Before Negotiating a Rate Rise, Look First at Who Decides the Amount

What gets offered as a way of raising your rate is mostly negotiating technique. When to raise it, checking the going rate, the wording to add to the email, the order in which to present your track record. These work: convey the same content and the outcome changes with how you open. As technique it is real.

But what that technique moves is only one of the three layers constraining the amount. Three things bear on it: the total budget available to the other party, the share of that budget allotted to you, and the standard level of the amount for that occupation itself. Negotiation reaches the middle layer, the share. It does not reach the two on either side. And those two were settled elsewhere before the negotiation began.

This article accounts for the following three. Why the first negotiation moved the figure and the second one hardly does. Why the same proposal becomes twice the amount with one client and half with another. And why explaining carefully that your skill has improved does not become material for the amount. None of the three can be explained by how well or badly you speak.

What cannot be produced goes in as well. What percentage it is reasonable to ask for, what figure is appropriate — those numbers are not placed here. A reasonable amount varies with the field, your experience, and the scale of the other party’s business, so taking only a percentage means bending your judgement toward the number without checking your own situation. Nor is the phase where a quoted amount has plainly been left low the subject of this article. In that case negotiation alone solves it, so opening the conversation is the faster route.

The centre of the damage lies in there being only one place left to put the cause when nothing moves. What the negotiation displays is whether the amount moved or not. Where the edge was is displayed neither on success nor on failure. So when it does not move, the only explanation left in hand is that you opened badly. And then what gets polished for the next attempt is the technique, and where you are at the edge, the polishing does not appear in the result.

Also outside the scope is the state of not being dissatisfied with a low rate in the first place. If the present amount keeps things running and you want nothing beyond it, the problem this article solves has not arisen.

What follows starts by separating the three layers. It then places what the phrase “raising your rate” refers to raising, and establishes what the methods on offer presuppose. From there it takes the three layers one at a time, in the order top, middle, bottom, and goes as far as what increases after a rise. It ends with the three things to redraw before negotiating.

Negotiation Moves Only One of the Three Layers

The amount itself and the mechanism that decides the amount are different objects. Negotiation touches only the former; the latter is never brought into the room.

Turning a quoted two hundred thousand into two fifty. Getting a ten per cent rise from next time. That does happen, and technique changes its likelihood. What goes untouched is why that job sits around two hundred thousand at all. Not being brought in, it does not become the subject of discussion.

Put one number in and think. Say the negotiation succeeded and the figure rose twenty per cent. Next time you speak to the same client, can you take another twenty from there? It becomes harder. It moves once and hardly moves twice. This asymmetry cannot be explained by technique, because technique is just as available the second time.

What does explain it is that the range of movement was settled in advance. Inside the range it moves; at the edge it stops. If most of the range went on the first attempt, little is left for the second.

What makes the range is three layers. The total budget available to the other party. The share within that budget. And the standard level of the amount for the occupation. Negotiation does not reach the third at all, barely reaches the first, and does reach the second.

So there is one thing to establish before negotiating. Did anything in those three move this time? If none did, the negotiation goes back and forth inside the same range.

The reason for separating them is that the correct response differs by layer. The correct response to the middle layer is negotiation; the correct response to the top and bottom layers is not. Think “raise the rate” without separating the layers and you apply one tool to all three.

The reason this check is needed is that the range is invisible from inside the room. What happens there is a proposal and a response: the amount moves and it is a success, it does not and it is a failure. Where the range was is displayed in neither case. So when nothing moves, there is no material in hand for separating the causes.

Without material, the explanation drifts toward technique. You opened badly, the timing was wrong, the grounds were weakly presented. None of these can be verified, so none can be denied either. And then the technique gets polished further for next time.

Polishing is not wasted. Taking the whole of the inside of the range does require technique. But at the edge, the polishing does not appear in the result, and because it does not, it gets polished more. There is one way out of that circle, which is to establish the three before negotiating. Establish them and you can account for the lack of movement as an edge.

What “Raising Your Rate” Means Raising

The rate is fixed as the outcome of negotiation, and the level of the rate is settled before that. One and the same word, “raise”, points at both without distinguishing them.

