
Ask HN: Negotiating My Hourly Rate? - 2bor-2n
Hi, I am a freelancer from a South Asian country and I have been working for a client through my friend for a year. The friend is getting $15 from the client and he pays me $9 hourly (i.e he takes 40% cut). I mostly work on the frontend side and handle multiple projects of the same client. Other than that, I communicate with the client directly and manage the work without my friend&#x27;s involvement.
I deliver the work on time and in good quality, however, I am not employed by him nor do I work full time on the projects (because of some personal reasons and the fact that I have my own client). Rather, I give enough time each day to complete the assignments on due time. Despite this, I think, I am getting a low rate on the basis of the value which I provide.<p>This has been in my mind for a couple of months and I wanted to let it out and pitch a new rate of $18 (double the previous rate) to my friend. But I am afraid this may not be acceptable, as he is getting $15 from the client and the client is already on a tight budget. And, I am afraid if I stick with this offer he will try to arrange some other resource, resulting in me losing this opportunity. Moreover, I do have my own client and work for him for $10.<p>I will really appreciate some help or guidance here. How should I best approach this scenario so there is a WIN&#x2F;WIN situation for all of us? Am I pitching too high?<p>PS. He is already looking for an extra resource to share my work. And I am willing to go as low as $15
======
obblekk
Here is the basic theory of negotiation and specific advise for your
situation:

Theory: in a negotiation both parties are trying to get a deal that is better
than the Best Alternative To A Negotiated Agreement (BATNA). So what you’re
trying to do is say if this negotiation fails what am I going to do instead.
Theoretically this is where your leverage always comes from because a good
BATNA enables you to threaten to walk away.

Practical: in your post I understand what you want, but I don’t understand
your BATNA. If your friend refuses, or worse let’s say he fires you right now,
what would you do/make instead?

The easiest way to get a win-win is the following: 1) go find other gig offers
- compare the price others are willing to pay you (recognizing there’s some
risk the next client is not as friendly/easy to work with) 2) Let’s say you
get 3 offers at $15,$16,$17. Show these offers openly to your friend and say
“look I like working with you and want to continue but the market rate for my
work is much higher than what I make right now”. This is actually a win-win
because if you’ve done your research right, these are the same offers your
friend would have to make to replace you. Now the conversation isn’t about
what you want vs what he wants, but what each of you would do if you can’t get
to an agreement.

3) Make your offer (say $18) and explain why it is higher/lower than the
market avg (you can trust me, you know I do good work, etc).

4) Truly be willing to walk away if it doesn’t work. Not everyone is rational,
not everyone will believe your alternative, not everyone wants a quick
resolution. Unfortunately this is the hard part with friends, but if it
doesn’t work you just must be willing to walk away (try to keep it isolated to
your business partnership and not your personal friendship).

Notice, throughout, the premise is: here’s what my alternative is. Without
this, you’re just hoping for him to take action out of kindness. It’s
certainly possible, but it sounds like you are confident in your skills and
value and ready to move past charity to career.

Good luck. Ask questions here if you have them. Let us know what happens.

~~~
quickthrower2
I think it is simpler than that. The OP is not freelancing. This is
effectively a job. He is underpaid but HAS EXPERIENCE! and just needs to find
a new job.

~~~
pc86
> _The OP is not freelancing_

> > _Hi, I am a freelancer from a South Asian country_

~~~
rephlex2097
Still, OP is not freelancing

------
whiddershins
I am shocked to see how adversarial many of these comments are.

It’s ok to negotiate win-win. And in the long run you win from that, because
what you want is great relationships with people who feel they can rely on you
and respect your work.

If you can do that without being taken advantage of, you will get tons of work
for years and make money you are happy with.

Why double your rate right away? Are you happy working for $10?

Can you find new work? Can you increase the rate gradually? Can you say ‘this
month it will go up to $12, but in 3 months it will go up to $15’ ...

It’s great if everyone makes money. Are you annoyed your friend is making
money? Why are you willing to make $10 from one person but you want $18 from
another?

You don’t want to work too cheaply, but you also want to maintain
relationships. This is how you get more work for years and years and build a
career.

Also it’s good practice.

~~~
2bor-2n
>Are you annoyed your friend is making money?

Not at all, the problem is as others have mentioned is a very big cut he is
taking. While I am the one delivering a lot of value to the client. Even
upwork takes lesser cut (max 20%) than his.

