Freelancer’s Survival Guide: Negotiation, Part Two

The Freelancer’s Survival Guide: Negotiation Part Two

Kristine Kathryn Rusch

I got a lot of interesting responses to last week’s introduction to negotiation section, some of which folks posted in the comments section.  I suggest you look at those, particularly the comment by Randy Tatano, before you start this section.

(And thank you, my friends, for reinforcing the fact that I am not charming.  So nice to know that I perceive myself accurately. <VBG>)

Last week, I stated the premise that everything is negotiable.  Then I gave the rules for a negotiation. They are:

1. Know What You Want.

2. Ask.

3. Be Prepared to Walk Away.

4. Stay Calm.

5. Never Reveal Your Entire Hand.

6. Don’t Flip-Flop.

All of them apply to any negotiation.

But there’s something I did not discuss last week that needs to be discussed before I go into types of negotiations, and that’s power.

In each relationship, one person has more power than the other person. Most recently, I heard this premise expressed in a fairly mediocre Matthew McConaughey movie called The Ghosts of Girlfriends Past.  Michael Douglas, in the Jacob Marley role (and frankly, the best thing in the movie), tells McConaughey that the person with the most power in any romantic relationship is the person who wants it the least.

If you think about that, that’s true.  The person who is the least involved controls whether or not the relationship continues. The other person, the person who wants it the most, must abide by the wishes of the person who doesn’t want it quite as much.

But, as McConaughey learns in the movie, romantic relations aren’t (or shouldn’t be) about power. They’re about a lot of other things, not the least of which are love and friendship and valuing the other person.

I didn’t tell you this just for your sappy movie lesson of the day, but for that one little nugget of truth spoken by Douglas’s character.  In any negotiation, the person who wants it the least has the most power.

Job seekers are discovering this right now.  They really, really, really need a job, any job (the higher paying the better) so that the bills get paid. Employers, on the other hand, aren’t sure about the wisdom of hiring yet another employee, so employers approach the negotiation with ambivalence.

When ambivalence meets desperation, one of two things occurs.  Either the ambivalent person decides it’s too much work to hire someone—particularly when a lot of job seekers answer an ad—or the ambivalent one takes advantage of another person’s desperation.  Desperate people say things like, “I’ll do anything,” or “Just hire me, please.”  And that leads to being underpaid for the job or overworked, just to please the boss—if, of course, the boss chooses to hire.

The set-up question for this often comes early in the interview, by the way.  It’s the “what kind of salary would you like?” question, which was a question I always hated as a job seeker and refused to answer.  What I would say was either, “You stated your pay rates in the ad, which is why I answered it” or “Perhaps you should tell me what you’re willing to pay.”  The first answer shut down that fishing question; the second threw the ball back into the interviewer’s court.

When I mentioned that question at weekly writers’ lunch the other day (in connection with writing part two of this topic), a woman who has worked at middle-management jobs her whole life said her answer to the question was similar to mine: “What are you willing to pay?”

But the best answer came from a man who worked in the highest level of management for decades, getting six figure salaries in the computer industry.  He said whenever he got asked that question, he would respond, “We can discuss that later.  Let’s see first if we’re suited for each other.”

Invariably at the end of the interview, when the company indicated that they wanted to hire him—and he wanted to work for them—the company would ask again what kind of salary he wanted.  He would respond, “I’d like to get more than I’m being paid now.”

Of course, they’d ask his current rate, and choke when they heard it.  But, he said, they always paid him. By the end of his high tech career, he often got paid more than his bosses.

That’s a skilled negotiator.

Note in his example the fluidity of the power relationship.  In the beginning, the power seemed to belong to the hiring company.  Then they asked the salary question.  He made it clear that he wasn’t even sure he wanted the job.  The power relationship became equal at that point.  The discussions continued, and eventually, the company decided that they wanted him.  He then had the power in the relationship—he could say no.  And he stated his terms which were “Pay me more than I’m getting now.”

In other words, he didn’t need them, but they needed him.

So many people can’t do that because they need the job itself.  So you have to understand when you enter into that negotiation that you (the potential employee) automatically have less power in the negotiation.  You need the job.  They want an employee, but they don’t necessarily want you.

You need to convince them to hire you without being desperate about it. And you probably won’t be in position to argue over salary.  Which was always my position when I was looking for a day job.  I never wanted a day job, so I only applied when I needed one.  Look again at my answers to that question.  “What’s your salary range?” Or “I saw your range in the ad, and that’s why I’m here.”

In other words, I took salary off the table, let them know they could afford me, and then we figured out if they wanted to hire me (and if I wanted to be hired.  Even desperate, I knew there were jobs I couldn’t [or shouldn’t] do).