A rate is the amount transacted per job, or per unit. Sometimes it is cut by time, sometimes by deliverable. Either way it refers to the money that moves in a single transaction.

The way it is decided does not appear in the room. The other party will say “our budget is in this range” but will not say why that budget is in that range. Not out of reticence: in most cases they too are simply receiving it as a constraint from above.

This asymmetry is hard to see from the negotiating side. The figure moves in front of you, so it feels as though negotiation is what moves it. It genuinely is moving, so the feeling is not wrong. But look at how far it moved. It usually lands within a limited range. An order of magnitude change seldom happens, and that fact itself suggests the range.

One more pair of words is worth separating. A rise and a pricing. A rise moves the amount of an already established transaction; its reference point is the present amount. A pricing places a level from your side while no amount has yet been settled; its reference point lies outside the present amount.

Much of the advice addresses the former. And the former has a structurally smaller range of movement than the latter. The already established amount becomes an anchor, and once there is an anchor, the difference from it becomes the subject of negotiation, and differences do not get large.

The word “going rate” deserves sorting too. Researching it is among the most useful of the methods on offer. You learn where your own figure sits in the market’s distribution, and if it had been left low, that becomes apparent. You get out of the state of quoting without knowing the distribution.

But a going rate does not account for the range. What it shows is only that many transactions are concluded within that band; it does not show why the band is where it is. A going rate is a tool for making up lost ground, not a tool for getting out. At the point the lost ground is recovered, this tool’s role is over.

Note also that a rate and an income are different quantities. If the rate rises and the job count falls, income does not increase. What is treated here is the rate alone; the ceiling on the income side needs a different view. Conversely, you can leave the rate alone and increase the count, but that route stops earlier, on the side of available hours.

What the Advice to Raise Your Rate Presupposes

Every one of the moves lined up presupposes that there is room in the other party’s budget. The presupposition is not hidden; it is stated.

Lay them out. Build trust before opening the subject. Judge when the other side has slack. Check the going rate on job boards and compare it with your own. Rather than saying “this is too cheap” directly, put it in a message that adds the benefit to them. Show your track record first. Time it to the contract renewal.

Many articles on going rates and negotiating technique say, in substance, that because clients decide fees on the basis of a budget, raising your rate is difficult where there is no slack in that budget. It gets skimmed past despite being written down, because it is not the article’s subject. The subject is technique, and the budget gets one line as a premise. Readers, too, are there for the method, so they pass over the line.

Yet that line states the existence of the range. With room in the budget it moves; without room it does not. The skill of the negotiator has an effect only where there is room.

And how much room there is cannot be known in advance from the negotiating side. You open without knowing; if it moves it was a success, if not the timing was wrong. Here is why evaluating this as a technique is hard. Both success and failure can be explained by attributing them to technique. Neither explanation looks at whether there was room.

One more premise is in place. That the relationship continues. Most of the methods envisage a client you already transact with, whom you ask for a higher amount from next time. Build trust, show your record, time it to renewal. All of them presuppose multiple transactions.

That is a realistic assumption. Put a unilaterally high figure into a first quotation and you are often simply compared away. So you move it once the relationship exists. As a sequence, it is sound.

But the premise has a consequence. To raise the amount, you first have to continue with that client. To continue, you begin by accepting something close to their quote. And the amount you accepted becomes the starting point of the next negotiation.

Which means the amount first accepted decides where the range sits in that relationship. Technique widens what can be moved from that position; it does not reset the position itself. That this goes largely unmentioned in the advice is because mentioning it stops the discussion being about negotiation.

The First Layer — The Budget Was Settled Elsewhere Before You Spoke

For the commissioning side, the money available for a job comes down from constraints above. What the person in the room can move is only the inside of what came down.

There is an overall business plan, an allocation within it, and a portion assigned to this job. What deserves attention is that the portion is not necessarily calculated from “the value of that work”. For the commissioning side, how much profit the work generates and how much they can pay are different quantities. The profit generated can be large and the allocation small, so the payable amount is small. It also runs the other way.

