What is the best way to tell a client that your rate is non-negotiable when they ask?
I am looking for way which will not offend the client and would also ensure that I don't end up decreasing my rates.
I simply state, "Sorry. Pricing is set and rates are non-negotiable."
I haven't run into an instance where that offended anyone. I may not get the work but, if they won't pay my rates, I don't see that as a problem. You aren't required to explain anything to clients in terms of your business structure or calculations. Actually going into too much detail is a bad thing and conveys a lack of confidence and the need to rationalize your business practices. This leads to a definite perception of a weak negotiator.
Any combination of:
A) We can certainly set this up as a [fixed bid/hourly contract] instead if that makes it easier for you.
B) Projects with unique requirements will, of course, entail negotiation. For the scope we've discussed [our standard price applies/I've already applied the appropriate discount of X from our base price].
D) If there's something you want to change about the contract, negotiate away. You can always negotiate and end up where you started.
Honestly, negotiating isn't bad and it doesn't mean you're necessarily taking a pay cut. It gives you an opportunity to find out what's important to them and structure things to better fulfill those needs. They're happier and you can often charge more or make the work situation better fit what you like (remote vs. onsite/delivery date/office accommodations/long term contracts/travel/etc.).
Saying "No" is completely acceptable, and you shouldn't worry about offending the client.
There are two points not brought up in the current answers that are worth mentioning:
I remember that feeling when starting out around 15 years ago. I would send a new client a proposal and anxiously waiting to see if they will balk at the rate or project price. Here is what I learned along the way.
Never decrease your hourly rate for a client.
It's helpful to have standards to screen all potential new clients. You want to see that they willing spend money if it is beneficial to the company.
For example if you walk into an office and find employees using OpenOffice because they aren't willing to pay for Microsoft Office, run away!
If you exclude clients that are cheap and like to nickel and dime everyone (normally because they have no option), you'll feel better and make more money.
I actually enjoy hearing them ask: "Is your rate is non-negotiable?"
Remember, a discount from $100/hour to $90/hour upfront can save the company $1,000s in an ongoing relationship. When they do this across the board with all new vendors, they can see a sizable savings.
My favorite line is getting emailed: "Is this rate for your preferred clients?" Often times when I tell them "Yes it is", to which they reply with "Had to ask!"
The takeaway is that you will find that many experienced business owners will haggle with young freelancers and get pleasure out of it, but actually would have no problem with the rate.
My goal since day one was to provide the client with what they need even if they don't realize it upfront. This and items I propose can be an unexpected expenses for them and not be budgeted.
When detected that a client doesn't want to pay the full amount, it's been my policy to offer them the option to pay the bill in 2 or 3 monthly installments. That tends be a solution when a client has sticker shock.
I occasionally get asked this and depending on my mood, I either just say "No." or I say "I never discount XYZ because I always propose my best price from the start."
Maybe someone on here can think of a better way to word it, but what I want to convey without being rude is that while I understand it's their right to ask for a discount, I don't think it's right for me to give one to the 5% who ask when 95% of my clients pay full fee without complaint. What does it say about my ethics if I give a discount? If I lower the price at their request, then obviously I was trying to gouge them initially.
Also, I wouldn't want to explain this to the client, but most of my clients know each other, and if I charge less to some than others, I believe word will get around.
Personally, I would never tell a client that I am just charging enough to get by because to me, that sounds like I I'm apologizing for wanting to be financially successful. They aren't working for free or apologizing for being in business, why should I?
I will, however, give clients discounts on things that don't cost me but that are valuable to them. For example, I recently developed some software for client A (I own the intellectual property). Client B asked for something very similar but much more sophisticated. So I offered to "give" them the work I'd already done and just charge for the work I do to improve that software. They're fantastic clients who never ASK for discounts and I'll make good money off the new work. I may offer the improved software to the original client at no charge or deeply discounted. That will build more good will with them and cost me nothing.
So keep in mind, that often you can sweeten the pot for a client without costing yourself. Software you've already developed, an accelerated time frame, free documentation (that you've already written and might have given them regardless, X number of free support calls (that again you would have given regardless).
I always put 5 or 10 hours of free modifications in a big contract. My initial price covers this so I don't feel abused, and the client, who may not wholly understand what they're getting yet, feels reassured.
Make sure they're aware of the benefits they get from doing business with YOU. And ask a lot of intelligent questions about how will they be handling XYZ moving forward so they realize you know this process and are competent. That will help you stand out compared to a cheaper person. They probably all have some scars from when they went cheap in the past and got what they paid for.
LASTLY: When someone asks for a discount, that's fine. But when you say no and they push -- Be afraid. Be very afraid. With one exception, every single client who asked for a reduction in rate where I said "yes" (in my early, more hungry years) turned out to be a LOT of work, MAJOR PAINS, and some even tried to screw me out of the little that I was charging them. Saying NO to discounts helps weed that type out. People who hire you based on price alone, have ZERO loyalty. None, nada, zip. They will leave you for someone who is $1 an hour cheaper without a thought. And never realize how much harder they make their own lives by doing this.
You could tell him that the rate is calculated so you earn enough to pay the bills and have a decent living. This will imply that asking for less will affect you and it's not really that you don't want to ask for less, but you just can't, which if I think about it, is the case with a lot of freelancers.
I think the underlying assumption in that question is that you have free time and you'd otherwise be twiddling your thumbs if not working for this potential client.
I would say something along the lines of: "Unfortunately, agreeing to a discount on this work/project/job would be prevent me from earning what I've determined to be a reasonable market rate for my services on other potential projects."
I.e., if you're not willing to pay my full rate, I can find someone else who is.
Lowering the rate cannot be done without a reason (otherwise you admit having overcharged for the task).
You have two options:
suggesting a way to diminish the service level;
by far better: asking the customer what he wants to modify in the service to enable a reduction.
Option 1 can be done in a way that you are sure the customer will refuse. Option 2 will probably calm down the customer.
„Sure, and this is what will not be included in my service and/or results.“
The purpose is to find out together, what your client really needs, and what the value (not money) is to him/her. You may end up in a win-win situation. It works the better, the better you know your client.
And there are occasions, where „no contract“ is the better option.