------
duaoebg
Maintain 3 gigs simultaneously and drop the lowest paid one on occasion. Or
devote fewer hours to it. Negotiation becomes, “sorry I can’t do more hours
for you, someone else is paying me more for my time.” This will also mean you
don’t have to worry about who gets what cut, just your cut. It means only
doing part time and keeping a float of 40-60hour weeks.

------
s1t5
It's difficult to have a win-win situation when one of the three sides is
getting paid a massive cut continuously without contributing anything. Next
time give your friend a one-off finder's fee upfront and deal exclusively with
the client from there.

> And I am willing to go as low as $15

So if they offered you $14 an hour, you would drop the project? Despite
working for $9 so far and having another client at $10? You'd better be able
to walk away from this or your leverage is non-existent.

~~~
mcv
Getting more leverage would help a lot indeed. Look for some better-paying
clients. If you can demonstrate results, prove you can get the job done, you
should easily be able to make multiple times that amount for international
clients. And once you've got better paying clients, you've got all the
leverage you need to ask for more, because you can afford to walk away.

Of course you can still try to cut your friend out of the loop. If he's not
providing any value, then working directly for the client will already be a
nice boost for you.

------
serial_dev
> How should I best approach this scenario so there is a WIN/WIN situation for
> all of us?

In my opinion, when you are negotiating, you should only keep in mind _your_
"win", not of the others.

The other thing is that I would work on improving the "demand" side for my
work: if I have 10 potential clients, increasing my hourly rate becomes very
easy, something I can do with confidence. On the other hand, if I only have 2
clients, I have to negotiate carefully, because I don't want to lose 50% of my
work and income.

~~~
bluedevil2k
This is not correct, as others have pointed out, you need to think of what
others consider a "win" when negotiating. You need to put yourself in their
shoes and understand their goals, their limit and their BATNA.

I've found it helps if you create a grid with you and your partner as the
columns and "Goal", "Walk-Away" and "BATNA" in the rows.

Your goal would be "$18/hr", your walk-away would be $1 less than your current
rate (it sounds like) and your BATNA is to find another job that pays more,
but accept the risk that you find another job.

For your friend, his goal is to keep you at $9, his limit seemingly would be
his own pay or $15/hr and his BATNA is to find someone else but accept the
risk that he may not find someone.

Ultimately, most negotiations end between people's limits, so it sounds like
if you negotiate you could increase your rate to $12-$13 an hour.

~~~
2bor-2n
>if you negotiate you could increase your rate to $12-$13 an hour

That makes it 80-85% of the original pay. I will keep this in mind but try to
pitch my least acceptable offer be 13.5 (i.e 90%)

~~~
bluedevil2k
One of the key steps in a negotiation is to make the first offer. This is
called "anchoring" and its been proven that the person who makes the first
offer generally gets more favorable terms. It works because if you set the
first offer the negotiation tends to revolve around that number.

To make the best initial offer and anchor it in your favor, you should aim for
their limit/walk away price. This would be probably around $17/hr for him
since asking him for $18/hr I would believe would be beyond his limit price.

In general you should always make the first offer and make it at the limit of
your opposition. How do you know their limit? You have to do your research
ahead of time and know your opposition and their needs. This even further
proves the OP I replied to was wrong.

~~~
2bor-2n
>This would be probably around $17/hr for him since asking him for $18/hr I
would believe would be beyond his limit price

$15 is his limit. How do i know that?

First this is the amount he is getting from the client, second he won't accept
that I get the entire cake while he gets nothing while the fact is that the
client is his not mine.

I know him from my school days, he is very careful when i comes to money and I
find him tight-fisted. Just to share an experience with him, when I first
started working with him he offered me $6, trying to take 60% cut, I told him
that this was very low and $9 would be acceptable. At this demand he got
irritated and said I worked nights to build this stuff. So I explained him how
I would provide value to him and his client and he won't have to worry about
my work because I would handle the client directly. After that he came to some
sense and accepted that $9 demand.

~~~
rl1987
Worked nights doing what exactly? It seems that he only did the initial work
of finding the customer.

My advice would be to look for exit path and walk away from this situation
when it becomes possible. You can easily make more than $9/hr. on freelancing
marketplaces once you establish yourself a bit.

------
pards
To be fair, this is how placement agencies work for contract staff here in
Canada, too. The agent maintains separate contracts with the client and the
candidate and takes a cut (often 30-40%) for the duration of the contract.

In return for their cut, the agent handles the payments and provides the
guarantee that the candidate gets paid on time even if the client pays late.

