Defending Your Prices 2.0

There is a lot to like about the Freelance life, but recurring paycheck anxiety isn’t one of them.  If we’re not waiting to get paid by a client who should have mailed the check 10 days ago, then we’re fretting that the check is rather too small anyway for the amount and quality of work that was done.  But how can one be choosy when the possibility of being replaced is so real? No matter how you earn your living, by 1099 or W2, the employer is in the driver’s seat.

Nevertheless, we Freelance consultants do have some leverage.  While there are thousands of Freelancers willing to accept small hourly rates and project fees, hiring managers in the know realize that the quality of their work is often less than ideal.  As always, you get what you pay for and pay for what you get. Below is a list of selling points that in your next pricing negotiation can help you to justify and defend the premium price I know you are worth:

Expertise

Shopping for B2B services is not like shopping at the old (and sorely missed) Filene’s Basement, where frugal fashionistas could find premier designer label clothing for a fraction of the retail cost.  The caveat was, one had to expect certain shortcomings, like maybe a  missing button or two because one of the infamous button thieves got to the item first (there were apparently several such individuals over the decades).

Inexperienced or less skilled Freelancers may request lower prices for any number of reasons, including perhaps the inability or unwillingness to perform complex assignments.  Some people like to compete on price and there will always be those who respond for whatever reason and that sometimes includes an antipathy toward paying people.  Those who like the low-ball figure should be advised that they are vulnerable to receiving only the bare minimum of work because they’re only paying the bare minimum price.

Make it clear to your prospect that you produce the highest quality work. The prospect can totally hand the project over and trust that you and your team will successfully complete the job as specified, on time and within budget. There will be no need for the client to perform after-the-fact do-overs of your work.  Your base price may be higher, but in the end you save clients time, money and aggravation.  You make them look smart for hiring you.

Dependability

In sum, you will produce what has been asked of you and if there appears to be an obstacle to doing so, you will alert the client as soon as that is recognized and suggest collaborate on making adjustments or creating a Plan B, especially for time-sensitive projects.  You meet deadlines and respect budgets.

Follow-up

One of the biggest mistakes a Freelancer can make when negotiating project or hourly rate pricing is to limit the scope of what you offer solely to the project work as described in the specs.  Make it known to prospects that you are selling an entire service package that includes not only the project spec work, but also includes responsiveness and prompt follow-up; good communication and feedback; efficiency with logistics; and the willingness to ensure that deadlines will be met, even if that means working outside of the 9:00 AM – 5:00 PM, Monday to Friday paradigm.

Showcase your value-added services by ensuring that your project proposal answers all of the standard or required questions and is sent to the client on time.  Respond to client follow-up inquiries quickly, efficiently and cheerfully.

Testimonials

While any confidentiality requests must be respected, revealing selected names on your client list, newsletter or blog statistics, links to published articles and webinars hosted and publicity listings for your noteworthy speaking engagements will provide tangible proof of your reputation and expertise and in that way, justify your pricing.  Depending on your specialty, an online or hard copy portfolio of your work to show to prospective clients is yet another effective way to demonstrate the quality and sophistication of your work and help to explain why you do not price your services at the bargain basement level.

Don’t be shy! Prospective clients want to see what you can do, so that an informed decision can be made.  Build your case, present it well and show them what you are worth.

Thanks for reading,

Kim

Shoppers at Filene’s Basement  (1974)  Photograph courtesy of Nick DeWolf

 

Negotiating 2.0: Taming Hardball Tactics

Freelance consultants are always the little guy.  We possess agile talent and experience that bring value-added to so many mission-critical projects,  but we never control the process.  We value our savvy and survival skills,  but we are alone and vulnerable, truth be told. We navigate and negotiate our way through work assignments and do whatever we can to obtain billable hours.

As we enter into negotiations in pursuit of contract assignments,  prospective clients will sometimes seek to take advantage of us. Passive aggressive withholding is the usual weapon. Prospects are known to play ugly games,  sometimes to bargain down our already quite reasonable fee,  other times to sneak more work into the agreed-upon scope of  project work (mission creep) without paying a supplement for the extra duties.

Negotiation skills are a crucial defensive mechanism that help us to protect our integrity and our income and maintain good client relations as we do. Deepak Malhotra, author of Negotiating the Impossible (2016) and professor of business administration at the Harvard Business School, has a few suggestions that will help us to respond when a prospect or client decides to become an adversary.

Tactic:  “We will never…”

This is an ultimatum. Malhotra recommends that one should simply ignore ultimatums because he’s found that they are usually NOT deal breakers. Ultimatums are frequently issued in the heat of emotion, or as a tactic to intimidate or control.

Avoid acknowledging the ultimatum and you allow the person who put it out there to slide away from it down the road,  because you never started a discussion about it. The other party will not lose face should they contemplate surrendering their tough position.

If ignoring the ultimatum is impossible, then try to reframe the statement in less harsh language that gives the other party an out. “It may be difficult,  I understand…” or “It could be costly (or time consuming or put you into unfamiliar territory)…”.

