If you need additional help but don’t have the budget to hire more employees, you may benefit from using freelancers. By 2027, Statista estimates that more than 50 percent of the workforce — about 86.5 million people — will be freelancers.
Freelancers can help with a variety of tasks, such as logo design, copywriting or website development. You can take advantage of that person’s specialized skill set without having to pay an annual salary or benefits.
Using freelancers can help your company save money, but paying at or above market value will help you develop a good relationship with the freelancers who work for you. So before hiring freelancers, it’s a good idea to understand how to negotiate with them.
Before looking for freelancers, determine what projects you need completed. From there, you can come up with a budget. What are you willing to pay for someone to help finish this project? By setting internal expectations prior to seeking out freelancers, you’ll be better prepared to negotiate a fair rate.
The process of setting a budget also means creating a job description for the freelance position. While it doesn’t need to be the same type of job description you might see for a full-time employee opening, there should be a set scope of work for the freelancer. Clearly defining the assignment makes it easier for you and a freelancer to agree on a fair price.
For a freelancer to accurately know what their time and effort on a project is worth, they need to know what you want. Create a budget and scope of work beforehand to ensure the negotiation process goes smoothly. [Read related article: How to Become a Freelancer]
Once you’re ready to seek out external help, you’ll want to look for help from reputable freelancers. You can look at online sources or ask people in your network who might know experienced and talented freelancers.
“I have been hiring freelancers from all over the world for nearly 10 years,” said Lior Krolewicz, founder and CEO of Yael Consulting. “The best way I found was to use a third-party website (like Upwork) so you can filter out freelancers who have proven experience and good reviews.”
Through our research, we found some of the best websites for hiring quality freelancers.
By using those four sites, you should find plenty of interested, talented freelancers. If you’re wary of using a freelancing site, you can never go wrong by speaking to people in your network. Spending money on substandard freelancers is avoidable – it just takes some effort during your search.
Once you find interested freelancers, you can start determining a fair rate for the project. While it isn’t normally considered part of the negotiation process, finding reputable freelancers will make the negotiation process much easier. [Read related article: How to Negotiate When Hiring Freelancers]
Allowing a freelancer to share their rate first starts the negotiation process off fairly. Unfortunately, some freelancers don’t know their hourly rate or what they should be paid per project in relation to market standards. Consequently, the freelancer might ask for a low price. While that seems like it would be beneficial to the business, that’s not always the case.
“Newer freelancers can often under-price themselves, which is bad for them and bad for us,” said Penni Pickering, WordPress website design and development at Kabo Creative. “A freelancer who under-prices won’t stay in business for the long term. When we come across this situation, we’ll often push their rate up a little, test them on a project, and if they are good, then we’ll be with them for the long term and are happy to pay a little more as they gain confidence and experience.”
For small businesses, it often makes sense to use the same freelancers on a regular basis. If you find a trustworthy freelancer, you may want to use them multiple times. Paying them below market value will only decrease the chances of them wanting to work for you in the future. If you offer them their market value or above, they’ll feel more comfortable working on future projects for you.
Letting a freelancer suggest the pay rate is a good starting point, but you still need to know what a fair price is for both them and your business. Treating freelancers fairly is the best way to negotiate. Don’t try to save a few extra dollars when it could burn a bridge with a qualified freelancer who enjoys helping your business.
“If you have a specific budget and freelancer you want to work with, share that upfront,” said Andres Lares, managing partner at Shapiro Negotiations Institute. “Otherwise, don’t try to save an extra 5 percent only to get less than 95 percent of the freelancer’s effort.”
Once a freelancer suggests a rate, be honest about your budget. Again, it’s about treating the freelancer fairly. Don’t go into the negotiation looking to belittle the freelancer’s ability by offering them less than they’re worth.
This is one of the most important aspects of negotiating with freelancers. Don’t negotiate with freelancers with the only goal being to reduce the amount you have to pay them. A freelance negotiation should aim to reach a fair agreement for both sides. Ideally, you’d rather pay a quality freelancer slightly higher than you’d like rather than use a subpar freelancer for less money.
“I always live by one mantra, and it’s the same for hiring freelancers and being a freelancer: Pay the freelancer what they want,” said Drew DuBoff, growth strategist and outsourcing expert. “If it’s a quality freelancer, you’re paying for years of experience and won’t be disappointed.”
Sometimes freelance negotiations don’t even have to be negotiations. If a freelancer suggests a fair price within your budget, accept the offer. There’s no need to haggle for a cheaper price when it may offend the freelancer or limit their motivation.
Try to be an ideal client for freelancers by offering a competitive wage and treating them with respect. This will help you get the most out of the freelancer-client relationship.
On the other side of the equation, there are a few negotiation tactics freelancers should use to ensure they get a fair rate.
One tip is to educate yourself about the market rate. Go into freelance negotiations knowing what your services deserve. If you’re inexperienced, your hourly rate will probably be lower than someone with decades of experience in the industry. As you gain experience, be willing to raise your rate.
“Freelancers should always position themselves in the best possible light,” said Kyle Kroeger, founder of Financial Wolves. “You should have a range of value for your scope of work. Do your research for job responsibilities and duties. For me, when I built my freelancing business, I used my base salary rate and calculated an hourly rate based on this. I had no trouble landing work, and my rate was within market standards.”
Knowing your worth is critical. By being aware of what other freelancers are making for similar services, you can ensure you’re earning a competitive rate.
If you’re not sure what to charge, it’s a good idea to talk to other freelancers to find out what they charge. From there, you can consider your experience and set your rate accordingly.
Whether you’re a business owner or freelancer, if you enter a freelance negotiation with the goal of agreeing to a price that’s fair for both sides, things should go smoothly. It’s when businesses and freelancers try to shortchange the other side that negotiations can get rocky.
“Negotiating is not an opportunity to get a bargain-basement deal, but rather it’s for you and the candidate you’re considering to come to a mutual agreement based on the value of the project and the freelancer’s skills,” said Leala Dueno, former SMB inbound sales team lead at Toptal.
As a business, you need to set a clear work scope and be clear about your budget during the negotiation process. As a freelancer, you need to know the value of your services going into the discussion, and you should stand firm on your value. If both sides are fair, it’s likely you will come to an agreement or decision quickly.
Jamie Johnson contributed to the writing and reporting in this article. Source interviews were conducted for a previous version of this article.