This is a bit of an opinion-based question, but I still think there's value in it. Also somewhat belongs on Freelance.SE, but may fit here as well.
To be honest, the most difficult part of freelancing is sticking to your guns during negotiations. This is compounded if you financially need the work. The best option is often to simply stick to your price "Sorry, my prices are my prices. I understand if you need to seek other venues." I realize that is more easily typed than done in many situations. However, you'll gain far more client respect by quoting and sticking to it. After all, people don't haggle pricing with their electrician, or plumber, or doctor, or any other professional. And 8 out of 10 times, I've found that if I'm adamant about my pricing, the client pays it. They all want a better deal if you'll cave. That doesn't mean you have to give in to their "my brother can use Photoshop and he'll do it for $20 and a beer." argument.
Now, if you must accept anything the client offers, realize first that you are immediately setting the tone for the relationship. Lower your price once and the client will tend to expect it each and every time. Whether consciously or subconsciously clients pick up on your weakness in negotiations and will use the same tactics on their next project when discussing pricing. Be prepared for that the next time the client contacts you. If you lower your price a second time, you immediately loose all footing for future negotiations. A second price reduction will permanently set the client in a power position and that client will almost never be a profitable client. Once is a "deal" or "special bargain". More than once is just poor business practice.
If you really need the work at much less than you think it is worth, then I'd suggest something like, "I'll offer you a one time discount of xx%. This will be for this project only since we haven't worked together previously. If you like my work, future projects will be priced at my traditional rates."
One of the most difficult lessons I learned was to not waiver when a client (especially new client) argues pricing. They never stop arguing it. I don't mind the initial asking if they can get things done for less, but if I say "No", then that's the end of the conversation - either pay what I've bid/quoted or find someone else. My rates are set for a reason. That's what I need to make to pay my bills and live. If a client doesn't respect my rates, they won't ever respect my time or my work. And for every client that whines about pricing, there are 5 others that won't.
The following is more anecdotal than anything else, but I feel it shows a valuable exchange I dealt with a just a couple weeks ago. I've never had a conversation with a client that so clearly showed almost every possible red flag a client can send up for me. I've been freelancing for over a decade and still get approached by clients that prove themselves to be problematic. Experience doesn't prevent bad clients contacting you. But experience does help you spot them faster.
I've trimmed things down a bit, reading the email chain can be quite hilarious at times.....
- Client: How much for this?
- Me: $X for A and $X For B.
- Client: That's too high, can you do it for $X? (his offer was about 2/3rds of my pricing)
(No harm here. There's absolutely nothing wrong with a client asking if they can get things cheaper. It's very common and almost expected at times.)
- Me: Sorry. I simply can't complete these projects for that amount. My prices are $X and $X.
- Client: How about I pay you $X an hour? That's more than fair.
(Red Flag #1: At this point, I pretty much know this clients is a loss and won't pay my pricing. Any client who takes it upon themselves to price my time without fully understanding my experience or abilities, doesn't respect me. Not to mention, clients have no way of knowing my overhead and what I must make in order to survive. It's sheer arrogance for anyone to assume they can put a price on my time without first fully understanding my responsibilities. And to think it's "fair" that he does so is simply astounding to me. Realistically, his offer was lower than my rates, but it wasn't insultingly lower. Someone just starting out freelancing would have seen his offer as decent. But nonetheless, it was below my rates and below what I quoted. Noted, but giving him the benefit of the doubt, why I'm not really certain.)
- Me: That is fair, if that was what I priced my work at. Unfortunately it isn't. My prices are $X and $X respectively. I have a great deal of work and it makes no business sense to cut my rates for a single client. I'm sorry but my pricing is my pricing. It is not going to change. I understand if you need to explore other avenues for design. Thank you.
- Client: We will have a lot of work in the future. We deal with XXXX marketers and will need designs to be updated and created regularly. If you give us a break here, we'll be sending you a lot more work.
(Red Flag #2: The "promise" of "tons of work" in the future is also a common ploy used by bad clients. Anyone who truly has a lot of work to be done "in the future" will be more than willing to accept the promise of a future discount based on their promise of future work. I was pretty certain at this point I don't want this client. Even if he agrees to my pricing.)
