 13. Michelle Goodman  |  April 29th, 2008 at 3:46 pm

    HW, sure, and thank you too! You’ve reminded me I have some branching out I need to do in terms of clients…

  • 14. Cory  |  May 10th, 2008 at 12:04 pm

    This is interesting. I guess writers have the same problems as illustrators. If I had a nickel for every time someone promised future work or residuals instead of money upfront, then I could probably stop freelancing.

    I think I have a cliched mantra for each of these lowball tactics. I’m always mumbling things like stick to your guns, I can’t pay my bills with unicorns and rainbows and I’ll gladly pay you Tuesday for a hamburger today.

    I wonder if they teach some of these tactics in business school.

  • 15. The Anti 9-to-5 Guide &ra&hellip  |  March 19th, 2009 at 8:15 am

    [...] been around the neck of newspapers for some time now. Freelance budgets have dwindled, pay rates have shrunk, and paid contributor opportunities are nearly [...]

  • 16. Deal Therapy  |  August 7th, 2009 at 7:45 am

    I work as a freelancer. In my opinion first he would analyze the problem of client. Then he checks the competition. After that he decides the prices.It can be in any mean, may be daily basis or may be lump sum.
    If we are talking about negotiation, it’s not a big issue. There should not be miss understanding between client and freelancer. sometime client can make a promise that he would check his work for a time then he will pay them.

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Hi, my name's Michelle Goodman and I've been freelancing since 1992. I'm author of My So-Called Freelance Life and The Anti 9-to-5 Guide. Read my full bio here.

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