How to Avoid Negotiating Yourself Out of a Paycheck as an Independent Contractor

July 19, 2018 Geekopedia 0 Comment

Competition is fierce in today’s global markets, especially for contractors. When people decide to make the move to consulting or contracting, they don’t usually dream about all the discounts clients are going to ask for – they are usually dreaming of all the money they are going to make bringing their expertise to the world. But the truth is that the cost of business continues to rise and more and more businesses are looking for ways to cut costs, no matter the consequence to people both inside the company and outside it. If you are an independent contractor, here are some ways you can avoid entering into negotiation tactics that require you to rethink your pricing structure.

Set it and Forget it

It’s easy to set your rates as an independent contractor out of thin air. After all, you get to determine your value because you are your own boss. But there will be times that clients don’t see eye-to-eye with your rates and they are going to try to get you to mark down you prices because it doesn’t “fit the budget.” Remind yourself that budget is their wheelhouse. Your wheelhouse is to provide value-added service for a fair price. A fair price doesn’t always come with a discount. So when you set out on your own to provide consulting services, be clear about your rates and make a deal with yourself that you won’t waiver.

Discounts Become Regular Pricing

As soon as you agree to give a discount to one client, it won’t be long before your discounts are your regular pricing. So before you enter into negotiation tactics with potential clients, know what you are going to say when they request a discount. For example, you may offer an explanation that discounts undermine your work and that your pricing is based on fair market value.Remind them that discounted pricing means discounted work and that is not what your client wants to pay for in the end. If you can’t help them at your price, happily offer to refer the to someone they can afford. They’ll appreciate your candid stance and it might even end up working in your favor. If you aren’t acting in your best interest, who will?

Move Toward Project Pricing

Rather than quote a job by the hour, provide a price for the entire project based on scope. It doesn’t matter if it takes you ten minutes or ten weeks to finish the project – what your clients want to know is how much it is going to cost them. So if saying “$150 an hour” scares you clients away, consider bulk pricing that doesn’t break down the project pricing by the hour. If a client asks about the price, you can simply explain that the scope of the project warrants the price based on your experience and the quality of product you can deliver. There’s no need to give them a hourly breakdown of your time. If you wanted to report by the hour, you’d have a regular job.

Politely Decline the Opportunity if You Have To

Not every project that comes across your desk is going to be worthy of your time. If you start selling yourself short in terms of your rates, you’ll soon resent your work and your consulting career will be over before you know it. It’s important that you take the time to properly price a project so that you feel your work is valued, and that it is in line with your business goals. Again, don’t worry about your client’s budget – that is for them to decide. But if a project is in your scope and your price range and you still don’t feel good about it, pass it onto another consultant or decline the offer. Doing so will ensure that you aren’t just taking on any and all work you can get, even thought this is a natural instinct people have. When you begin to establish yourself as a consultant, you want to ensure you are taking on the best possible projects that make the most of your time and are worth the money you earned for them.

Regardless of the industry you work in, you are going to get hit with questions about price breaks, discounts, sales, and more. It’s important that you have a game plan in place to address those concerns and prevent your business from drying up or losing money. Anticipate the questions, but be confident in your ability to deliver quality products on time and provide tremendous value to your clients.