My biggest challenge in becoming a freelancer and entrepreneur has been to charge for my value and never negotiate down from what I am worth.
Gary Vaynerchuck jolted my thinking when he told the story about his first presenting gig. He was asked to present for an hour and he thought, wow, I didn’t know you could get paid for this, and he had the guts to ask for a price he thought was outrageous - “I will do it for $5,000.”
What happened? They said, “okay, sure”.
Then he did something truly extraordinary, something that I would never have considered. He said, “Okay, so half hour for $5,000 - great.” even though he knew very well they wanted an hour, he thought - well if they agreed that quickly then I asked for too little! So he doubled his money in one sentence because they quickly agreed. This meant of course, that once again, he had asked for too little!
I have taken jobs speaking for zero money, discounted my worth for every client, and only five years later have I dared to stand by a price and say no to jobs that were not willing to pay me my worth.
Learning to communicate effectively is just the beginning; standing by your value and worth is quite another.
Top three issues
1. You are not used to asking to be paid
If you come from the corporate world, then this is a really difficult one to consider. We always paid; whether you worked that day or not, you always got paid! Now you have to ask for pay. Eek.
Have you ever had to discuss money? I still hate it. Feels like begging. We could explore all the different routes I took to that illogical assumption but let’s not! The fact that I always have to justify my cost to prospective clients doesn’t help matters.
2. You are not used to understanding your value
We always calculated our value as what a corporate was willing to pay us day to day. Having to calculate not only the hours you are working but the preparatory hours, the experience you bring to the table feels unnatural.
Working with clients who don’t understand every meeting you take that is unpaid means you are not able to work on paid work, and therefore you want to minimise these irrelevant - every corporate has ten a day! - meetings that result in no clear outcome, goal or move the project forward. If you know, you know.
3. You are not used to saying no
My biggest issue when I had to state my price was standing by the price when a client tried to negotiate me down to 20% of that price! Yup, I even got talked down to 10% of my price, which was not my proudest moment.
Saying no did not feel natural, and saying no when starting out felt impossible. I had just left a full-time job and felt I needed the work! So it took me years to realise that saying no or standing by your value is part of the negotiation process and ensures you get paid your worth.
Challenge yourself with these tasks and see what you can achieve with some confidence and grit.
1. Set your price
Be realistic and do the research. What are people at your experience level and success charging for consulting? What is reasonable? Here is a basic rough chart that you can put together based on experience and success.
10+ years Day rate of €1500
20+ years Day rate of €2500
30+ years Day rate of €3500
2. Add tax and a buffer
What is the minimum you can get paid for your work based on your calculations from #1?
In some cases, corporate tax can be 20%, and you need to consider this in your final calculations. Add a buffer that allows you to negotiate down to your minimum price so that when a client inevitably comes back negotiating a price reduction, you are ready.
3. State your price
Put your price and terms in writing, and don’t forget to add VAT if appropriate. Send this to your client without explanation, without discount and as your “usual” price.
Haven't heard back in a week? Don’t be alarmed; turnaround days can vary from organisation to organisation. Follow up in a week.
4. Don’t back down
Now, this is not to say you will not negotiate down in price if that is what is needed or appropriate. It is meant to ensure you don’t back down from the value you are worth.
You are not asking for a fee for a 30-minute presentation of one working day; you are asking for a fee that is commensurate with your level of experience and success. You will not be working every single day; you spend almost four days of the five securing your next job or feeding your pipeline. As a general rule of thumb, consider one working day as the equivalent of five working days in an organisation, e.g. 20 years of experience, €2500/day x52 = €130,000/year.
Do the research and don’t back down. You got this.
Simone and I thought this was such an important topic that we explored the act of negotiating in our Marrakesh retreat, expanding possibilities and putting those possibilities into action.
Interested in joining our next retreat? Sign up here.