When your client asks to do it cheaper: how to respond and close the deal
Navigating the politics of the client-worker relationship is one of the trickiest games that we play as freelancers. Within that game, one of the trickiest topics we must navigate is that of cost. Clients obviously want to save money, while you as a freelancer want to make money. It's a tricky puzzle, but one that when done in good faith should leave both parties happy. From time to time, you may encounter a client that feels you are asking too much, and refuses to pay a certain amount. They want you to do the project cheaper. In that situation, what should you do?
First thing first, decide if they are worth keeping as a client
In my experience freelancing, the worst clients have also been the cheapest. While not always the case, there does seem to be a trend. As a client looking to spend as little as possible, they will want to extract as much value out of you for little in return. They may micro-manage your hours, constantly expand the scope, and ask for free do-overs.
Obviously, not all clients with limited budgets are like this. The client may simply be looking to pay you a small amount to start as a trial, with the intention of eventually paying you a fair market rate. It's also totally possible that you are simply asking for too much.
If you want to drop them as a client, we wrote an entire piece discussing how to fire your freelance clients.
If you've decided you want to keep them as a client, the next thing is deciding how low you are willing to go.
How to determine a rate that is fair
Before we dive deep here, let me please implore that you do not undersell yourself. Ultimately, you are hurting the value of freelancers everywhere by causing a race to the bottom. If you charge less than what you're worth, this client will try to do the same in the future to other freelancers. Why pay someone a fair rate for their service when somebody else will do it way cheaper?
If you are desperate and really need the money or you have no existing clients and are looking to grow a portfolio - fine. Charge on the low end, to an extent, maybe offer discounts for a short period that expire after a given period of time.
Otherwise, the best way to find a fair rate is to check what other people are charging for similar services. Find freelancers with similar experience and skills to yourself, and see what they charge. By using that data, you can come up with a fair range of what you should charge.
For example, if you're a Graphic Designer, check the hourly rates for freelance Graphic Designers. Otherwise, check the hourly rates of one of the other many roles we have in our database. In addition to hourly rates, we also support project based rates. If the client is looking to pay a lump sum at the project level, this may be a better option.
After a few minutes of research, you should be able to come up with a decent range that you would deem "fair". Set the bottom end of this range as your hard red line, and negotiate from there.
Explain the value of your service
Often times, when your client asks to do it cheaper, they may simply not understand the value of what you are providing them. Clients that don't work with freelancers often may not be privy to the price of doing business and were initially expecting a much lower price. This is often an innocent mistake, and the best thing you can do here is simply explain why you charge the rates that you do. Communication with new clients is critical in closing the deal.
As a simple way to explain the value of your service, it's easy to just link the client back to this website and have them view the market rates for your specific niche. In addition to that, explain to them the costs it takes you to run your business, and how each client taken on is a potential client lost due to being unavailable.
The best tactic in price negotiation is to explain why your price is necessary - clients just want to feel they are not being swindled. If you can justify why you are asking a fair price, it goes a long way.
Explore different service options
Sometimes, the client may be asking for more than what they need. For example, a client may be asking for a 5 star gourmet meal, when in reality, a microwave oven meal is actually perfectly adequate.
If that's the case, you may be able to offer the client the microwave oven option at a reduced rate, because it's much simply and demands less skill. You probably know how to offer the 5 star gourmet meal, but if the client isn't willing to pay for it, give them the other options that are more fitting to their budget.
Explore different pricing packages
Most freelancers like to charge an hourly rate. It's simple, the money you make is proportionate to amount of work you do, and it's just the common practice.
However, if the client feels the hourly rate you are asking is too high - you can respond with different package deal options where the client feels they are getting a cheaper price.
Package Option 1: Project based payment plan
In a project based payment plan, the client simply pays one bulk sum for the delivery of a given task.
- Max budget is pre-defined, which is assuring for clients
- You can potentially make a higher hourly rate if you price it well
- Risk of project taking longer than initially anticipated, thus tanking your rate per hour. It's best to double your initial time estimate from the start and be very clear about project requirements and deliverables. Scope creep can kill a project based payment plan.