There's usually a clause in both contracts that prevents them from cutting out
the middle-man.

~~~
mehrdadn
So basically they're paying 30-40% of the salary for a payment insurance
service? That seems a little... excessive? Just how often are payments missed
to warrant this kind of a premium?!

~~~
S_A_P
Most staffing companies work like this in the US as well. There are a couple
of ways they maintain their middle man status. 1) most of the jobs they
provide personnel for are not overly specialized and the client is happy to no
have to hire for and deal with hr issues around these positions. 2) the
staffing firms often oversell their role to contractors in how difficult it is
to make sure they get paid in a timely manner/offer “career development”
training (e.g. letting the contractor work) 3) staffing firms often do a lot
of client wining and dining to maintain favorable status. 4) staffing firms
often hire young and attractive reps to distract.

~~~
blaser-waffle
> staffing firms often hire young and attractive reps to distract.

LOL, what? "The only reason we used staffing firms was cuz them reps be dummy
thicc".

I worked for a small/medium ISP for a while and did a lot of hiring for entry-
level and mid-level roles. If we threw an ad up on Craigslist for DC, NYC, or
Baltimore we would get back, easily, 500+ responses.

The signal-to-noise ration was insane. A huge chunk of the responses would be
spam or automated-resume-slinging-bots, and like 30-40% would be immediately
disqualified for being in different states/countries or being wildly
unqualified. Even after adding a few homemade filters and a basic online tech
quiz, we'd still end up with like 40 candidates to screen further. The
viability of these candidates was... not great... and a lot of them tended to
split after a couple years, and several didn't last 6 months.

Then we started using a headhunting firm and they did all of the sorting,
vetting, and gave us a great 3-to-6-month hiring window. We could ask them for
3 decent clients -- "decent" was relative sometimes -- and have them in a
couple weeks, get them hired comparatively quick, and turn them to full-timers
in 6 months if they were good; usually we did.

Some of the hires were for very specialized roles (frame relay/fiber optic
types) that often took a while to source or had to be lured out of other
places, and they were generally good at doing that too.

I'd never want to be one of the contract-to-hire candidates again (once was
enough) but I'd be hard pressed dissuade others from using them.

------
gus_massa
Can you get more projects on your own? If you get enough money to get
comfortable without this project, you can have leverage with your friend and
the client. Something like: " _I 'd like to continue working in this, but I
have an offer from XYZ that pays me more._"

Also, read whatever patio11 wrote about this.

[https://www.kalzumeus.com/2012/09/17/ramit-sethi-and-
patrick...](https://www.kalzumeus.com/2012/09/17/ramit-sethi-and-patrick-
mckenzie-on-getting-your-first-consulting-client/)

[https://www.kalzumeus.com/2012/09/21/ramit-sethi-and-
patrick...](https://www.kalzumeus.com/2012/09/21/ramit-sethi-and-patrick-
mckenzie-on-why-your-customers-would-be-happier-if-you-charged-more/)

------
user5994461
>>> Other than that, I communicate with the client directly and manage the
work without my friend's involvement.

If your friend has zero involvement and no relation with the client, I don't
see how they are getting paid in your place to begin with.

Do you have a contract with your friend? If not, just notify the client to
update your bank account details and they will start paying you directly.

~~~
2bor-2n
The friend is taking a cut because he introduced me to the client and kind of
provided me with the opportunity to work.

He is rarely involved. I send him invoice monthly, and if I get stuck on some
technical things he guides me a little (this have happened around 3-4 times in
the whole year, so to give you an idea). He doesn't even have the domain
knowledge of projects I am working on for his client.

"just notify the client to update your bank account details and they will
start paying you directly" I don't think this is ethical, especially with your
friend. This would result in a bad relationship between us or the end of it.
We've been friends since childhood.

~~~
SwiftyBug
Is this person really your friend? If I "provided opportunity" for a friend I
would never ask for a commission from his earnings. Actually, I did exactly
that twice last month because I want my friends to have work and I trust their
work. Even if I did ask for a commission, I'd arrange it so he'd pay me only a
percentage of what he made the first month or a single fixed fee. What your
friend is doing sounds a lot like pimping. If you've been friends since
childhood something like that should not be enough to end your friendship. Of
course I'm making many assumptions here, but that sounds abusive. You are
afraid you will lose your friend if you ask to receive full payment for a work
you put on on your own, with zero input form him. You are doing the work and
you should be receiving the money. Even if you two have an arrangement of you
paying a fee for the leads he generates to you, his cut should be much, much
smaller.

------
enjeyw
I'm curious to know what value your friend is offering to justify taking the
cut. It sounds to me like you're putting in 95% of the effort for 60% of the
return.

If your work is good quality, it's almost certainly worth much more than $9 an
hour. I would seriously consider:

\- negotiating with your friend to reduce his share - as long as it's still
profitable to him, he should be willing to move a little.

\- trying to find some other freelancing work opportunities so that you don't
feel pressured to accept your friend's terms.

------
germs12
Do you have samples of your work? I'm sure someone on here would be willing to
pay you more than $15/hr.

