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So you've done it. You've decided to become an independent contractor. Your business is set up, and you've got your first client. But the client can't afford to pay your rates. What do you do?
When working as an independent contractor, especially if you're just starting out and haven't yet built an extensive client base, it is vital that you learn how to negotiate your contracting rates. You need to make sure that your clients can afford you, but it's equally important that you are getting paid adequately for your time and services.
This article will provide information on how you as a contractor can ensure that you're making a profit while making sure your clients don't feel as though you're overcharging.
1.Be willing to negotiate. This may sound basic to you, but there are a lot of contractors out there who will not negotiate their rates. It's important that you demonstrate to your potential client that you are willing to keep their needs in mind when hammering out a contract.
2.Learn your client's budget. Most businesses, unless they're very small and run haphazardly, create an estimated budget for each project. For example, a business might study their finances to determine how much they can afford to have a Web site designed, or they may set aside a certain amount for larger purchases. Most companies will be willing to tell you approximately how much they expect to spend on a project.
3.Consider your investment. How much time and effort will the project take you? Do you feel the amount you'd make on your potential client's budget would compensate you for your efforts? If so, let your potential client know. If not, tell them that as well, and discuss with them the lowest you will be willing to work for.
4.Find out the scope of their project. Before you ever give an estimate on a project, find out how much time it is going to take you and whether you need special equipment or software to complete it. Sometimes hiring managers at companies are unfamiliar with the processes necessary to do certain projects, and therefore underestimate the amount of time, and therefore the cost, associated with completing a specific project.
5.Determine your rates based upon the potential client's budget and your efforts. If you feel that you'd like to proceed and provide a potential client with an estimate, do so. In order to determine your rate, consider the information you've been presented with and calculate a rate based upon the client's budget and your efforts.
6.Discuss your estimate with the potential client. Once you've presented your estimate to the potential client, allow them a few days to digest it, then offer to review the estimate with them. Explain to them how you came to your estimate so they understand why you're charging them what you're charging them. If they want a rate that is still lower and you simply can't go any lower, tell them so as politely as possible and recommend they find someone who can. If possible, recommend a contractor. Yes, you'll be giving business to a competitor, but your demeanor will demonstrate your professionalism and make you memorable.
7.Remain polite. Regardless of your potential client's expectations, even if you feel their budget is ridiculously, if you lose your cool, you'll probably lose your chances at getting them as a client, and you might end up damaging your reputation as a reliable, professional contractor.
8.Get it in writing. Once you have gone back and forth with your potential client and have hammered out an estimate you both agree on, provide your client with a statement of work or letter of engagement for them to sign. Be sure to keep a copy for yourself and send one to your client for their records.
Whether you're an independent contractor who is just starting out, or even if you've been doing this for years, you'll find that flexibility and professionalism are the keys to acquiring new clients and turning them into repeat clients.
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