The side effect of this approach is, that your freelance earnings will be maximized in the long run. When someone hires you, he/she has some sort of project to create. And they hope, that at the end of the business transaction, they will end up with more value than they paid to you.
If you do value-based pricing (and I believe you should do it 99% of the time), then you are basically getting a share from the value you deliver to your client. So we can establish a rule: the more value you deliver to your client, the bigger is your share.
Based on the rule, we can formulate an optimal strategy, which is to deliver as much value to your client, as possible.
How you can deliver the maximal value to your client?
When you are defining the project with your client, you both are having a dialogue and co-creating the project together. So it’s an interplay of your personalities, know-how, and business interests. You can’t control your client’s behavior, but you can control your part. And that’s 50% of the negotiation.
We can then derive another definition: maximum value is delivered when your part of the negotiation is maximally effective.
What maximally effective negotiation means?
All clients are different individuals, with different personalities, value systems, and goals. They all also face different challenges.
1. You need to understand your client, their project, and their context.
Seems to me, that most effectively this is done by the question “why?” and you can start by asking:
Why you need this?
Clients often provide you with a brief description of the problem. Sometimes, they approach you directly by a solution, formulated by them. The thing is, that if you deeply understand, what they need, you can often formulate a much better solution than they have. And this is the first spot, where value can be found.
2. You need to be an expert in your field
“Expert is someone, who already made all the mistakes”. The stronger you are within your area of competence, the more solutions you are able to generate for your client. So it means, that your field of operation is much wider and you can find possibilities, where others will not see them. This also means that you can serve more clients.
3. You need to be fluent in business
It means understanding the business principles and entrepreneurship in the general. So if you know the unique situation of your client and the set of solutions they have, you can attribute business value to them.
Few examples of the output
The client needs to fix something. If you understand their situation, you know that they will be changing their IT system soon, so the fix does not have to withstand for years. It has to be a quick dirty fix for a couple of months.
Other client needs to fix the same thing, but their targets are to stick with the IT system. So in this situation, you can provide a more robust solution, because that will bring him more value.
The last client tells you precisely, what he/she wants you to do. But after the analysis, you find out, that they need something radically different than they think. This is because clients are experts in their business, not yours. So you should listen to their problems, not to their solutions.
So how to maximize the value for your client?
Precisely describe the problem, generate a set of solutions, and attribute them business value. Being the expert in your main competence domain is necessary, but not enough. You also need to be an expert in communication, negotiation, and business.
Seems like a lot, right? But I can promise, that once you master this triangle, your earnings will skyrocket. You will be able to identify spots, where is value left in tens or even hundreds of thousands of dollars for your client. And imagine how things could be for you if you quote 10% of it? For example, if you save someone $30,000 per year, you can take $3,000 from it and you both will be happy. And what if you can find and fix this spot within an hour? That is, where the real money can be made in freelancing.