I’ve watched this same dynamic play out with writers over the years.  Freelance fiction writers, who have struggled for years, often accept the first offer they receive on a book.  In publishing, the first offer a new writer gets is a low-ball offer.  The editor expects the writer to negotiate.  In fact, the editor who makes the offer wants the writer to negotiate because, if writer doesn’t, the editor knows the writer will hate the publisher later.  The writer will end up blaming the publishing company for “screwing” him when really, the writer screwed himself by not negotiating.

But in that early publishing relationship, the publishing company does have more power.  They have it in two ways: they have the resources to publish the book; and they’ve become the vehicle for fulfilling a writer’s greatest dream.  It takes guts and a firm belief in one’s self to walk away from that, but the writers who do benefit later on.

In the writer/publisher relationship, the power shifts over time.  An established writer will often not get book offers because the editor is afraid to anger the writer with a low-ball offer. (I always say, Make the offer, and let me make the decision.)  Established writers have a lot more clout than new writers.

I think that the only time that writers and publishers reach parity is in the case of established writers who are negotiating with their publishers.  They’re negotiating over the book itself, and the power lines are equal. The writer wants the sale, yes, but only under certain conditions.  The publisher wants the book, yes, but only under certain conditions.  And the writer and publisher must then negotiate the best deal for all involved.

Bestselling writers and writers with hot properties, however, have all of the power in the publishing industry (many of them just don’t realize it).  They command higher advances, promotion budgets, and so on.  They get offers from other publishing houses trying to steal them away.  These authors sometimes won’t get offers from the houses that want them because those houses really and truly can’t afford them.  And everyone, everyone, wants a piece of those authors, so the authors can set their price.

Power fluctuates.  You just have to know what yours is when you enter into a negotiation.

So let’s talk about specific types of negotiations.  In last week’s section, I mentioned how Dean negotiated for a television set.  That was a short-term negotiation.  We needed a TV, we had limited dollars, and we wanted that TV immediately.  So we went with a set price in mind.  Dean got us the best TV he could find for our limited dollars.

End of negotiation, end of situation.

You encounter this all the time as a freelancer. Someone wants to hire you for a short-term project.  Or you want to work on a short-term project.  This is a one-time thing that has absolutely no resale value.   That’s important because in many kinds of freelancing, your work can be sold and resold for years to come.  Artists, writers, and musicians in particular face the resale issue, but not in every case.

So let’s put this in a musician’s ballpark.  A few blocks from my house is one of the best blues clubs in the Northwest.  Up-and-coming groups play there as well as long-term professionals and extremely famous blues musicians.

The gigs are short—one or two nights—and since no one is allowed to record while the musicians are playing, the gigs have no resale value at all.  It’s just a group of musicians playing to a crowded club.

Sometimes when musicians play bars, there are contracts.  Sometimes there aren’t.  In this hypothetical case, let’s assume there are no contracts involved.  Just a handshake.

Musicians can get a flat fee for playing.  They can get a flat fee and a percentage of the cover charge (if there is one). (A cover charge, for those of you who don’t know, is the price you pay just to get into the club.  Some clubs charge these every night; some never charge it; and some charge it only when there’s a big name group playing.) Musicians can get a flat fee and a percentage of the bar’s earnings that night.  They can get a flat fee, a percentage of cover, and a percentage of the bar’s earnings.  Or they can get a percentage of cover and the bar’s earnings.  Or just a percentage of cover…

You see how this goes.  It’s all negotiable.

A brand new torch singer with no following at all might ask for a percentage of cover and the bar’s earnings, but that’s probably not wise for the bar or the singer.  Because a brand new singer has no following, so charging cover is probably a mistake—unless the club is so exclusive that playing there is an honor that will start the torch singer’s career in a big way.  Even then, the torch singer should probably negotiate a flat fee.  After all, this is a limited engagement and attendance will probably be down. The torch singer has a better chance of making her expenses with the flat fee than with a percentage.

However, the established professional probably wants a combination—a small guarantee (in other words, a flat fee) plus percentages of the cover and the bar’s take.  The small guarantee pays for everything should it be a stormy night or the advertising failed and the club didn’t fill up.

The Big Names have an appearance fee that is non negotiable (except for real friends).  That gets paid no matter what. Whether it comes out of cover or the bar’s earnings, it doesn’t matter.  The appearance fee gets paid.  However, some Big Names want the appearance fee and a percentage of cover and the bar’s earnings.

If you look at this, you realize that when a club books a Big Name, the club could actually lose money on the appearance.  Why would a club do that? To bring in new customers, and hope they become repeat customers.

(This happens in books as well, which is why bestselling books are often sold at a discount.  That’s to bring people into the bookstore with the hope that they’ll buy other books.)

But let’s go back to our brand new torch singer.  She can ask for the same appearance fee as the Big Name, but she won’t get it.  In fact, she might get laughed at.  She can take the flat fee the club offers.  She can take a percentage of cover and bar, with the idea that she might not make any money.