Tactic “Oh, and we also will want…”

The other party may have a laundry list of add-ons and conditions that delay agreement. Malhotra observes that there are a couple of likely motivations for this behavior. One, they sense that doing the deal is important to you and they aim to exploit that.  Alternatively, the conditions might possibly be meaningful to them in terms of obtaining satisfactory ROI.

Malhotra recommends that you put a cap on the demands by stating that if something is truly important,  you would like to understand why and that you will work with them to accommodate any legitimate concerns or objectives. However, you are not willing to negotiate an individual element so late in the negotiation process.

If adjustments are critical, he says, then tactfully make it known that it will be necessary to propose and discuss concessions that they would be willing to make in exchange. The other party must be willing to give some easement and flexibility on issues of value to you as well.

Tactic “Great– I’ll confirm this with my boss.”

Malhotra advises that first of all, make sure you are negotiating with the person who can really approve and set into motion the terms of the negotiated agreement. Sometimes, unfortunately, the other party will not be transparent.  Negotiations can be handed off to a gatekeeper while the real authority remains behind the scenes.

To head off this possibility,  ask clarifying questions of the other party  before you get too far along into the negotiations.  Inquire about who will need to sign off on or otherwise sanction the deal that is struck. Ask what factors might speed up or slow down the process. Learning the process of the one across the table shows you are someone who respects the organization and allows you to set expectations for the outcome you can achieve. Do you want to invest time talking to these people, or should you walk away and find a potentially better prospect?

Thanks for reading

Kim

Eight Leadership Styles. Which One Is Yours?

When assuming a leadership role,   one does what is required in that position at the time.   There is no road-map because leaders must respond to events as they occur,   as they simultaneously champion projects developed by members of their team,   push through selected personal initiatives and follow through with worthy projects that started before their regime.   Most of all a leader must be versatile,   possessed of good judgment and more than a little lucky.

Nevertheless,  we all have our strengths.   Some of us are super strategists,  or change agents.  Others are great with process and operations,  we intuitively know how to get things done efficiently.  Still others are master communicators: deal-makers,  negotiators or coaches.

How does one rise to leadership,  take the reins and succeed when certain key projects call for talents outside of the natural skill set? Good judgment will encourage the leader to recognize what is beyond his/her expertise and delegate such tasks to better qualified team members.   Further,  the leader is advised to acknowledge team members who step up,  because recognition builds loyalty and the productive can-do spirit of a high-functioning team.

Leadership development specialist Manfred F.R. Kets de Vries,   author of “The Hedgehog Effect: The Secrets of Building High Performance Teams” (2011),   has identified eight leadership competency archetypes for us to ponder.   Do you recognize yourself in one?

The BUILDER approaches leadership as an entrepreneurial activity.  This leader longs to create a tangible legacy.

The CHANGE AGENT loves to ride in on a white horse and clean up a mess.   Re-engineering is the preferred activity.

The COACH derives great personal satisfaction from talent development and knows how to recognize the strengths of team members and get the best out them.

The COMMUNICATOR,  like former presidents Bill Clinton and Ronald Reagan,  loves being on stage and knows how to influence people.

The INNOVATOR is able to sort through difficult problems and devise creative,  yet practical solutions.

The NEGOTIATOR is highly gifted at recognizing,  selling and bringing to the organization lucrative new business opportunities.

The PROCESSOR is an operations expert who will make the organization run like a well-oiled machine.  This leader will institute systems that support the organization’s objectives.

The STRATEGIST has the vision to recognize which goals and strategies the organization would be wise to pursue to ensure its future growth and sustainability.

Merry Christmas and thanks for reading,

Kim

Negotiating Tips

“What’s your best price?”

“That’s too expensive,  we can’t budget that amount.”

“Last year I hired one of your competitors to do the same thing for half your price.”

Freelancers,  business owners and of course salespeople are confronted with the above statements on a regular basis.   Customers are always angling to get the goodies on the cheap.   We need the sale,  we need the work because we need to get paid and that puts us in a vulnerable position.  How can we command what we consider to be  a fair sum  for the top-drawer services that we deliver?  To get what we feel is our due,  it’s imperative that we sharpen our negotiation skills.

Many people are afraid to negotiate.  But all of life is negotiation,  if you think about it.   All relationships involve  give and take,  do they not? Life is all about the exchange of what is valuable: time,  love,  expertise,  friendship,  products and services,  money.   To frame the process of negotiation in that light is to de-mystify it,  take away the fear and encourage one to learn to become more adept.  The tactics listed here will help:

The cards you hold

First,  understand the value of what you bring to the table.  Do your homework and investigate your competitive advantages.   How urgent is the need for what you’re selling?  Who else can match or possibly exceed you in quality,  expertise,  price and/or timing?

The person with the best data often triumphs,  so learn as much as you can about the prospect and any competitors.  If possible,  figure out if the prospect has the ability to do the project in-house.   Ask whether this project been done before and if so,  who did the work?  While you’re gathering intelligence,  try to figure out whether they might be inclined to cancel the job if they can’t get what they want for cheap money. 