The form in which a portion stands first and judgement happens inside it has been studied in household finance. In 1996 Chip Heath and Jack Soll showed that people assign spending to budgets by category and judge individual expenditures against the portion for that category (Heath & Soll, 1996, Journal of Consumer Research, 23(1), 40–52). In a category whose portion is used up, an expenditure that is worthwhile in itself gets passed over. What the judgement uses is not the worth of the expenditure but the remainder of the assigned portion.

That study addressed individual households, not corporate commissioning. Its scope cannot simply be widened. What can be carried across is the form itself: placing portions by category first and making individual judgements against the remainder is the order often followed in corporate budgeting. So the worth of your proposal drawing in an amount from outside the portion is, in principle, unlikely.

Which is why the argument “the client will make this much from the work, so they can pay more” can be correct and ineffective at once. The place the correctness reaches has no authority to decide.

The portion also comes with an information asymmetry. The other party knows their budget and you do not. Researching the going rate tells you the market’s distribution, not this client’s portion. You are exchanging figures in a state where information sits on one side only.

No means of closing that asymmetry sits on the technique side. It closes only where the other party tells you the portion. And here the part where technique genuinely works becomes clear. Deepening the relationship makes the information about the portion more likely to be shared. That is a substantive effect. What it improves, though, is not the power to move the amount but the accuracy of knowing where the portion is.

Know the portion and you cut the number of rejections from quoting beyond reach, and take the maximum available within it. That is an improvement worth having, and the portion itself has not moved.

There are also two cases where the portion does move. One is the other party’s business expanding so the total available to allocate grows, which happens more or less independently of anything you do. The other is your scope coming to straddle a different portion. Work taken on within a production budget that grows to include design decisions can shift which budget category is consulted. If the amount changes by an order of magnitude, this is the route.

There is room to act on the second. But this is not negotiation; it is a matter of what the work contains, of actually changing what you take on. If you want the amount to move by an order of magnitude, the place to start is not preparation for negotiating but what you take on in the next job.

The Second Layer — The Share Is Decided by What the Other Party Does If Talks Break Down

How much of the same portion is allotted to you is decided by what the other party does when you are dropped. The harder you are to replace, the more expensive dropping you is, and the larger the share.

That sounds cold, and from the commissioning side it is the obvious judgement. If the same thing can be had, take the cheaper one. To be taken, you come down too. The share is decided out of that exchange.

The same form was formalised earlier in the theory of bargaining. In 1950 John Nash treated mathematically the case of two parties dividing what agreement gains them, and showed that the position of what each gains if no agreement is reached — the disagreement point — decides how the agreement is divided (Nash, 1950, Econometrica, 18(2), 155–162). Skill in speech is not in that formalisation. What is in it is only what each party takes home if talks break down.

Applied to the transaction in front of you, the disagreement points take concrete shape. Theirs is “ask someone else”; yours is “take a different job.” With many substitutes, their disagreement point is light and the share coming to you is thin. With few, theirs is heavy and your share is thick.

Which is why this single point bites harder than technique. Where there is no substitute, the amount rises without any technique at all, because a reason to keep you arises on their side. Where substitutes are plentiful, however well you negotiate, you are declined and they move to the next person.

The response often taken here is “raise your specialism”. The direction is right: the higher the specialism, the fewer people can do the same thing. But specialism comes in two kinds. Height of skill, and narrowness of the field addressed.

Height of skill reduces the number of substitutes. It reduces continuously: get into the top tenth and your substitutes number a tenth. They do not reach zero. Narrowness of field reduces differently. Build a state where your experience applies directly to parties with particular conditions and the list of candidates itself gets short. The filtering is by fit to conditions rather than by rank of skill.

The difference matters in practice. Raising skill has to be kept up or the rank is not held. Narrowing the field, once it holds, keeps working as long as the field exists.

That said, narrowing the field also reduces the total number of enquiries. Having no substitute and having enough enquiries are hard to hold at the same time. What matters here is whether you hold the route by which enquiries arrive. Hold it and a narrow field still reaches the count you need; lack it and you thin out by exactly what you narrowed.

