A Brief Consultation on How to Negotiate Consulting Rates Smartly

How to approach price-setting for your services if you are an independent consultant?

17:46 02 March 2021

It does not matter whether you actually consult on some topic or provide other subcontracting services, you act as an independent negotiating party and you need to get your fee. Some may say that hey, look at the market and set the average, but it depends. You may have more experience than most consultants, or be a newcomer who needs to attract customers. You may have a specific salary level in mind or you just want to build yourself a portfolio fast. All these considerations will impact the figures you will give to a customer and the ways you will negotiate.

 

When you enter the negotiations, there are three separate points of importance that must intersect somewhere along the way. They are: what you want to get, what they can pay, and what the market says about pricing. If the first and the second ones fall in the same ballpark, it is great. You will reach an agreement soon.

 

But all negotiation tips and negotiation trainings do not exist just for fun. They prepare you for a more common situation when the rate they offer and the rate you want belong to totally different levels of salaries (i.e. your desired $100/hour vs. their $20/hour). Then, you look at the market, adjust your expectations or start negotiating, if the salary statistics are on your side.

 

Fees’ Negotiation Trainings Tips: Steps to Take

 

1. Define the sum you will accept as the minimal rate, remember that figure in negotiations, and do not fall below it.
   
   
2. Be ready to stop the talks and walk away if you see that the fee you can get won’t cover the costs of work, not to speak about bringing you any margin.
   
   
3. Try not to be the first to name your desired rates. Ask the other party to name their offer or fee brackets. If they evade the question, name your highest rate and decide how much you will discount during negotiations. To account for this discount, inflate your desired rate a bit. When the other party will say that it’s too much, you can always grudgingly agree to lower the bar. But you will lower it by this inflation figure and will stick to the actual rate you want to get. In all other cases, you can try and use the magic words ‘It depends’ and ‘First, tell me more about the project.’ Any good negotiation trainings will tell you about this trick, and it actually works.
   
   
4. Talk about specific numbers when you are prepared, psychologically and mathematically. If you are caught off-guard, make a poker face and say that you need to reschedule negotiating the matter.
   
   
5. Do not haste to offer a reduced rate if the other party tells you your price is too high. This step is called ‘bidding against oneself’ because you offer the price lower than the one you set before. Let the opponents make their bid and see if you are on the same page of price brackets. They may want you to reduce costs by half, and so the talks are bound to end in nothing anyway. If you are confident about the prices you name, you look professional and highly employable. If you give in immediately, it may point to your desperate position on the job market.

 

Not sure you can negotiate? Take reputable negotiation trainings, practice a couple of times and talk about your fees with customers like a pro (who you are, we believe).