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Renegotiating The Contract (And Other Tales Of Horror)

You’ve met with the client, done the creative brief and gotten some kind of written agreement or contract. Work has been creative and progressing nicely. The joy and hope for life slowly return as the scent of money looms. So, with an overdose of sleeping pills no longer your retirement plan, you start to delete your suicide note and dispose of the envelopes containing instructions on terminating your accounts on Twitter, Facebook and LinkedIn.

Then, someone crunches some numbers and realizes that you can’t be paid what was agreed on. Suddenly, your contract becomes either a weapon in a brutal fight or a token to keep the job going in the hope of some pay and a return client.

You may also be interested in the following related posts:

The Hard Part Is Behind You Link

Many people start an assignment only after a percentage of the job has been paid. 50% is nice, but convincing the big clients that they are not your bank is becoming harder and harder, and the promise of payment in 30 days does not give you a warm feeling inside.

I am currently awaiting word from a client who has to evaluate some concepts and inform me of which to invoice (per piece). I am now in my sixth week of waiting, and then I have to wait 30 days beyond that to receive payment. I’ll be paid faster than the waiting period for approval for a large corporation. If you have the deposit fee, walking away is an option, but if you don’t, then you’re in a tough spot.

For hourly jobs, I always include a summary in each email of my hours spent. Sometimes, they actually pay attention and step on the brakes so hard that you can hear the job screeching to a halt. I have never worked on a project that didn’t go around and around and rack up the hours. Clients rarely connect the hours spent on committee decisions to the many extra hours they eat up. When they do and the budget is dried up, who do they turn to to make the project fit the budget?

When this happens, the strongest contract is worthless if you’re trying to finish the project, educate the client and show them a better method of coming in under budget while getting exactly what they want. The alternative is a collection agency or small-claims court (check your local laws for limits on small claims and civil claims); I prefer collection agencies, but you still may never see the money.

My Story Of Horror Averted… For Now Link

This story involves a website for a mid-sized company. Because the boss’ son knew my wife, his cousin asked for the “family discount.” The discount wasn’t enough to sting, so I agreed on an hourly rate and began. I was to work with the boss’ secretary as my contact person. A couple of weeks rolled by, with changes and odd requests coming in. The requests were implemented, and more requests came in, sometimes reverting the project to a previous version. This went on for a while until I got a call from the boss one weekend. He was angry that I wasn’t following his directions and wanted to know what my problem was.

I sent him several emails showing the instructions for the changes. There was some silence on the phone before he muttered, “Oh… my… God.”

He said he’d get back to me and hung up. Monday afternoon he calls to relate a story that is unfortunately not entirely unfamiliar. His secretary, it seems, has always wanted to be an art director. She had no formal training but apparently loved the idea of having the power to hold meetings and tell designers what to do, because apparently that was her impression of what art directors did. That and drink a lot of gourmet coffee.

She ignored what the boss wanted so that she could run the project and present it to him as her “art direction.” When I told him that she had wracked up about $2,000 in changes, he hit the roof.

“You can’t expect me to pay that!?” he boomed.

“I did everything I was told to do by the point person you assigned to me,” I answered softly, hoping my tone would bring him down a little. I knew he was furious and wasn’t about to part with another $2,000 (family discount included).

“I can’t afford another $2,000 in the budget.”

“I can’t afford to walk away from $2,000 of work I did, forsaking other work, so the money can’t be replaced or forgotten.”

“You’re going to have to work with us on this,” said the client, a little more down to earth, but obviously worried I hadn’t given in right away and cut my bill.

“May I suggest you take it out of your secretary’s pay?” I gently suggested. “I’m sure she’s worried about losing her job right now, and she’d probably prefer to pay out of pocket than just be fired.”

“I’ll get back to you,” said the boss before hanging up. His tone indicated that he hadn’t decided whose head would roll.

After about a week, he called back and informed me that I would be working directly with him. He told me what he had asked for before the secretary (whose name he never brought up again) messed with his directions. We completed the whole thing in a week. I don’t know what ever happened internally. Later on, they called a couple of times to revise a page or two on the website, but eventually they stopped calling and later redid the website with someone else very cheaply — probably in cost and certainly in look.

I did get paid the entire amount, minus the family discount, and it led to more work. I never renegotiated, but I would have to save the client. My gamble may or may not have paid off because the relationship went on for a brief period, but I was prepared to renegotiate to keep this client with the “dysfunctional family discount.”

I’m Often Asked to Renegotiate Link

Sometimes renegotiating gives you a better deal. Sometimes you just have to take a lower fee and hope it leads to something better down the road. And sometimes you have to cut your losses, take some money and learn a lesson. I wish I knew what that lesson was. I think it’s to say, “Yes.”

A good client of mine, a huge corporate entity, assigned me the challenge of coming up with innovative initiatives. I could submit up to three, and each idea accepted would pay me enough to buy all the fast food lunches I wanted for the rest of the hour. I submitted three, but the point person felt that one of them wasn’t quite there and so would pay me a fifth of the agreed-upon slave wages. What kind of candy bar would I buy with that money?

“I could never, in good conscience, invoice you for something that you are not 100% happy with and will not invoice you for that initiative,” I wrote. “I must also state that this negates our contract for ownership on this piece only.”