~~~
2bor-2n
I am working on my portfolio, unfortunately even after 5 years in the industry
I still don't have portfolio of projects in JS frameworks like React or
Angular. Mainly because I wasn't totally focused in my career. But I am very
good with building static UI's with intermediate skills in vanilla JS.

But since last year, I have started to take my profession seriously. I quit a
good paying job last year and started freelancing because the job was
fulfilling for me.

Shortly after quitting the job I started working for my friend's client and
that $9 rate was decided back then.

~~~
pknerd
Do not wait for perfection. Just come up with a portfolio. Use Github for
that!

------
bluGill
You don't have to charge every client the same. A client that is easy to work
with gets a discount. A client that has steady work gets a discount (because
you can count on them in lean times). A client that does work for a cause you
support gets a discount. A client that provides some other benefit that I
can't think of gets a discount.

This is a consideration that others haven't mentioned. Don't be afraid to take
a different rate from different clients.

------
tomschwiha
I can think of two Options:

You could try getting in touch directly with new clients (costs time and
effort) and negotiate a better deal.

You could negotiate with your friend to pay you the full amount but pay your
friend a fixed fee instead (applicable if the worktime is not constant). For
example if you work 50h/month the client pays 700 - 450 for you. Offer your
friend a constant 200$. But try to increase your worktime so you get a better
quote and your friend has a fixed income.

------
blickentwapft
The way to set your fee is to decide on a rate that is fair.

Neither too high nor too low. A fee that you think is reasonable.

When someone asks your fee, you say.... “this is my fee. I think it is fair. I
do good work. I don’t overcharge. I know there are cheaper people out there
but that’s not where I am positioned. You are welcome to work with the
cheapest.

If you want good work at a fair price then I am happy to work with you but I
cannot discount my rate because it’s not commercially practical for me to do
that.”

If you lose the potential client then that is fine . Do not chase them with
lower prices. Wait for the clients who agree with you.

When clients insist on some concession, some discount, then give it only in
return for something else, like up front payment. Don’t concede discounts for
nothing.

~~~
2bor-2n
"Don’t concede discounts for nothing" This is a great advice. Thank you.

------
fareesh
If you're in the Indian subcontinent, please email me with some examples of
your work, I can send you some work from time to time - no cut.

~~~
2bor-2n
Just asking out of curiosity, why no cut policy?

~~~
fareesh
because no reasonable cut would be worth the effort

------
airbreather
This is a little off the particular circumstances of topic, but highlights it
is not always as straight forward as it might seem.

Sometimes the mark-up is for more than is apparent - in Australia there is a
6% payroll tax that kicks in after a certain size payroll is achieved.

Also, big companies often like to "write one cheque" a week/month and not deal
with a lot of hassles which can consume a few admin staff continuously.

My current contract was direct for years and they paid a 2.5% "supplier
markup" extra to me because that is what the agency charged just for insurance
postage and petties etc, at the individual scale it wasn't enough by maybe 2%,
just for those issues, esp insurances.

There are more issues, but even though a contractor (hourly pay) almost
entirely for my 30+ year working life, I still use the agency at times as the
convenience can be worth it rather than going direct and often they can find
work you can't, in my circumstances.

Having work vs not having work really lets you consider if you are prepared to
pay them a bit to help you out, so it is just the nature of the problem
sometimes.

------
mrhackernews
You can negotiate with your friend. You have more experience in general than
when you started, and you have more experience with this client. Just keep in
mind that if you negotiate, a couple of important "rules" will tend to set
practical boundaries: 1\. you will have a hard time asking for more than
"market value" for your skill level for your programming language in your
area, from ANYONE (your friend or client) unless you can differentiate your
service 2\. if you want your friend to pay you more than the customer is even
paying him...guess what... you are really asking your friend to negotiate a
higher rate with the customer... so you need to provide the justification and
arguments your friend will use to dramatically increase the billing rate

This is possible to do. I've negotiated big increases in the past. But you
need to understand what your skills are worth in the market.

