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Q. Gosh that sounds expensive, can you do it for less than that?
A. No! Not any more.
OK, lets talk about the filthy lucre for a while. Why do I have to keep negotiating with would be accountants when setting up a technical or creative project. I really do try and work out how to give the client as good a deal as I can. I figure that if they believe I am not trying to ‘stitch them up’, then they will come back again for more business. Because I’m a small company and my overheads are low, my rates can be extremely competitive. Now then. If I quote let us say a rate of £ 45 per hour, secure in the knowledge that the client has willingly paid upwards of £ 60, £ 70 or even over £ 100 an hour for some services, I think its bit unreasonable when they bargain the deal down to the point where even my margins are almost non-existent. Of course one is always tempted to take a job at cost price just to get in the door. I would urge you to think again about that. Actually I am coming round to the idea that you are in a stronger bargaining position if you start off at a high tariff and allow it to be negotiated down a little. There is also the matter of image and creating the right impression. If I quote a rate of £ 25 per hour, the client may think my company is too small to consider. If I quote £ 100 pounds per hour, maybe they will think my company is bigger than it really is. It’s a credibility thing. It also takes nerves of steel, and as technical specialists, we are generally not armed with the negotiating skills we would wish to have. I’m catching on real fast though.
As I discussed in the introduction, if you recall the graphics industry 10 years ago, everyone was after that first job with a client, just to get in the door. They expected that they could hike the rates on the second job once the client was happy with them. What actually happened was that someone else came along when people were bidding on their second job. The newcomer was after his first job just to get in the door too and tempted the client with a good deal, just the same way as the original bidder had done before. This meant that for a while the clients could just go the rounds of all the graphics companies and get one good deal after another.
Eventually, the consequence was that no one made enough money to re-invest and keep the cycle of growth growing, and all of a sudden, the whole industry went catastrophic. Only a very few of the companies that were around then have survived and many people lost a lot of money. I think the clients end up with less choice and overall I think it is all very unsatisfactory.
I would hope (and urge you all to seek the same aim) that we can build a more robust and enduring industry and not go the same way.
Check out the whole list of Cliff's pithy tips for Web developers.
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