Having a well-negotiated contract template or agreement template between you and your client is one of the best ways to ensure that you are both on the same page before starting work. It can help you avoid hiccups down the road, such as if you deliver something the client wasn’t expecting or if the client fails to pay you on time (explore our learnings about late freelance payment from freelance invoices sent by 100,000+ freelancers)
When creating a freelance contract or a scope of work template, for example, it’s really important that the terms laid out work for both you and your client. That’s where negotiation comes into play. But, how to negotiate a contract? What are the steps involved?
Here are our 7 tips for navigating the delicate negotiation process, and understanding the importance of negotiation skills in freelance business.
Like most things in business, a little bit of preparation can go a long way. Before you start negotiating any freelance contracts or taking on any freelance work, there are certain things you can (and should) do to make sure you’re in the best position and know how to negotiate contract terms that work in your benefit.
The first thing you should do is get crystal clear on your worth. It’s not enough to merely be familiar with your hourly rate or typical fixed price— you should also know why you’ve chosen those numbers. Knowing the value of your time ensures you’re prepared if your client hits you with a “Wow, that’s a lot more than I anticipated…” or “And what can I expect from that fee?”.
You should also think about any issues that have come up in previous projects and come to your contract negotiations prepared on how you’re going to prevent them in this new project. For example, maybe you once had a client who requested 10 rounds of revisions on a writing project, costing you a lot more time than what you quoted for your freelance work. In that case, you’ll probably want to build a set number of revisions into your next contract. And a quick way to do that is using a contract generator app that lets you customize the clauses.
Some clients will want to jump into the contract negotiation process right away, like in your very first meeting, especially if they’re eager to get the project started. However, no matter how much preparation you make beforehand, there will almost always be things that come up in your initial meeting that you weren’t expecting (like a larger project scope or tighter deadlines), so it’s completely normal to ask for time to reevaluate your conditions.
Simply communicate to your client that you need a little bit of time to think about your terms, and let them know when they can expect you to be ready to start negotiating. For example, tell them: “I don’t have all those answers right now, but after we finish this call I’ll think about it and get back to you in an email by this evening.”
Don’t just take your time— also make sure you’re negotiating in small doses to ensure you’re not missing anything important or overwhelming your client. Don’t try to discuss all your terms at once. Instead, go into your contract negotiation with a prepared list of all the terms you need to talk about and take the time to go through them one-by-one.
A great strategy for negotiating is to not only make a list of your terms but to also be prepared to weigh the different options available to you and think about alternatives. For example, think about what a two-week payment schedule means for you versus a 30-day payment schedule, and under which circumstances you might be willing to compromise.
If you’re not sure what those terms should be, read our list of what to include in your freelance contracts for guidance. In your negotiations, it’s best to start with the easier terms (like non-disclosure and timelines) before moving on to the often trickier subjects like preparing a budget and payment terms.
In business, it’s always best to “use facts, not feelings”. During the negotiation, avoid feeling-related statements like “I believe” or “I think”. Instead, stand firm, give examples, and be direct by using phrases like “If we do X, Y will happen” or “It’s best if we do X because…”.
In your freelance contract itself, back up any claims that you’re making with evidence. For example, if you’re trying to convince your client that you’ll need to budget a couple of hours to put together a creative brief before diving into their logo design, be sure to give them examples of what that would look like and justify the process.
Negotiation is a totally normal part of any business, and it’s important not to see your client’s attempts at negotiation as a threat. This is not a “you vs. the client” situation, but rather a means of making sure you’re both on the same page and that the project will be delivered as expected.
No matter how you negotiate a contract, or whichever your negotiation strategy or style may be, remember to be courteous and collaborative when you’re negotiating a contract with your new client. Be open-minded, ask questions if things are unclear, and be sure to actually listen to your client’s needs and wants. Don’t simply hear to respond, but actually listen to what they’re saying and ask for clarification if needed.
At the end of the day, the ideal scenario is for you to work with this person, so it’s important to avoid jumping to conclusions and to know how to defuse a situation if the negotiations start to get heated. As you might well know, properly understanding the importance of negotiation skills in business can take your game to the next level.
That said, it’s also important to be able to recognize when a contract negotiation simply isn’t going to work out. You should always identify your own priorities before starting to negotiate a contract or a retainer agreement. If there are some things you certainly won’t budge on, get clear on what those are before talking to your client. For example, maybe you expect your freelance invoices to be paid 30 days after project completion, and budging on that would negatively affect your ability to pay your bills. When writing graphic design contracts, let the clients know how many revisions they can get so you won't end up doing endless revisions.
Know what these non-negotiables are ahead of time so you know exactly when to walk away from a client who refuses to find a middle ground. No project is worth compromising your priorities - especially when it comes to meeting requirements that could jeopardize your reputation, success, or personal wellbeing - and you don’t want to fall victim to freelancer exploitation.
Once the negotiation process is finished, be sure to write all the details down in a formal written contract. Doing this will not only protect your interests more than any verbal agreement would, but it also makes you look more professional as it shows the client that you take your work and their project very seriously.
Send your client a freelance contract that clearly defines things like deliverables, deadlines, budget and payment terms (including the invoicing process and any late fees), as well as anything else that came up during the negotiation process.
According to business guru Ramit Sethi, a really well-written freelance contract should include six different sections:
No matter what you choose to include, be sure to be as detailed as possible to avoid any loopholes.
