Renegotiating The Contract (And Other Tales Of Horror)
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You’ve met with the client, done the creative brief and gotten some kind of written agreement or contract. Work has been creative and progressing nicely. The joy and hope for life slowly return as the scent of money looms. So, with an overdose of sleeping pills no longer your retirement plan, you start to delete your suicide note and dispose of the envelopes containing instructions on terminating your accounts on Twitter, Facebook and LinkedIn.
Then, someone crunches some numbers and realizes that you can’t be paid what was agreed on. Suddenly, your contract becomes either a weapon in a brutal fight or a token to keep the job going in the hope of some pay and a return client.
You may also be interested in the following related posts:
- Invoice Like A Pro: Examples and Best Practices
- Freelance Contracts: Do’s And Don’ts
- How To Deliver Exceptional Client Service
The Hard Part Is Behind You
Many people start an assignment only after a percentage of the job has been paid. 50% is nice, but convincing the big clients that they are not your bank is becoming harder and harder, and the promise of payment in 30 days does not give you a warm feeling inside.
I am currently awaiting word from a client who has to evaluate some concepts and inform me of which to invoice (per piece). I am now in my sixth week of waiting, and then I have to wait 30 days beyond that to receive payment. I’ll be paid faster than the waiting period for approval for a large corporation. If you have the deposit fee, walking away is an option, but if you don’t, then you’re in a tough spot.
For hourly jobs, I always include a summary in each email of my hours spent. Sometimes, they actually pay attention and step on the brakes so hard that you can hear the job screeching to a halt. I have never worked on a project that didn’t go around and around and rack up the hours. Clients rarely connect the hours spent on committee decisions to the many extra hours they eat up. When they do and the budget is dried up, who do they turn to to make the project fit the budget?
When this happens, the strongest contract is worthless if you’re trying to finish the project, educate the client and show them a better method of coming in under budget while getting exactly what they want. The alternative is a collection agency or small-claims court (check your local laws for limits on small claims and civil claims); I prefer collection agencies, but you still may never see the money.
My Story Of Horror Averted… For Now
This story involves a website for a mid-sized company. Because the boss’ son knew my wife, his cousin asked for the “family discount.” The discount wasn’t enough to sting, so I agreed on an hourly rate and began. I was to work with the boss’ secretary as my contact person. A couple of weeks rolled by, with changes and odd requests coming in. The requests were implemented, and more requests came in, sometimes reverting the project to a previous version. This went on for a while until I got a call from the boss one weekend. He was angry that I wasn’t following his directions and wanted to know what my problem was.
I sent him several emails showing the instructions for the changes. There was some silence on the phone before he muttered, “Oh… my… God.”
He said he’d get back to me and hung up. Monday afternoon he calls to relate a story that is unfortunately not entirely unfamiliar. His secretary, it seems, has always wanted to be an art director. She had no formal training but apparently loved the idea of having the power to hold meetings and tell designers what to do, because apparently that was her impression of what art directors did. That and drink a lot of gourmet coffee.
She ignored what the boss wanted so that she could run the project and present it to him as her “art direction.” When I told him that she had wracked up about $2,000 in changes, he hit the roof.
“You can’t expect me to pay that!?” he boomed.
“I did everything I was told to do by the point person you assigned to me,” I answered softly, hoping my tone would bring him down a little. I knew he was furious and wasn’t about to part with another $2,000 (family discount included).
“I can’t afford another $2,000 in the budget.”
“I can’t afford to walk away from $2,000 of work I did, forsaking other work, so the money can’t be replaced or forgotten.”
“You’re going to have to work with us on this,” said the client, a little more down to earth, but obviously worried I hadn’t given in right away and cut my bill.
“May I suggest you take it out of your secretary’s pay?” I gently suggested. “I’m sure she’s worried about losing her job right now, and she’d probably prefer to pay out of pocket than just be fired.”
“I’ll get back to you,” said the boss before hanging up. His tone indicated that he hadn’t decided whose head would roll.
After about a week, he called back and informed me that I would be working directly with him. He told me what he had asked for before the secretary (whose name he never brought up again) messed with his directions. We completed the whole thing in a week. I don’t know what ever happened internally. Later on, they called a couple of times to revise a page or two on the website, but eventually they stopped calling and later redid the website with someone else very cheaply — probably in cost and certainly in look.
I did get paid the entire amount, minus the family discount, and it led to more work. I never renegotiated, but I would have to save the client. My gamble may or may not have paid off because the relationship went on for a brief period, but I was prepared to renegotiate to keep this client with the “dysfunctional family discount.”
I’m Often Asked to Renegotiate
Sometimes renegotiating gives you a better deal. Sometimes you just have to take a lower fee and hope it leads to something better down the road. And sometimes you have to cut your losses, take some money and learn a lesson. I wish I knew what that lesson was. I think it’s to say, “Yes.”
A good client of mine, a huge corporate entity, assigned me the challenge of coming up with innovative initiatives. I could submit up to three, and each idea accepted would pay me enough to buy all the fast food lunches I wanted for the rest of the hour. I submitted three, but the point person felt that one of them wasn’t quite there and so would pay me a fifth of the agreed-upon slave wages. What kind of candy bar would I buy with that money?
