A couple of weeks ago I was negotiating with some freelancers who were interesting in writing for a new website I am developing. We were discussing what kind of articles I needed, the length of each article, frequency and the like. The main point of the negotiation was the pay rate, however.
Most of the freelancers were replying to me asking if I knew how much the market was paying for similar gigs, or how much I was already paying to my other writers. Initially I replied to these emails with a number, but that made me a bit uneasy, because the first person who throws out a number usually loses the edge on the negotiation.
After thinking more about the issue I came to the following conclusion: what does the market rate has to do with how much I will pay to that freelancer in particular? Even if the market average for writing gigs is $15 per article there are people out there charging $2 per article and people charging $100.
How do those freelancers come up with how much they should charge? Usually by calculating how much they make per hour doing similar or alternative jobs. For example, if a freelance web designer makes around $50 hourly from his normal activities and you ask him how much he will charge to design your website, he will calculate how many hours the job will take and multiply it by $50 (a bit more if his plate is full, a bit less if he is lacking work).
From this point onward I changed my negotiation strategy. Whenever freelancers asked how much I was paying to other writers or how much the market was paying for similar services, I replied asking how much would make the job worth their time. Any professional worth his salt will know how much his time is worth.
Most of the writers replied with a number, and then I was in a much better position to evaluate the expectations of each and to negotiate with them.
But I am curious to know what you guys think. Do you agree that it makes more sense to start with the earnings expectation of the freelancer in question rather than with the market average? What is your strategy to negotiate pay rates with freelancers? If you do freelance work, how do you negotiate with your clients?