Negotiating a freelance contract only gets easier with time, but if you follow our tips you’ll be sure to come up with terms that work for both you and your client. When you’re ready to send your final contract over, be sure to use Bonsai’s contract templates, which have been vetted and allow for easy e-signing. You can use Bonsai's online signature maker to create your e-signatures. You can also follow our guide on how to insert signature in Word and how to digitally sign a PDF. Get your free trial today and see how easy it can be.
A verbal contract (formally called an oral contract) refers to an agreement between two parties that's made —you guessed it— verbally.
Formal contracts, like those between an employee and an employer, are typically written down. However, some professional transactions take place based on verbally agreed terms.
Freelancers are a good example of this. Often, freelancers will take on projects having agreed on the terms and payment via the phone, or an email. Unfortunately, sometimes clients don't pull through on their agreements, and hardworking freelancers can find themselves out of pocket and wondering whether a legal battle is worth all the hassle.
The main differences between written and oral contracts are that the former is signed and documented, whereas the latter is solely attributed to verbal communication.
Verbal contracts are a bit of a gray area for most people unfamiliar with contract law —which is most of us, right?— due to the fact that there's no physical evidence to support the claims made by the implemented parties.
For any contract (written or verbal) to be binding, there are four major elements which need to be in place. The crucial elements of a contract are as follows:
Therefore, an oral agreement has legal validity if all of these elements are present. However, verbal contracts can be difficult to enforce in a court of law. In the next section, we take a look at how oral agreements hold up in court.
Most business professionals are wary of entering into contracts orally because they can difficult to enforce in the face of the law.
If an oral contract is brought in front of a court of law, there is increased risk of one party (or both!) lying about the initial terms of the agreement. This is problematic for the court, as there's no unbiased way to conclude the case; often, this will result in the case being disregarded. Moreover, it can be difficult to outline contract defects if it's not in writing.
That being said, there are plenty of situations where enforceable contracts do not need to be written or spoken, they're simply implied. For instance, when you buy milk from a store, you give something in exchange for something else and enter into an implied contract, in this case - money is exchanged for goods.
There are some types of contracts which must be in writing.
The Statute of Frauds is a legal statute which states that certain kinds of contracts must be executed in writing and signed by the parties involved. The Statute of Frauds has been adopted in almost all U.S states, and requires a written contract for the following purposes:
Typically, a court of law won't enforce an oral agreement in any of these circumstances under the statute. Instead, a written document is required to make the contract enforceable.
Contract law is generally doesn't favor contracts agreed upon verbally. A verbal agreement is difficult to prove, and can be used by those intent on committing fraud. For that reason, it's always best to put any agreements in writing and ensure all parties have fully understood and consented to signing.
Verbal agreements can be proven with actions in the absence of physical documentation. Any oral promise to provide the sale of goods or perform a service that you agreed to counts as a valid contract. So, when facing a court of law, what evidence can you provide to enforce a verbal agreement?
Unfortunately, without solid proof, it may be difficult to convince a court of the legality of an oral contract. Without witnesses to testify to the oral agreement taking place or other forms of evidence, oral contracts won't stand up in court. Instead, it becomes a matter of "he-said-she-said" - which legal professionals definitely don't have time for!
If you were to enter into a verbal contract, it's recommended to follow up with an email or a letter confirming the offer, the terms of the agreement , and payment conditions. The more you can document the elements of a contract, the better your chances of legally enforcing a oral contract.
Another option is to make a recording of the conversation where the agreement is verbalized. This can be used to support your claims in the absence of a written agreement. However, it's always best to gain the permission of the other involved parties before hitting record.
Fundamentally, most verbal agreements are legally valid as long as they meet all the requirements for a contract. However, if you were to go to court over one party not fulfilling the terms of the contract, proving that the interaction took place can be extremely taxing.
So, ultimately, the question is: written or verbal agreements?
Any good lawyer, contract law firm, or legal professional would advise you to make sure you formalize any professional agreement with a written agreement. Written contracts provide a secure testament to the conditions that were agreed and signed by the two parties involved. If it comes to it, a physical contract is much easier to eviden in legal circumstances.
Freelancers, in particular, should be aware of the extra security that digital contracts may provide. Many people choose to stick to executing contracts verbally because they're not sure how to write a contract, or they think writing out the contract terms is too complicated or requires expensive legal advice. However, this is no longer the case.
Today, we have a world of resources available at our fingertips. The internet is a treasure trove of invaluable information, platforms, and software that simplifies our lives. Creating, signing, and sending contracts has never been easier. What's more, you don't have to rely on a hiring a lawyer to explain all that legal jargon anymore.
There are plenty of tools available online for freelancers to use for guidance when drafting digital contracts. Tools like Bonsai provide a range of customizable, vetted contract templates for all kinds of freelance professionals. No matter what industry you're operating in, Bonsai has a professional template to offer.
A written contract makes the agreement much easier to prove the terms of the agreement in case something were to go awry. The two parties involved can rest assured that they're legal rights are protected, and the terms of the contract are sufficiently documented. Plus, it provides both parties with peace of mind to focus on the tasks at hand.
Bonsai's product suite for freelancers allows users to make contracts from scratch, or using professional templates, and sign them using an online signature maker.
With Bonsai, you can streamline and automate all of the boring back-office tasks that come with being a freelancer. From creating proposals that clients can't say no to, to sealing the deal with a professional contract - Bonsai will revolutionize the way you do business as a freelancer.
Why not secure your business today and sign up for a free trial?