Most beginners wouldn’t ask for the Big Name’s appearance fee, not because they’re afraid of being laughed at, but because they wouldn’t think of it.  Fine.  That’s probably good.

Okay. So we know what the power relationship is in this instance.  But now let’s look at the other part of the negotiation.

1. What Does Our Torch Singer Want? She needs to figure out what she wants more than anything else.  Is this club prestigious? Will it launch her career? Or is it just a local club in a small town that really has no importance at all?

If it’s an important club and she wants to play the club more than anything else—money, hours, anything—then she has to make sure she has to keep that firmly in mind before she negotiates anything.

But let’s assume this is a local club.  Now she has to figure out what she wants to get paid.  Let’s also assume that the gig is two nights—Friday and Saturday—with no hope of renewal.  She needs to find out how much the cover is, if there even is a cover, and what the bar expects to earn.  Sometimes she can do that in her head—the number of seats in the club times the cover price plus the cost of one drink.  If that number turns out to be much higher in a full club than the flat fee, she might want to ask for that.  Of course, the request assumes she’ll fill the club, which she probably won’t, considering that it’s a local club and she’s an unknown.

But she is taking a risk with the club owner and they both have a stake in a good outcome.  It might be worth the gamble to her.

Let’s assume, though, that her rent is past due.  She needs money more than anything else.  She needs the flat fee at the very minimum.

Our torch singer has decided she needs a flat fee to play at the local club on Friday and Saturday night. That’s the bottom line of her negotiation.

2. Ask. But she needs money, and the flat fee is a small amount—say $100 for two nights. She gets the practice, and she’s not going to say no to the $100. Does she tell the club owner that at the beginning of the negotiation? Of course not.

She has done her research, though, and she has learned that this club doesn’t charge a cover when the performer is unknown.

So she goes into the negotiation knowing her limits: she can’t ask for a cover percentage and she needs the flat fee.  But it would be nice if she made more money than that flat fee.

She asks for $200 flat fee.  That’s double what was offered, but it’s worth a try.  But it would be better for her to ask for the flat fee plus a percentage of the bar.  Because if she’s good and word gets around, Saturday’s bar take should be pretty high.  She’s taking a risk along with the club owner. She’s not costing him extra money if no one comes to her performances, and she’s making money if people do.

So she asks.  What’s the worst thing the club owner can say? All together now…the worst thing he can say is no.

3. Be Prepared to Walk Away. In this particular instance, our torch singer is not prepared to walk away. She needs the money. But she doesn’t tell the club owner that.  The nuclear option is not available to her.

He’s probably willing to walk away.  So if he says no to her request for a percentage of the bar, she should laugh, tell him that $100 is fine, and shake hands.

4. Stay Calm. She needs that $100.  Is she nervous? You bet. Can she negotiate? I hope so. But she’s a performer. She can probably pretend calm when she doesn’t have it.  If she can’t pretend, then she should take a few deep breaths and make sure she thinks about each sentence before she speaks.

Because at her level of the career, it would be foolish for her to hire a manager to do the negotiating for her.  Better that she learn how to do it on her own than sacrifice $15 to $20 of that much needed $100 for someone to speak for her—when she wouldn’t get much out of that deal anyway.

5. Never Reveal Your Entire Hand. Let’s assume the deal’s done, the hands are shaken, the torch singer is going to play the club.  Should she tell the club owner that she needed that $100 more than anything? No. Should she tell him she never planned to walk away from the gig? No.

Because she might negotiate with him in the future, and she doesn’t want him to know how good she is.  She doesn’t want to give him any insight into her ways of thinking.  It doesn’t benefit her—and he probably doesn’t care anyway.

6. Don’t Flip-Flop. She’s committed to the gig, shaken hands, and agreed to a fee. So she shouldn’t arrive on Friday night, see that the club is full, and ask for more money.  Nor should she back out of the deal, even if she finds out later that the club owner usually pays first-timers $500.  She made the agreement; she should stick to it.  If she doesn’t like the deal, she needs to remember that in future deals.  This one will be over in two days, she’ll have some practice singing sexy songs in a dark club, and $100 toward her rent.  That’s what she negotiated, and if she’s not satisfied, she needs to make sure she never agrees to this kind of deal again.

Which brings us back to point 1.  In future deals, she’ll remember this deal and make sure she never takes a fee this low again—or does more research and finds out what others get paid—or agrees to only one night at $100.

This deal doesn’t hurt her long term. She has only short-term considerations: a two-night stint, a flat fee, a few songs.

Next week, we’ll deal with long-term commitments, which usually involve contracts.  So I’ll deal—as best I can—with contract negotiation.  Be prepared to take notes.

“Freelancer Writer’s Survival Guide: Negotiation Part Two” copyright 2009 by Kristine Kathryn Rusch.

You can now order either an e-book copy of the Guide or a trade paper copy of the Guide. It’s in slightly different format and has been organized, so that related topics are in an easily accessible place.