A newbie consultant is in a jam with a client negotiation. He agreed to a lower than desired hourly consulting fee because of the client's use of bait and switch. What would you do in this situation?
I received the following email from a TechRepublic member:
I have a question regarding IT consulting. I've never done any consulting so this might be a bone-headed question.
I was laid off last week, where I was the Network admin for a small company. I got a call from the owner asking me to come-back on as a consultant to take care of the IT needs of the office.
I was told to submit my rate ... after googling for a few hours I found a resource to help me calculate my fee .. it came out to $63/hour.
I emailed the client with my rate ... he told me that he has 10 hours a week for me and would I consider $50.
I agreed because it was more hours than I expected to get.
Yesterday we had a meeting to outline my duties and responsibilities and the 10 hours ... become 5 hours.
In your opinion do I have a case for reneging on the agreed $50/hour and asking for the original $63 because he changed the agreed upon hours?
How about a sliding scale of .. anything less than 10 hours $63, anything above $50?
I would greatly appreciate your opinion on this .. or even a resource that might give me an insight into this kind of situation.
The client employed a sales tactic known as bait and switch; this led the consultant to commit to a value proposition and then the client changed that proposition after he agreed to it. The lower rate of $50 was predicated on having 10 hours of work available per week, but after the consultant agreed to the rate, the number of hours dropped to five. Of course, none of this was in writing.
Our would-be consultant started the negotiations on the wrong foot by asking for the amount he thought he deserved. Most consultants undervalue themselves, but even if your number is spot-on, you want to ask for a higher amount so you can negotiate downwards. Furthermore, the $63 rate is telling; most consultants round their rate to the nearest $5 or $10. A number ending in 3 immediately evokes the question: Where did you come up with that figure? Why $63 instead of $65? If the prospect correctly guesses that the consultant employed a rate calculator of some sort, then he can use the consultant's uncertainty about rates against him and argue for a lesser amount. You need to present your asking rate confidently and that 3 communicates a lack of confidence.
But now that the consultant has dug himself into this hole, here are some options for how he can handle the situation:Run. If the prospect deals that dishonestly when trying to sell you on the engagement, you'll never be able to trust him. If you stick around, expect excuses for late payment and incessant insinuations that you should work for free. Insist on your original rate. Clearly reiterate that you only accepted the $50 rate based on a volume of 10 hours a week. Now that it's no longer part of the bargain, neither is the lower rate. Offer to compromise. Remind the prospect why you accepted the lower rate, but offer to work with them if they can't keep their part of the verbal agreement. The consultant's "sliding scale" idea mentioned in his email might have some merit -- it keeps the incentive for more hours in play while accommodating slow periods. Or perhaps you could offer to meet in the middle -- offer $60, but be silently willing to take $55. Accept it. You're out of work, and it's income. Besides, they'll need your help a lot more than they realize. You'll be up to ten hours a week (maybe more) in no time. And since it's only a part-time gig, you'll be free to look around for better opportunities. (I don't like this option myself.)
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