When speaking to our clients, a recurring theme is fee negotiation:
- How do I know how much to charge?
- How do I ensure I get paid on time?
- How do I go about negotiating costs?
With so many different fee methods, including fixed or daily/hourly, it can be a tricky conversation for both you and your clients.
While choosing the fee can be difficult, communicating this desired cost (once settled on) can be the hardest part of the process. But here is the thing: you are a talented designer with amazing ideas and specialist skills. No one else can do what you do the way you do it. Your service is unique and your prices reflect this - don’t forget it!
When entering fee negotiations, it is essential to have confidence in your service offering – believing in it can make negotiations easier. However, we appreciate that ‘easier’ doesn’t always mean ‘easy.’ If you’re looking to negotiate fees that work for you and your business, keep these points in mind:
RECOGNISE YOUR VALUE AND PRICE YOUR SERVICE ACCORDINGLY
When you’re starting out, it can be hard to determine your value; and with a mass of pricing options, it’s hard to know where to begin. As we’ve said, believing in your designs and your offering is the ideal starting point. From there, you need to assess the existing marketplace. Who are your direct competitors, and what are they charging? What do they offer that you don’t, and vice versa? Once you have a rough figure in mind, it is useful to take a step back and consider your costs – the fee you settle on needs to cover your time, as well as any overheads. If you are working for yourself with no employees and no office rent to worry about, you may be able to charge less due to lower business outgoings. If you are running a studio, however, your fees will need to reflect these higher costs.
HOW TO SUCCESSFULLY NEGOTIATE FEES
Two simple words: slow down. Too many designers rush in with a quote before taking the time to think through their first bid, which can lead to disappointment. If you lay the groundwork – by building relationships and running your own financial analysis –before discussing money, you’re more likely to achieve a fee that suits your needs.
At this stage, we ask our designers to take a client questionnaire. Taking this time to really think about what the project entails allows them to better understand the brief and scope, and helps to build a stronger foundation. When it comes to submitting a fee proposal, this will leave you in good standing for a successful negotiation. If your client is unhappy with your first quote, we would never suggest reducing your fee. Instead, use other negotiation methods such as implementing a strict time frame, trade retail split or monthly retainer to improve cash flow. Additionally, always try, where possible, to negotiate in person on neutral ground – your client is buying into you and your skills, discussing via e-mail can weaken your position!
HOW TO ENSURE YOU ARE PAID ON TIME
Nobody wants to put their heart and soul into a project and not get paid for it. To ensure you are paid on time, every time, it is important to have written agreements in place, especially when working with a new client. Agreements should outline scope and cost, as well as procedure and payment terms.
On completing the job, send your invoice as quickly as possible, and remember to include a due date. It sounds simple, but you’d be surprised how many people forget to do it!
Negotiating fees that work for you is an important part of being a business owner. It may be difficult at first, but it’s a skill worth learning. If you want to learn more, we run a workshop on fee negotiation – find out about it here.