Hi, my rates in our contract are going up from $xx/hr to $yy/hr to adjust to market rates effective ______. You know that I have not had a rate revision for several years. The new rates are reflective of the additional skills, knowledge and experience I bring to the table. As a long-term partner, I would be happy to lock these rates for a period of ___ years and include an inflation/cost-of-living adjustment from year ___ onwards in our new contract. Let me know what you think. Thanks.
a. Your client already knows your capabilities. So, no need to rehash that, I think.
b. If there are new skills you will be bringing to the table in the future (eg: you can now program in Rust), that can be stated as part of the value you bring.
c. Don't worry about the client being shocked. If they like your work and your increases are reasonable and worth the value you bring, they are likely to accept your proposal.
d. Some of these elements in the proposal are negotiable. For example, you are proposing a rate increase, but also proposing to lock those rates for a longer period. You are also hinting at an inflation-adjusted rate down the road. If the client likes your longer-term rate lock at the higher rate, you can decide to knock-off the inflation-adjustment clause.
Remember that every negotiation begins with what you are comfortable with and ends (successfully) with what the other party is comfortable with that you can accept.
Good luck.
Depends, sometimes people mean "justify by referring to our shared project history, context, process & logic" as opposed to business-world metrics. Which to a lot of people is more impactful for negotiating.
So you could say, look. Here's what I've done on this project so far. I've made it possible to do this, that, and the other. I'm already up to speed, which took years, and I know it inside and out. I see the following benefits of working with me in the future (examples). My rate is $$$ but I'm aware that this is below industry right now, for people who can do what I do (recapped above).
The last sentence would help you contextualize the impossibility or improbability of finding someone who can look at your work and tell you exactly what dollar amount you're worth on the hourly.
Regardless this is really important for you from a relationship standpoint, often the unspeakable elephant in the room for business. Their response to even the sloppiest negotation you can produce will help you understand your next set of moves compared to what you thought they'd be, and that is really helpful to know. Good luck.
You don't need to justify it beyond "it's the market rate for your skills"
Businesses regularly update their financial targets in order to grow. There isn't anything to explain here.
Any post here that deviates in fundamental details from the statements above is selling you a point of view that is irrelevant.
Comparing it to the market only matters if they decide you’re unlikely to be worth the value they are getting from your work.
- emphasizing the value of your services and how they will benefit the client - stressing the importance of quality workmanship - highlighting your experience and expertise - outlining a flexible payment plan that works for both you and the client
If that's not cool with them, wish them luck in finding someone else who will accept whatever they've been paying you.
that said i suspect managers discuss rates with finance or hr people while they should not. these people have their own ideas on what to pay people which IMHO are based on hearsay. i’m interested to hear other people’s opinion on this as i’ve had at least one situation like this. i’ve walked away from it.
in the end I think it all comes down to who has more leverage:
- can they find someone else for the old rate + risk and cost of hiring someone new
- can you walk away and find another customer for the new rate
Easy, then: you’ve grown as an engineer. You would see raises at a salaried job. Give yourself a raise.