Where you depend on a service that brokers jobs, the problem comes out harder still. Brokerage works better the more things can be filtered by condition, so the person who can take on a wide range tends to be displayed more often. Narrowing works against you inside that mechanism.

So the advice “raise your specialism and raise your rate” ends with only one half executed unless it comes coupled with the route. Having narrowed and receiving no enquiries is not a failure of narrowing; it is the consequence of not having prepared a route that reaches the narrowed field.

The Third Layer — The Level Is Settled on the Side of the Cost of Reproduction

Negotiation does not reach the standard level of the amount for an occupation at all. What settles the level is the side of what it costs to make that working capacity available again.

It is not a share of the value generated. Why it is settled that way, and which three costs it divides into, are taken apart in getting out of labour-intensive form, so only the consequences bearing directly on negotiation are taken here.

There are two. One is that the relearning needed to keep up is counted into the consideration from the outset. Continuing to learn is already in the calculation as a premise, so having caught up is not material for an increase. The only thing that works as a deduction is not having caught up.

The other is that the level moves only when the standard of the field itself moves. The fact that you got better than others does not touch that standard. So however carefully you discuss skill, it does not become negotiating material for this layer.

This settles a phenomenon reported constantly as lived experience: skill rises and the amount does not rise in proportion.

There was a period when I learned this one point in the body. After finishing music college I was sending compositions to song competitions — selections that gather large numbers of candidates from unknown composers for an artist’s next release. Finish to the deadline, send. In most cases nothing comes back.

Over the time I kept sending, my ability certainly rose. Processes I could not do before became available, and the standard of the finished work went up. Even so, income did not move.

The account I received at the time was that I was not being chosen because I was still not good enough. But that account does not fit the facts. My ability was rising and I could verify that for myself. If it rose and nothing moved, then something was missing between rising and moving.

What was missing was the route. For the fact of improved ability to connect to an amount, a route is needed that carries the fact to the side receiving it. In the form of a competition, that route was held by the people running the selection. What I held was only the right to submit as a candidate.

The difference is not an emotional matter. It changes what you do next. Think of it as not being rewarded and the next thing to do becomes making them acknowledge you more. Think of it as having had no route and the next thing to do becomes holding a route.

What the Experience of an Actual Rise Proves

That it rose proves negotiation works. It also proves, at the same time, that the conditions were in place.

Look at what was happening when it rose and the conditions were likely in place beforehand. There was room in their budget. Your substitute was not immediately findable. Or the work up to then had made dropping you expensive in handover. Where one of those three holds, negotiation tends to succeed.

So the conclusion is not that negotiation is pointless. Even with the conditions in place, the amount does not move unless you open the subject. Negotiation is the process that converts assembled conditions into an actual figure.

That is where this article sits. Negotiation is the process of collection, not the process of creating conditions. Doing the collection carefully is worth something. But how much can be collected is settled on the conditions’ side.

Be accurate here. This is not an argument that you must not negotiate when the conditions are not in place. Where the quoted amount plainly falls below the going rate, that is not a matter of conditions; it is simply having been underestimated. In that case negotiation alone resolves it.

Such cases really are common. Taking work without knowing the going rate, leaving the amount first agreed untouched for years, never once having asked for a rise. For anyone in that state, technique works fastest of all.

What is being treated is the order of two phases. Once the correction of a left-behind figure is done, movement stops beyond that point. Think “let me negotiate better” at that point and you go back and forth inside the range. Where movement stopped is not the limit of technique but the edge of the range.

The two phases look identical from outside. Both are the state of wanting a higher rate, and the response in both is negotiation. What differs is only whether it works.

They can be told apart by one thing. Where your figure sits against the distribution of going rates. Low in the distribution and you are in the correction phase, where negotiation works fastest. High in the distribution and still short, and you are near the edge, where the range you can expect from negotiation is small and the place to start is elsewhere.

And beginning in the former and moving to the latter is not unusual. Continuing the same response without noticing the move is the state this article addresses. It feels as though the response suddenly stopped working; what changed was the phase.

After the Rise, the Preparation Side Grows

When the rate rises, the preparation per job rises too. The increase is added to working hours.