Package Option 2: Retainer based work
In this pricing model, you can offer to work on retainer for the client. For example, the client will pay you a set rate each month in return for your availability as needed.
- Predictability in income
- Client will become a recurring, long term client
- Some months, you may find yourself working more than others, making the retainer seem small relative to the amount of effort
Package Option 3: Cascading rates
Cascading rates are when you charge an initially defined hourly rate, but after a certain amount of hours worked, that rate is reduced. Think of it like an "overtime" rate, except where you earn less. The reason you do this is to basically hold yourself accountable to the initial time estimate which gives the client a little bit of piece of mind.
- Earnings proportionate to time worked
- Client reassured that your initial estimate will be held to
- If your initial estimate is wrong, or the scope increases, you can find yourself working for a reduced rate.
Make your pitch
Given the information above, you should at this point have enough to make a pitch. These are the bits of information you'll need:
- The lowest amount of money you are willing to take
- The pricing structures you are willing to offer
- The value of your services (with data to back it up)
- How much you want to keep this client
As an example, we created a simple template for a pitch in response to the client asking you to work for a lower price.
Thank you for sharing your concerns with me! I value your feedback and welcome a conversation on finding a payment structure that is fair to both of us.
After doing some research, I've determined that my a fair hourly rate is between [X] and [Y]. I came up with this number by looking at rates of freelancers with similar skillsets and years of experience at contractrates.fyi.
As an alternative to paying an hourly rate, here are a few different packages that I offer.
- Project based payment. I can work for a lump sum of [X] upon completion of the project.
- Retainer based work. I am willing to offer you [X] hours of availability each month for a monthly retainer of [Y].
- Cascading hourly rate. When I do projects like these, I will always give you an estimate up front on the amount of time it will take. If I go over this initial estimate, I will work at a reduced rate on all subsequent hours.
I'd love to secure this contract with you, so there is some wiggle room in all the numbers I mentioned above. Please, let me know if you're interested in any of these options or if I can be helpful in any other way.
All the best,
Wait for a response, negotiate if necessary
Hopefully the client responds with a yes to any one of the options you offered them and you can start working on a contract from there.
However, things don't always work out that way. If the client is cheap, expect drawn out price negotiations. We wrote an entire post about negotiating your freelance rate, and we encourage you to check that out.
General tips to remember when a client asks for a lower price
Be respectful. Even though you may feel they are trying to take advantage of you, they are at least willing to have a discourse with you. You never know if they can end up being a good referral engine, or a good client. During negotiations, be as amicable as humanly possible. If negotiations fall through - thank them for their time, wish them the best, and ask them to keep you in mind if any of their network needs your services.
Don't feel obligated to say yes. Potential clients come and go, you can't win them all. If the client asks for you to work at a rate that is below your red line, say no. Don't work for less than you deserve, because you don't only hurt yourself - you hurt the freelancing market as a whole. The butterfly effect is real.
Don't spend too much time fretting over the perfect response. The client probably doesn't care about your specific phrasing - what they really care about is the numbers, that's why they're asking about numbers in the first place. Make sure the pricing options are very clear. Negotiating is already time consuming enough, don't fret over tiny details.
Explain yourself. Clients are often surprised when a freelancer asks for a set amount of money. Unfortunately, many have been groomed to expect $5 rates by the likes of upwork and other services like fiverr. Explain why you are worth the rate you're asking, use data to back it up. That's what this site is for. Use it.
Hopefully this post armed you with the information you need to navigate this tricky scenario and land the job. Keep in mind, if it doesn't work out, that's okay. Not all potential clients are a good fit for you, your services, and your value. Don't set your price to fit the needs of the lowest denominator - find customers that are willing to accept your fee that understand the value of your expertise.
As always, please keep us in mind next time you secure a contract. When that time comes, please share the hourly rate data with us!