This has been in my mind for a couple of months and I wanted to let it out and pitch a new rate of $18 (double the previous rate) to my friend. But I am afraid this may not be acceptable, as he is getting $15 from the client and the client is already on a tight budget. And, I am afraid if I stick with this offer he will try to arrange some other resource, resulting in me losing this opportunity. Moreover, I do have my own client and work for him for $10.
I will really appreciate some help or guidance here. How should I best approach this scenario so there is a WIN/WIN situation for all of us? Am I pitching too high?
PS. He is already looking for an extra resource to share my work. And I am willing to go as low as $15
Theory: in a negotiation both parties are trying to get a deal that is better than the Best Alternative To A Negotiated Agreement (BATNA). So what you’re trying to do is say if this negotiation fails what am I going to do instead. Theoretically this is where your leverage always comes from because a good BATNA enables you to threaten to walk away.
Practical: in your post I understand what you want, but I don’t understand your BATNA. If your friend refuses, or worse let’s say he fires you right now, what would you do/make instead?
The easiest way to get a win-win is the following: 1) go find other gig offers - compare the price others are willing to pay you (recognizing there’s some risk the next client is not as friendly/easy to work with) 2) Let’s say you get 3 offers at $15,$16,$17. Show these offers openly to your friend and say “look I like working with you and want to continue but the market rate for my work is much higher than what I make right now”. This is actually a win-win because if you’ve done your research right, these are the same offers your friend would have to make to replace you. Now the conversation isn’t about what you want vs what he wants, but what each of you would do if you can’t get to an agreement.
3) Make your offer (say $18) and explain why it is higher/lower than the market avg (you can trust me, you know I do good work, etc).
4) Truly be willing to walk away if it doesn’t work. Not everyone is rational, not everyone will believe your alternative, not everyone wants a quick resolution. Unfortunately this is the hard part with friends, but if it doesn’t work you just must be willing to walk away (try to keep it isolated to your business partnership and not your personal friendship).
Notice, throughout, the premise is: here’s what my alternative is. Without this, you’re just hoping for him to take action out of kindness. It’s certainly possible, but it sounds like you are confident in your skills and value and ready to move past charity to career.
Good luck. Ask questions here if you have them. Let us know what happens.
It’s ok to negotiate win-win. And in the long run you win from that, because what you want is great relationships with people who feel they can rely on you and respect your work.
If you can do that without being taken advantage of, you will get tons of work for years and make money you are happy with.
Why double your rate right away? Are you happy working for $10?
Can you find new work? Can you increase the rate gradually? Can you say ‘this month it will go up to $12, but in 3 months it will go up to $15’ ...
It’s great if everyone makes money. Are you annoyed your friend is making money? Why are you willing to make $10 from one person but you want $18 from another?
You don’t want to work too cheaply, but you also want to maintain relationships. This is how you get more work for years and years and build a career.
Also it’s good practice.
> And I am willing to go as low as $15
So if they offered you $14 an hour, you would drop the project? Despite working for $9 so far and having another client at $10? You'd better be able to walk away from this or your leverage is non-existent.
In my opinion, when you are negotiating, you should only keep in mind your "win", not of the others.
The other thing is that I would work on improving the "demand" side for my work: if I have 10 potential clients, increasing my hourly rate becomes very easy, something I can do with confidence. On the other hand, if I only have 2 clients, I have to negotiate carefully, because I don't want to lose 50% of my work and income.
In return for their cut, the agent handles the payments and provides the guarantee that the candidate gets paid on time even if the client pays late.
There's usually a clause in both contracts that prevents them from cutting out the middle-man.
Also, read whatever patio11 wrote about this.
https://www.kalzumeus.com/2012/09/17/ramit-sethi-and-patrick...
https://www.kalzumeus.com/2012/09/21/ramit-sethi-and-patrick...
If your friend has zero involvement and no relation with the client, I don't see how they are getting paid in your place to begin with.
Do you have a contract with your friend? If not, just notify the client to update your bank account details and they will start paying you directly.
If your work is good quality, it's almost certainly worth much more than $9 an hour. I would seriously consider:
- negotiating with your friend to reduce his share - as long as it's still profitable to him, he should be willing to move a little.
- trying to find some other freelancing work opportunities so that you don't feel pressured to accept your friend's terms.
This is a consideration that others haven't mentioned. Don't be afraid to take a different rate from different clients.
You could try getting in touch directly with new clients (costs time and effort) and negotiate a better deal.
You could negotiate with your friend to pay you the full amount but pay your friend a fixed fee instead (applicable if the worktime is not constant). For example if you work 50h/month the client pays 700 - 450 for you. Offer your friend a constant 200$. But try to increase your worktime so you get a better quote and your friend has a fixed income.
Neither too high nor too low. A fee that you think is reasonable.
When someone asks your fee, you say.... “this is my fee. I think it is fair. I do good work. I don’t overcharge. I know there are cheaper people out there but that’s not where I am positioned. You are welcome to work with the cheapest.
If you want good work at a fair price then I am happy to work with you but I cannot discount my rate because it’s not commercially practical for me to do that.”
If you lose the potential client then that is fine . Do not chase them with lower prices. Wait for the clients who agree with you.
When clients insist on some concession, some discount, then give it only in return for something else, like up front payment. Don’t concede discounts for nothing.
Sometimes the mark-up is for more than is apparent - in Australia there is a 6% payroll tax that kicks in after a certain size payroll is achieved.
Also, big companies often like to "write one cheque" a week/month and not deal with a lot of hassles which can consume a few admin staff continuously.
My current contract was direct for years and they paid a 2.5% "supplier markup" extra to me because that is what the agency charged just for insurance postage and petties etc, at the individual scale it wasn't enough by maybe 2%, just for those issues, esp insurances.
There are more issues, but even though a contractor (hourly pay) almost entirely for my 30+ year working life, I still use the agency at times as the convenience can be worth it rather than going direct and often they can find work you can't, in my circumstances.
Having work vs not having work really lets you consider if you are prepared to pay them a bit to help you out, so it is just the nature of the problem sometimes.
This is possible to do. I've negotiated big increases in the past. But you need to understand what your skills are worth in the market.
You will also find that if you spend time finding new clients yourself, that activity takes times to do. So if your friend has a lot of connections, you may want to consider preserving that relationship if you don't want to worry about the business side.
In the US, there's an expression called "Keeping up with the Jones'". It means you're trying to match what you see other people getting in income, material goods, etc., often at the expense of your own happiness. Think about the following before you act.
Why is the situation bothering you?
Are you being influenced by another party who thinks you're being taken advantage of?
Are you happy with the work and is it allowing you to enjoy your life?
If they pay you that, all is good. If not, you go on working with them until you find something else.
Can you deal directly with the client and cut out the middleman? Early in my career, I did this with an employment agency who were perpetuating the same scam on me.
They weren't pleased about it, but fuck 'em. These capitalist bastards will grind you down and steal your labour any way they can - and you deserve better!
Anyway good luck with it, whichever approach you take.