Negotiating Business Contracts - 5 Tips For Freelancers

Freelance business gives you the luxury of being your own boss, but it also comes with its share of responsibilities. Unlike regular employment, where you are paid a monthly or weekly salary to concentrate on your work and deliver on your specific job responsibilities, freelancing requires you to handle all core and non-core aspects of the project, including quoting a price for the project.

Setting the price of your freelance services is a tough decision. Apart from determining the actual cost of performing the work, you also need to set a reasonable margin for your profit. Pricing both the costs and your profit is certainly not a very easy thing to do. What you may consider a reasonable sum for your work, may not always be as obvious to your client. This is then the start of negotiations with your client around pricing.

Refusing to meet your clients' bargaining pleas is always an option, but might result in your client walking away from you. After all, you may be one of many freelancers who can do the same or similar job. Nearly always, you will want to secure a particular project, and you will need to negotiate pricing or terms in order to get a contract with the client. Here are some tips that will help you negotiate in a professional manner with your client and secure a contract:

Let your Clients Make the First Move
Here's a trade secret - The party that asks for a change to standard terms has less leverage in the negotiation. Therefore, give your client your standard terms and pricing. Then let your clients make the first move and start the negotiation process if they don't like your terms or pricing. This will also give you a clear idea about the pricing they have in mind for the project.

Consider Other Factors apart from the Price
Remember... Price is not the only thing that you can negotiate upon. Rather, take a more holistic approach and consider other aspects of the project that you can make negotiate. If you think you cannot be flexible with your pricing, think of other aspects, such as payment terms, time frames, milestone payments, deliverables, number of hours you will dedicate to the project, altering the scope of the project, subcontracting part of the project etc



Identify the Reason for Negotiation
Spend some quality time researching about your prospective clients and try to find out what they will most want to negotiate. Don't always assume that price is the most important thing for them. More often than not, they may be okay with the price but skeptical about other aspects of the project, such as scope of the project, payment schedules, timelines etc. Try to identify these things upfront and address them in negotiations.

Dissect and Show
Don't expect your clients to immediately understand what they are paying for. One of the most common reasons clients want to negotiate is that they feel they might not get services worth the price you have quoted. So, follow the 'dissect and show' approach. When you quote your price, make it a point to break down the price into various slabs and explain to the client exactly what you are offering for that price. This will help you close to your initial quote.

Don't Try to Defeat the Client
Remember, the negotiation process is not a win-or-lose game where you need to beat the client or vice-versa. Rather, try to come to a mutually beneficial situation where both the parties are happy about the deal. This is what paves the way for more long-term relationships with your clients. If a client feels they have 'lost' in the negotiation, or that they're paying too much, this will not set a good tone for the rest of your working relationship.

Disclaimer Sabra Easterday is the owner and founder of MatchB2B. Sabra is also a lawyer with a special interest in business issues and e-marketplaces. Notwithstanding that Sabra Easterday is a lawyer, nothing in this article and no services of MatchB2B or its website are legal services and no attorney-client relationship exists between any reader of this article or user, customer or potential customer of MatchB2B, and MatchB2B, its website or Sabra Easterday.