Are you a new freelancer who’s learning how to land new clients? Have you been freelancing for a few years and want to increase your rates? Whatever stage you’re in, freelance contract negotiation skills are necessary to ensure your rise up the freelance ladder.
Keep reading to learn about how freelance contracts differ from traditional employment contracts, how to negotiate fair pay, and more.
Freelance Contracts vs. Employment Contracts
While some aspects of freelancing are similar to being a part-time or full-time employee, there are also drastic differences between the types of contracts. Freelancers may have multiple clients at one time, while an employee works for a single company.
Freelance contracts may include an outline of the deliverables (what the freelancer must complete during the project), the pay rate for the project, deadlines, and more. While an employment contract might include similar sections, the contract revolves around a specific role within the company.
Therefore, freelancers may negotiate specific terms like project pay or timelines, while employees may negotiate broader topics like salary or employee benefits.
How To Negotiate Freelance Contracts
As a freelancer, you will want to make sure that your time and expertise are fairly compensated. Take a look at the freelance contract negotiation tips below.
1. Consider Your Minimum Acceptable Rate
Your Minimum Acceptable Rate helps you determine how much you would need to earn per hour to cover your expenses. It is calculated using the following formula:
(Personal expenses + Business expenses) / Hours Worked
You can then multiply your MAR by a certain percentage to make sure you can cover your taxes. It’s generally recommended to use 30% as your starting point.
Your MAR can help you figure out how much you should and should not accept for compensation. While you might ask for more per hour, you should not accept less than your MAR since it won’t cover your expenses.
2. Start High To Leave Room for Counteroffers
When you negotiate your contract terms, you should expect the client to try to bring your rates down. Therefore, starting higher than your typical rate leaves room for the client to feel like they’re getting a deal without you losing money.
With that being said, you don’t want to start with a rate that’s so high that the client decides they can’t afford your services. You may want to quote around 20% more than your typical rate.
3. Determine What Is Valuable to the Client
Even though you might have an idea of what you would like to charge, you need to make sure you have an accurate perspective of how valuable your services are to your clients. You should be able to communicate how you can benefit the client and help them bring in more revenue or reach their goals.
Understanding the client’s goals and how their business operates can help you tailor your services to their needs. You will also know how you can position yourself and propose your services in a way that helps the client view you as an investment rather than another expense.
4. Set Your Rates per Project
In most cases, freelancers will get faster over time. For example, you might start out taking three hours to complete a project. But that same project might take you half the time in a few years.
If you charge an hourly rate, you will start to make less even though you have more experience and skill. To ensure that you’re being paid for your expertise, you should strongly consider charging per project based on what you want to be paid per hour.
While you could charge your desired hourly rate, it can sometimes confuse clients when they hear you’re not spending as much time on the project as anticipated. Charging per project communicates the value of your work simply without the client having to worry about time.
Get a Pay Raise Today
Whether searching for new clients or renegotiating contract terms with an existing one, the tips above can help you determine your worth, how much time you should be spending on projects, and what kinds of services you might want to offer.
Only 39% of professionals even try to negotiate their salary, according to a recent poll, yet most companies leave room for negotiation when they set the budget for a role. Don’t leave money on the table. Pathrise can connect you to an experienced professional for one-on-one negotiation support and help you get a 10%-20% increase in salary on average. Learn more and connect with a Negotiation Consultant here.
Apply today.