Identify what the prospect wants,  why they want it and what they gain by having it,  or lose by not having it.  If a lot is on the line,  that strengthens your hand and vastly improves your chance of getting paid what you want,  depending on who you’re competing against.

Re: competitors,  find out who they are and if a prior relationship exists and why the prospect didn’t call that company/Freelancer in again?  Are they in search of something else,  or is it required that a certain number of vendors be interviewed and that’s why you’ve been invited to bid?  A vendor who’s done business with the prospect previously has a huge advantage,  but if you can make a good case,  it’s possible to scoop the business.  Maybe the administrative assistant can fill you in on a few things,  so be friendly and diplomatically ask a couple of questions.

Practice

Hone your abilities and your confidence by incorporating negotiation into your everyday life.  You’re liable to be pleasantly surprised by the receipt of a few unexpected benefits.   When making large purchases,  bring your checkbook.   Ask the store clerk  (who will have to consult the manager)  what the discount is when you pay by check  rather than by credit card  (merchant credit card processing fees cost more money).

If you visit a flea market or antiques store,  ask for 20%  off the marked price.  Again,  bring your checkbook and sweeten the deal by allowing the merchant to avoid the credit card processing fee and pass the savings onto you.  Even when you’re paying by credit card,  requesting a 10% – 20%  discount on original art,  furs and high-end jewelry allows the merchant to move product that might otherwise languish and saves you money.  You’ll be so proud of yourself!

Be confident and pleasant when you ask for your discount.  Ask for a little more than what you expect to receive  (your prospect will do that as well,  when squeezing you for a lower fee)  and expect to wind up somewhere in the middle.  Get comfortable with silence when negotiating.   Make an offer or respond to the client with a counter-offer and then shut up and wait for the response.  You may go back and forth a bit,   but hang in there and don’t be afraid to do a little horse trading.

Walk away

When entering a sales negotiation,  always have your minimum standards in mind and adhere to them.   Be prepared to leave the business on the table if you feel the prospect is out to exploit you.   It won’t help your cash flow,  but you’ll be able to hold your head high and become even more savvy as you successfully sell to the next prospect.

Thanks for reading,

Kim

Ask and You Might Receive

Nearly all Freelancers are feeling the pain of the long slog through the sluggish economy.  Merely treading water is now considered a victory.  Even those fortunate  enough to have maintained robust billings are sensitive to the cash flow problems of their customers and fellow business owners.  Consequently,  the time is ripe to ask for a better deal,  for everything.  You may be pleasantly surprised at what people will do to keep your business.  To get the ball rolling,  all you’ll need are some creativity and moxie.

You’ll also need to remember that your goal is to both save money and build mutually beneficial business relationships,  especially when approaching fellow Freelancers or other small business owners.  Be assertive,  but considerate and respectful.  Don’t try to squeeze someone whose business may be hurting.  Think of benefits that will accrue to the other party and communicate that as you present your proposition.

The other party will appreciate that you’ve thought of their interests as well as you own,  so no matter what,  you’re likely to be seen in a positive light.  Even if you are unable to get what you want,  you’ll never lose by asking.  As they say,  it’s just business.

  • Think about bartering products or services.  What do you sell or do that suppliers and service providers might value for their businesses?  HR or IT services?  Graphics or PR or landscaping?  You’ll never know until you ask the question and get the dialogue started.  Make sure the exchange is of equivalent perceived value,  so that no one feels short-changed.
  • If you rent an office,  begin preparations now to campaign for a rent roll-back.  Commercial space is plentiful and most landlords want to keep a good tenant.  Be sure to pay your rent on time and otherwise cast yourself in a favorable light.  Get information on rents for comparable spaces in your area and determine what would be reasonable to pay for yours in the current economic climate.  Are their problems in the building?  If so,  make a list so that you can more effectively negotiate with your landlord at lease renewal time. 
  • When it’s time to advertise,  ask for a discount (try 10 %).  You’ll be more successful if the ad is larger and/or if you place multiple ads with that publication.  Ask also if you can be notified when remnant space is available,  which will save even more money.  You must be flexible and prepared to act quickly when taking remnant advertising space.  You might even spend more than you anticipated.  In exchange,  you just might get an eye-popping half page ad for the price of a quarter page.
  • Think about the products and services that you use all the time when doing business.  Do you ship items on a regular basis?  Do you travel frequently and stay at the same hotel?  If so,  then it’s time to ask for a loyalty or volume discount.  Have information about how often you use the service/product and how much you spend at the ready,  to support your case.
  • To preserve your cash flow,  request more flexible payment terms from suppliers and service providers.  Ask for 45-60 day terms,  or ask to pay half of the balance in 30 days and the remainder at 60 days.  The other party may not love it,  but the terms may nevertheless be extended in an effort to keep you as a customer.

Thanks for reading,

Kim