Watch how it grows one step at a time. When the rate rises, the other party’s expected standard rises too. For the same content, more careful explanation gets asked for, or the number of confirmations grows. On your side too, you increase preliminary work and the working-up of proposals in order to deliver a result worth the amount. So a twenty per cent rise in the rate leaves the amount per hour unchanged if the time per job has grown twenty per cent.

This does not happen because anyone is acting in bad faith. If the amount rises, aiming to deliver a standard that matches it is natural. And on their side, expectations rise as the amount they pay rises. The work gets heavier as a result of both parties behaving honestly.

Here the character of raising a rate as a response shows itself. The more it is repeated, the more the next round costs. Raise the rate and preparation grows; grown preparation squeezes working hours; to recover what was squeezed you raise it again. Each time you return to the same position, the conditions are heavier than last time.

So this response does not necessarily improve matters if left alone. There are cases where it improves and cases where you return to the same place. Which one depends on whether preparation grew after the rise.

The test is simple. Compare the time used per job before and after the rise. If the time is the same, the improvement stays. If time grew too, the ratio is unchanged.

The comparison needs a record. Without one, it gets made by feel. Feel is not reliable in this phase. The fact of the amount having risen comes first, so it feels as though the situation improved. Meanwhile the twenty per cent growth in time per job happens a little at a time, so it is not registered as a change. One arrives at once, the other gradually.

So noting down the time per job before you raise it is worth doing. Everyone keeps a record of amounts; few keep a record of time. The change shows up on precisely the side that is not being recorded.

There is also the option of reducing the grown preparation. Where it can be reduced, that is the right answer. But reducing it takes you below the expected standard, which then has an effect on the next enquiry.

Grown preparation is not necessarily a bad thing in itself. If the growth is raising the quality of the work, that part has an effect on the next enquiry or referral. What becomes a problem is where the grown preparation is used only to maintain the same amount. In that case the increment does not go outward.

Before Negotiating, Redraw the Three Layers

What you establish is whether any of the three layers has moved since last time. Stack negotiations on a layer that has not moved and you go back and forth inside the range.

First. Has anything new become known about the other party’s portion? Recall how far they spoke about the portion at the last negotiation. If it ended at “the budget is fixed”, no information about the portion has been shared. If there was a range of figures or an account of how it gets decided, sharing has started. Where it has progressed, you can take the maximum available within reach.

Second. Has what the other party would do if they dropped you become heavier than last time? There were two ways to make it heavier: raise the rank of your skill, or narrow the field you address. If neither, their disagreement point sits where it did. If it sits where it did, there is no reason for the share to change.

Third. Have you built anything outside the mechanism that decides the amount? The level itself does not move through negotiation. To move it you have to hold a place where an amount arises in some form other than selling hours. That is not a matter of negotiation but of the shape of the business.

If all three are “no”, the negotiation will go back and forth inside the same range as last time. There is still value in opening it, since room left untaken last time may remain. The range to expect, though, is smaller than last time.

Redrawing has one cost attached. Once you can account for the lack of movement as an edge, your appetite for negotiating itself cools. Opening the subject repeatedly in a place where you can see the edge is heavy work. That is worth putting down honestly. The energy freed by the cooling belongs, properly, on the third layer.

What to look at before negotiating is not the other party’s face but which of the three layers constraining the amount moved this time. If a layer moved, negotiation converts it into a figure. If none did, there is nothing to convert.

And the technique you have been polishing was not wasted either. Technique is the tool for taking the whole of the middle layer, and the middle layer genuinely moves. What was mistaken was the premise that technique reaches all three layers. Know how far it reaches and you can consider separately what to apply to the part it does not reach. Of the three, the ones you can move are the second and the third, and neither is something to prepare before the next negotiation; both are built over a stretch of time.

Why moving the rate as a variable does not move the ceiling on income is treated in what to know before earning on your own: the ceiling on selling time, and the properties of the hourly rate as a measure are taken apart in raising your hourly rate does not make you free. The third layer, the one negotiation does not reach, is not closed by this article alone. Where the level of the amount is settled is addressed from the outset in getting out of labour-intensive form.