Me: That's great. I would love to be able to assist. In the future I'd be happy to discuss discounts based on the quantity of projects when your'e prepared to move forward with design. However, at this time, for these initial two pieces my pricing is $X and $X.
Client: I have an in-house guy who says it's only a 3-4 hour job.
(Red Flag #3 and #4. Ahh... so factor the "3-4 hours" his in-house guys say's it'll take plus the $X per hour offer... he's basically pushing to pay about half of what I quoted. Comparing my services to some random in-house person, who I know absolutely nothing about, shows a complete disregard for me and my abilities. Why isn't his in-house guy doing the work then? Is he going to provide me with a 401k, vacation time, sick leave, paid holidays? Is he going to cover my electricity and other operating expenses the same way he does for his "in-house guy"?)
- Me: Great! I'm sure your in-house guy will do a wonderful job.
(To be honest, I should have ended the conversation here. It was my fault for responding any further once I knew there was no way this client would ever be a respectful or happy client. At this point I was 100% certain I did not want to work with this guy, regardless of any pricing.)
Things went like this for a couple more rounds with my explaining that he came to me initially because he liked the design I did on another piece and pricing reflected the design not just minutes of pushing around a mouse.
From here the client became increasingly insulting and exceptionally
condescending. Even going so far as to call my pricing "retarded" and me "crazy". It
was a clear attempt to bully me into lowering prices to what he
- Me: I've tried to remain polite throughout this entire exchange in spite of your repeated insults. I'm sorry but I'm not interested in any work from your company at this time. Thank you.
- Client: We feel the same way.
One Month later
- Client: Hi. Sorry about the miscommunication before. I apologize if I insulted you. You were right. This is more difficult than we thought. Can we pay you $X (DOUBLE my quote) to do this? Would you be interested in completing it? I promise I'll be easy to deal with.
(This surprised me. I figured he'd go off and have his in-house guy do whatever he was going to do and I'd never hear from him again. He'd then use a "borrowed" design based on the original piece he liked of mine. It may or may not have had a good return, but I wasn't holding out any hopes he'd return. There was a great deal of satisfaction in seeing that email, as I'm sure you can imagine. In the end he gave validity to my pricing and he's probably less argumentative when discussing pricing for conceptual work in the future.)
- Me: Hi. I'm sorry you've had a difficult time creating the design. However, as I stated before I'm not interested in any work from your company at this time. Thank you.
I haven't heard back, and don't expect to. I really didn't want to work with the guy for any reason.
Now, I could have easily accepted that final offer at more than what I originally quoted. However, the exchange with this client threw up red flags with every email. It's clear from the second he offered to pay me X per hour that he had absolutely no respect for me or my rates. The "in-house guy" comment then solidified that perception. Clients like this are destined to always be a problem, always take more of your time, always be slow to pay, and always have scope creep (wanting as much as you let them get away with). It would have been an "abusive" relationship at every turn with me being the one getting the short end of the stick. If I were desperate for the money, I may have taken his initial, lower, offer. However, I'd have realized half-way through the project that his lower rate was making completing the work even more unpleasant and I'd be kicking myself for ever agreeing to less than what I thought the project was worth. In all likelihood, the scope of the project would have grown well beyond what I, myself, initially quoted. And again, I'd be left with an unpleasant conversation about scope and pricing and I'd be kicking myself then too. Bad clients cause nothing but stress. I don't like stress.
It is always unpleasant to deal with stuff like this. But it is an excellent harbinger to the type of client they are. I would much rather have an afternoon of unpleasant emails than to put in hours of work and then find out how difficult the client can be. The more you deal with clients the quicker you can spot the signs of a bad one. Those clients that see you as grunt labor, or just some person pushing a mouse around, will never respect you or your work. It's best to simply not deal with them if it can be avoided.
Side note, after a couple weeks I learned this particular client was working with a few vendors I also work with. Every single one of those vendors expressed to me how much they disliked working with this client and how they regretted ever agreeing to the work they were doing.