How to Negotiate When Hiring Freelancers

Tips for businesses negotiating with freelancers

Freelancers can help with various tasks, such as logo design, copywriting, website development and much more. However, no matter the project, rate negotiation is a nuanced skill that can strengthen relationships when done correctly. Follow these steps and best practices for negotiating with freelancers. 

1. Set your ideal budget.

Before you search for freelancers, determine the project you want to outsource and start budget planning. Decide how much you’re willing to pay a freelancer to complete the project. By setting internal expectations before you contact freelancers, you will be better prepared to negotiate a fair rate.

After setting a budget, you can create a job description for the freelance position. While it may not be as detailed as one for a full-time role, it must accurately convey the project’s scope and required skills. A clear definition of the assignment is essential to be able to agree on a fair price for both you and the freelancer.

Transparency is crucial when you’re outsourcing business processes to freelancers. For freelancers to accurately assess the value of their time and effort, they must clearly understand what you want. Developing a budget and scope of work beforehand ensures a smoother negotiation process.

2. Search for freelancers from reputable sources.

Once you’re ready to seek external help, prioritize finding reputable, skilled freelancers. Asking professionals in your network to recommend experienced, talented freelancers can yield great results. Online sites are also excellent sources of high-level 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.”

These are some of the best sites for freelance services: 

• LinkedIn: Successful networking on LinkedIn goes beyond finding professional and industry peers; it’s also an excellent platform for reaching freelancers. Consider searching for specific titles, like “freelance graphic designer” or “freelance writer,” to locate freelance workers on the platform. You can also tap into your current LinkedIn network for direct recommendations.
• Fiverr: The popular service Fiverr offers “gigs” starting at $5 and scaling much higher. It’s a good spot to find freelance help for various tasks.
• Upwork: Similar to Fiverr, Upwork is a popular freelancing platform that helps connect qualified freelancers with businesses in need of their services. It’s a great resource for small businesses.
• Toptal: This company looks to connect people with the top 3 percent of freelancers. If you’re looking for elite talent, particularly for tech help, this is a strong option. Toptal is one of the best websites for finding freelance developers. 

By gathering recommendations and scouting freelancers on top freelancing sites, you will likely find many talented professionals who are interested in your project. Do your due diligence to check job references and review past work samples, if applicable. The time and effort you spend weeding out less-qualified candidates will ensure your investment is well spent.

Once you’ve identified promising freelancers, begin determining a fair rate for the project. Rates will vary widely by project type, so conduct research to understand the market rates for similar work.

3. Let the freelancer suggest a rate.

Begin the negotiation process by asking the freelancer to share their rate. However, this step requires sensitivity, as freelancers vary in their familiarity with market standards. Some freelancers, especially newer ones, may not have a set rate or may suggest a lower rate than expected. Consider the following advice:

• Avoid the risks of underpricing. Low rates may not be good news. “Newer freelancers can often under-price themselves, which is bad for them and bad for us,” said Penni Pickering, a web developer at Kabo Creative. “A freelancer who under-prices won’t stay in business for the long term.” Pickering advises working with promising freelancers who price themselves low. “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,” Pickering explained.
• Prioritize building long-term relationships. If you find a trustworthy freelancer, you will likely 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.
• Understand fair rates for the project. Letting a freelancer suggest the pay rate is a good starting point, but you still need to know what a fair price is for 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.
• Be transparent about your budget. Once a freelancer suggests a rate, be honest about your budget while respecting their rates. “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.” Negotiating respectfully and fairly fosters trust and builds stronger working relationships.

4. Be willing to pay what a freelancer is worth.

Paying freelancers what they’re worth is a crucial aspect of negotiating. Your goal shouldn’t be to minimize their payment but to reach a fair agreement that benefits both parties. Paying a quality freelancer slightly over your budget can yield significantly better results than hiring a less-skilled professional for a lower rate.

“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, a growth strategist and outsourcing expert. “If it’s a quality freelancer, you’re paying for years of experience and won’t be disappointed.”

Freelance negotiations don’t have to include haggling. If a freelancer suggests a fair price within your budget, accept the offer. Attempting to negotiate a lower price can offend the freelancer or limit their motivation, which may reduce the quality of their work. 

Tips for freelancers negotiating with businesses

If you’re becoming a freelancer or you’re new to this type of work, you may be uncomfortable negotiating a fair rate. In this situation, it’s essential to educate yourself about your industry’s market rate so you can price your services correctly. 

Enter freelance negotiations knowing exactly what your services merit. If you’re inexperienced, your hourly rate will likely be lower than that of someone with decades of experience in the industry. However, as you gain experience, don’t hesitate 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.”

Negotiation benefits both the freelancer and the client

Whether you’re a business owner or a 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 and current assistant vice president of client services at BairesDev.

As a business, you must set a clear work scope and be transparent 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, you will likely reach an agreement or decision quickly.

Kimberlee Leonard contributed to this article.