“I could never, in good conscience, invoice you for something that you are not 100% happy with and will not invoice you for that initiative,” I wrote. “I must also state that this negates our contract for ownership on this piece only.”
He agreed and was obviously happy with the renegotiation because he has since sent me better-paying work, and I was happy to retain the rights to the initiative, which I shopped elsewhere.
What if he had insisted on paying less for ownership of the third idea? I would have given in. The client was too important, and all that would happen is my pride would be hurt and the client might have made a huge windfall from the idea and looked forward to cheating me again… well, you know what I mean. They would see my value, and obviously I’m willing to be “flexible.”
Being “flexible,” in my experience with work and life, means inconveniencing myself because someone else screwed up. I use different words, but never in mixed company.
In negotiating a contract with another client, the partners agreed that I should include “… and anything else we deem necessary.” (People who have heard this story love it.) Obviously, entering the slave creative trade wasn’t acceptable to me, and so they told me they needed to work with someone “more flexible.”
My guess is that either they never found someone to launch their business or some poor soul is owed many thousands of dollars.
What To Do When Asked For a “Flexibility” Mid-Project?
There are many schools of thought on what to do when you’re asked to be “flexible” with your work and invoice right in the middle of a project, ranging from quiet acceptance to violent government overthrow. Let’s explore the middle road.
When you’re asked out of the blue to reduce an invoice or provide extra unpaid work, the first thing you have to do is think. It’s okay to sit on your response overnight, depending on the deadline. If it comes via a phone call, then you can say to the client, “I understand your dilemma. I’ll need to crunch some numbers and come up with an option or two that will make us both happy and allow us to finish the project on time. Let me call you tomorrow with some great solutions.”
They may press for an answer right away. You’ll feel the pressure. Explain that a lot is at stake, and you want to be sure that everyone walks away from the renegotiation happy.
If they press further still, well then, think quickly and engage them in a negotiation. Here are some possible responses you can give:
— The first thought off the top of my head is to cut the number of changes by having one point person draw together the requests and decide what is necessary. That would cut the number of hours. Does that help you out?— I can’t really reduce the invoice because it’s time that I can’t make up with other projects. What if I stretch out the payments over six months so that the overage falls into another budget period?
— I’ll give you a discounted rate on the next assignment to even it out. [Wouldn’t it be something to use that line on a client for a change?]
— If you can get me two dozen items of the product, I could easily agree to changing the monetary part of our agreement.
— You carry some products that we could use to barter.
— You have a service I could use, so let’s barter.
(Check your local laws on the value of bartered goods for taxation purposes, and always barter at the wholesale cost, not the retail cost.)
There are several ways to get paid while remaining “flexible.” When asked to renegotiate, think of what you want. Do you want the client to be a regular client? Do they give you enough work to even be regular? Has working with them been a positive experience? Is the fee structure good? What are you really giving up? Do you have another project waiting? Will a few unpaid hours dent your income from other clients? Is the client the type that would appreciate your sacrifice? Will you get referrals from this client? Does the 50% deposit cover your output so far, and could you just walk away now and leave them to find another freelancer?
Big Lies About Being “Flexible”
I became very close with many ad agency art buyers, and when they would get liquored up, I could easily get them to spill the industry lingo. They would laugh as they spat out slogans that had no meaning to anyone. I think back to the many times I heard those slogans thrown my way and how the laughs must have mounted at my expense as I left.
If you hear this: “We’ll remember that you did us this favor…”Insert the following: “… and avoid you like the plague because of it.”
If you hear this: “We ran over budget on this project, but you can add it to the next invoice…” Insert the following: “… which will never be happen because we'll never run out of freelancers to screw."
If you hear this: “It will take you 10 minutes to do this…” Insert the following: “… But it will take you six weeks to listen to me say ‘I’ll know it when I see it’ and to listen to all my stories about my vacation to Fiji and my new Maserati.”
If you hear this: “I just don’t understand how a design for one simple movie poster could cost more than $500?…” Insert the following: “… After all, it’ll only be used for the worldwide rights to all merchandise for this blockbuster film, and we expect the poster image will bring in only $485 million.” (It’s long been the practice that illustrators, photographers and designers would charge more for work that would be licensed out. Licensing rights are just as important as the money earned from time spent on the actual work. The story of the Nike logo shows a happier ending.)
If you hear this: “Oops! I typed $500 instead of $5,000 on my budget report. Could you give me a break here?…” Insert the following: “… so that I’m not fired when you show the contract to my boss.”
If you hear this: “The client loves your work and wants to use you for further projects, but could you lower your fee as a kind of test?…” Insert the following: “… which you will fail, even if the work is great. Ha-ha! Satan wins again!”
It seems Satan has quite a following in advertising. As if we didn’t know that. How do you think agencies get work for the Super Bowl?
People will tell you all kinds of things to get what they want. We do it, too. The key is to know when to keep one’s mouth shut and when to negotiate one’s way to a happy solution, with as little of Satan’s influence as possible. You may not be cowering from him in subservient terror, but you’re stuck next to him on a cramped bus for the entire ride.
Related Posts
You may be interested in the following related posts:
- How To Spot A Sketchy Client (Plus A Contract Template)
- Web Design Criticism: A How-To
- Why Design-By-Committee Should Die
- Dealing With Clients Who Refuse To Pay
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