You will also find that if you spend time finding new clients yourself, that
activity takes times to do. So if your friend has a lot of connections, you
may want to consider preserving that relationship if you don't want to worry
about the business side.

------
travisoneill1
Nice "friend" you got there. A couple years ago I got my friend a $150/hour
contracting gig, and my cut was $0/hour.

~~~
bogdanu
Hey, do you wanna be friends? :)

------
ayushchat
Maybe try to keep a standard hourly rate of 12-14 and charge the same from all
clients. And do work of that quality. You should definitely charge more than 9
for the kind of work you are doing, but you don't want to lose this client
till you don't have a backup. So tread carefully

------
dave333
In any negotiation the main factors are power, information and time. Does the
client have the power to get someone else to do the job or does he need your
specific skills and experience with the code? Can you do other work and just
walk away if you don't get your asking rate? Knowing the rate your friend
charges is good info and it would be good to know what any other client
employees/contractors make and also what general rates are available from
other employers. Time can help - how soon does the client need the work done -
can he afford to hire and get someone else up to speed? Can you hold out for a
higher rate or do you have living expenses to pay etc?

------
kirubakaran
If you're interested, could you please summarize your skills and experience?
Someone here (including me) might have some work for you depending on that.
You could also link to your resume.

------
fock
nice "friend" \- like straight from the mob I guess. I mean, I understand,
that he might want some commission for his contacts (and sets up a payment
plan), but a permament fee?!

~~~
jamil7
Not sure why you're being downvoted, it's a fair criticism, introducing
someone to a client doesn't entitle you to a percentage of their rate forever
if you're bringing nothing to the table.

~~~
godzillabrennus
If you are a sub contractor to the company that has the contract then you lose
margin to the company. That sounds like the arrangement here.

The multi billion dollar staffing agency business in the United States is
built on these layers of comp for labor and finding labor.

~~~
jamil7
Well yeah but OP mentioned it was his friend, who apparently twiddles his
thumbs all day while OP busts his arse for $9 p/h. He has the ability to lean
on the fact that this is a friend and should care a bit more about his well
being than a multi billion dollar staffing agency.

------
bpyne
Other commentors gave good advice about how to negotiate.

In the US, there's an expression called "Keeping up with the Jones'". It means
you're trying to match what you see other people getting in income, material
goods, etc., often at the expense of your own happiness. Think about the
following before you act.

Why is the situation bothering you?

Are you being influenced by another party who thinks you're being taken
advantage of?

Are you happy with the work and is it allowing you to enjoy your life?

------
quickthrower2
Any reason you can’t get higher paid gigs online? I’m sure you could beat 9/h.
If you can code 40/h should be a minimum then keep negotiating up as you do
gigs.

------
bravura
Make a profile on Upwork and experiment with your pricing there. Find more
clients.

------
Vibrelli
Read 'Never Split the Difference', great book on negotiating.

~~~
quickthrower2
I like it. I’ve not applied it directly to a negotiation, but it helps me edge
forward on sticky points. Turn an angry complaint (or more likely for me
passive aggressive) into a powerful question to move on. Maybe that is
negotiation! But not used it on a high stake thing yet.

------
fergonco
You can ask for $18 and __not __stick to that offer.

If they pay you that, all is good. If not, you go on working with them until
you find something else.

------
2bor-2n
OP here: Guys what would be the best medium for negotiation Call, Face to Face
or messaging?

------
horriblecapital
Your 'friend' is scamming you, they are basically taking a chunk of your wage
for doing absolutely nothing at all.

Can you deal directly with the client and cut out the middleman? Early in my
career, I did this with an employment agency who were perpetuating the same
scam on me.

They weren't pleased about it, but fuck 'em. These capitalist bastards will
grind you down and steal your labour any way they can - and you deserve
better!

Anyway good luck with it, whichever approach you take.

~~~
2bor-2n
I am not sure this is the right road, as the middle man is my good old friend.
May be I will try to persuade him, how much value I provide by managing all
the client work by myself. I think I can give him a big rate, if he refuses or
couldn't convince the client to pay that much then I will stop working for
him.

~~~
pearjuice
"good old friend" and he is basically profiting of your work for doing
nothing? I'm not sure what other qualities he offers in the relationship with
you, but leeching isn't something friends do. Don't get sentimental just
because you guys know each other for a long time. If the roles were reversed,
would he accept the same conditions? I don't want to sound harsh, but when
money is involved you should maximize negotiations for your own gain because
you should assume everyone else is doing the same. Your friend maximized his
and he didn't care about the relationship with you, just about his own gain.

