Believe me I can relate to the difficulty of selling oneself. But I would say it becomes less and less about silver-tonguing and more and more about speaking honestly to clients about your abilities.

In any case, when any new contractor is just getting started, it’s definitely true that it makes sense to aim for maximum happiness. It’s the only thing that will keep you going.

One thing I didn’t mention, but which is very important to me, is the happiness factor. It’s true that Joe’s scenario in this example is not ideal, but I find juggling clients stressful and personally value a steady client perhaps more than I should (at least, for the sake of my pocketbook). That’s why I would consider being flexible in that scenario.

I definitely want new contractors to understand that no matter what the scenario, they have options when it comes to negotiating contracts. If one month you want to sacrifice a little cash in exchange for lower stress or to work on a fun project, go for it. Of course, the silver-tongued among us can probably get away with better. ;)

Rather than coming down to $65/hour, which he would then be relatively locked in to for the term of the relationship, it might make more sense to stick to the $75 figure and make it easy for the client to get comfortable with his work at a lower commitment rate.

I like the structure of a trial run for this kind of scenario. For instance, if Joe can state with confidence that his clients will be thrilled with his work, and they need to only give him 4 hours to prove it, then they might be convinced and satisfied that spending the extra $300 was well worth it not only for this project, but for the long run.

If Joe’s a liar, then they are only out $300 instead of $1500. If Joe’s the real deal, then they’ve got somebody who’s worth the money and knows it.

Ron: You make a good point here, and I originally had that number as 3 before I adjusted it down to 2. This is because I personally started out at 3x, then found I routinely had to adjust down to get enough work, at least until I had enough experience and exposure to move back up. Depending on their industry, others may want to do this too – start at 3x and see how it goes from there. I definitely want to drive your point home that going independent should be a financially *lateral* move (or better). If you’re not making as much in your new job as your old (accounting for employer expenses) you aren’t charging enough.

A few little tidbits I’d like to note about working with the bigger clients:

1) If they’re not complaining about your rate, you’ve left money on the table. Most small companies will complain about any rate, but the bigger ones will often suck up $75/hour for most projects and not even blink.

2) Larger companies expect and can afford communications, project management and such overhead to be billed and considered in the realm of billable hours. Almost any large outsourcing company includes project management and such hours as a default anymore. If you really want to get quirky, you can charge a different rate for this as an indie, but be aware that you don’t have to just suck it up with the larger companies. Also consider doing all communications and project management hours as by-hour, not by-job, because they can expand amazingly fast with a large company. In those realms, you’ve often got multiple people to please and communicate with and the communications overhead can expand dramatically.

3) Always keep a log of your time suitable for sharing/giving to your client. If you’re doing work “by the job” and estimated 25 hours, and it takes you 30 – you can either suck it up and do better estimating in the future, or you can use Anne Kate’s suggested “if over 25, I’ll bill you the additional hours” clause. In those cases many businesses (especially small ones) will want to know where you spent your time. You should be using this as a defense mechanism in case your client goes wack-job on you and tries to demand you do all their changes, new ideas, and other such crap for the same original job price. It’s not realistic, and keeping a log of hours can really make a difference in what you have to push back with.

It’s a well known secret that most outsourcing companies nail down an estimate for an original job that’s well below what you might consider reasonable, fully expecting to make it up on the “change request” end. I might even go so far as to suggest that some don’t worry about doing crappy work (this in the programming side of work, not so much design) with the expectation that it’ll increase the need for future programming efforts, and hence more work for the company in the future. Not everyone is that way – but it’s worth being aware of.