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My current rate for him was 75per hour, but after 5 projects, it would go down to 50per hour. He's currently being billed at 50per hour.
My intentions were for the lesser hourly rate to be conditional - a certain amount ($) per month he must maintain in order to keep the rate of 50per hour. But I chickened out and didn't tell him that part. At the time, I was desperate for money and thought that he might leave or refuse. I have to admit, I've haven't been firm in what I want from my clients. I'm starting to become firm in getting what I want and not trying to please the clients just because I'm broke and need money.
I now wanna change that rate to be conditional.
I'm sure he's pretty happy with the lower rates. He just entered his first project with the new rate. The project is currently in motion and I have no intentions of changing anything now, but once its over, I wanna make a change.
What do you think about this? Can I do this?, is it right? I just want some guaranteed revenue a month. If this can be done, how and what should I tell him?
note: There was no contract signed. There was no contract at all. I just stated it in an email.
[edited by: Nealreal at 7:40 pm (utc) on July 11, 2007]
My intentions were for the lesser hourly rate to be conditional
Assuming you have a written contract with him, look at the part where it says how/when you can terminate the contract or renegotiate the terms. That will be your starting point.
If he's a nice guy and likes/needs your work, he may be willing to renegotiate. But in the back of his mind he's going to be wondering if you are going to try to renegotiate again after a couple more projects. So you should prepare that any "guaranteed revenue" from him in the future might be 0.
Now, all this is based on typical business practices in the U.S./U.K. and other with similar business cultures. If you go to Korea or Japan, the real negotiation starts after the contract's been signed. :)
It sounds to me as though you do actually have a contract between each other, in that you've made an agreement that both of you intended to be legally binding. It doesn't necessarily make a difference that you haven't both signed a piece of paper. Although of course you'd need to talk to a lawyer to be sure.
But: how long are you committed to this for? It would seem fair to me that you could renegotiate after a reasonable period of time.
I think it would be fine for you to ask to renegotiate your rates after a reasonable period of time has passed. However, mid-way through the first project on the new terms is too soon; as Andye said, even if you didn't sign a contract, you did have an agreement.
Really it would be best if you were in a position to say, "Since the original agreement x, y, and z have changed" in order to justify renegotiating terms. The longer you leave it, the more plausible it is that enough has changed that the rates originally agreed should no longer apply.
For example, let's say:
- Your standard rate is $75.
- You're now doing work for him at $50 basically because he's a valued client.
- You could say to him: "I can offer you an even better rate of $45, but you'd need to buy 20 hours paying up-front. You'd have up to 3 months to use the time".
Then he can choose whether to agree or not - if not then you stick with the existing terms.
BTW, you might find the book "getting to yes" is useful for these kinds of negotiations.
It may be that you shouldn't say or do anything for at least as many projects as he took to get to this lower pricing. if you do try to change things, it should be with a good notice period.
Perhaps you could explain 'to all clients' that 'some' clients who have previously qualified for the large customer discount pricing but are no-longer sending through a large number of projects are going to be moved back to the standard pricing after the end of August after which the discount will be strictly based upon $#*$!X spend during the previous month.
In that way you aren't necessarily pointing the finger at your client, and you are giving him a good period of time to send you more work and keep himself in the cheaper pricing range.
Unfortunately this will come down to a very personal decision that you must make on your own. Nobody will fault you for deciding some money is better than none and sticking to the lower rate. On the other hand if you choose to keep it this way now you will be setting a precedent that will be that much harder to change later, if not impossible.
If you let this continue and decide later you can't stand it you may lose him as he thinks this has been the way it has been for a while now and what are you doing changing the ground rules this late in the game.
In his first book, Donald Trump said that when he was putting a project together he would imagine the absolute worse thing that could happen to him by doing what he was doing. Then he decided if he could live with that outcome. If the answer was yes he went forward, if the answer was no he pulled the plug or found a way to mitigate the problem.
You would probably benefit by doing the same thing. The worse that can happen is he pulls all work he is giving starting the second you tell him you want your old fees back. If you can live with that and know that you will have to work to replace the income somewhere else then have the conversation. If you can't live with that possibility then you are probably working for $50 and hour.