He agreed and was obviously happy with the renegotiation because he has since sent me better-paying work, and I was happy to retain the rights to the initiative, which I shopped elsewhere.

What if he had insisted on paying less for ownership of the third idea? I would have given in. The client was too important, and all that would happen is my pride would be hurt and the client might have made a huge windfall from the idea and looked forward to cheating me again… well, you know what I mean. They would see my value, and obviously I’m willing to be “flexible.”

Being “flexible,” in my experience with work and life, means inconveniencing myself because someone else screwed up. I use different words, but never in mixed company.

In negotiating a contract with another client, the partners agreed that I should include “… and anything else we deem necessary.” (People who have heard this story love it.) Obviously, entering the slave creative trade wasn’t acceptable to me, and so they told me they needed to work with someone “more flexible.”

My guess is that either they never found someone to launch their business or some poor soul is owed many thousands of dollars.

What To Do When Asked For a “Flexibility” Mid-Project? Link

There are many schools of thought on what to do when you’re asked to be “flexible” with your work and invoice right in the middle of a project, ranging from quiet acceptance to violent government overthrow. Let’s explore the middle road.

When you’re asked out of the blue to reduce an invoice or provide extra unpaid work, the first thing you have to do is think. It’s okay to sit on your response overnight, depending on the deadline. If it comes via a phone call, then you can say to the client, “I understand your dilemma. I’ll need to crunch some numbers and come up with an option or two that will make us both happy and allow us to finish the project on time. Let me call you tomorrow with some great solutions.”

They may press for an answer right away. You’ll feel the pressure. Explain that a lot is at stake, and you want to be sure that everyone walks away from the renegotiation happy.

If they press further still, well then, think quickly and engage them in a negotiation. Here are some possible responses you can give:

— The first thought off the top of my head is to cut the number of changes by having one point person draw together the requests and decide what is necessary. That would cut the number of hours. Does that help you out?

— I can’t really reduce the invoice because it’s time that I can’t make up with other projects. What if I stretch out the payments over six months so that the overage falls into another budget period?

— I’ll give you a discounted rate on the next assignment to even it out.
[Wouldn’t it be something to use that line on a client for a change?]

— If you can get me two dozen items of the product, I could easily agree to changing the monetary part of our agreement.

— You carry some products that we could use to barter.

— You have a service I could use, so let’s barter.

(Check your local laws on the value of bartered goods for taxation purposes, and always barter at the wholesale cost, not the retail cost.)

There are several ways to get paid while remaining “flexible.” When asked to renegotiate, think of what you want. Do you want the client to be a regular client? Do they give you enough work to even be regular? Has working with them been a positive experience? Is the fee structure good? What are you really giving up? Do you have another project waiting? Will a few unpaid hours dent your income from other clients? Is the client the type that would appreciate your sacrifice? Will you get referrals from this client? Does the 50% deposit cover your output so far, and could you just walk away now and leave them to find another freelancer?

Big Lies About Being “Flexible” Link

I became very close with many ad agency art buyers, and when they would get liquored up, I could easily get them to spill the industry lingo. They would laugh as they spat out slogans that had no meaning to anyone. I think back to the many times I heard those slogans thrown my way and how the laughs must have mounted at my expense as I left.

If you hear this:
“We’ll remember that you did us this favor…”

Insert the following:
“… and avoid you like the plague because of it.”

If you hear this:
“We ran over budget on this project, but you can add it to the next invoice…”

Insert the following:
“… which will never be happen because we’ll never run out of freelancers to screw.”

If you hear this:
“It will take you 10 minutes to do this…”

Insert the following:
“… But it will take you six weeks to listen to me say ‘I’ll know it when I see it’ and to listen to all my stories about my vacation to Fiji and my new Maserati.”

If you hear this:
“I just don’t understand how a design for one simple movie poster could cost more than $500?…”

Insert the following:
“… After all, it’ll only be used for the worldwide rights to all merchandise for this blockbuster film, and we expect the poster image will bring in only $485 million.”

(It’s long been the practice that illustrators, photographers and designers would charge more for work that would be licensed out. Licensing rights are just as important as the money earned from time spent on the actual work. The story of the Nike logo shows a happier ending.)

If you hear this:
“Oops! I typed $500 instead of $5,000 on my budget report. Could you give me a break here?…”

Insert the following:
“… so that I’m not fired when you show the contract to my boss.”

If you hear this:
“The client loves your work and wants to use you for further projects, but could you lower your fee as a kind of test?…”

Insert the following:
“… which you will fail, even if the work is great. Ha-ha! Satan wins again!”

It seems Satan has quite a following in advertising. As if we didn’t know that. How do you think agencies get work for the Super Bowl?

People will tell you all kinds of things to get what they want. We do it, too. The key is to know when to keep one’s mouth shut and when to negotiate one’s way to a happy solution, with as little of Satan’s influence as possible. You may not be cowering from him in subservient terror, but you’re stuck next to him on a cramped bus for the entire ride.

You may be interested in the following related posts:

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Footnotes Link

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Speider Schneider is a former member of The Usual Gang of Idiots at MAD Magazine, “among other professional embarrassments and failures.” He currently writes for local newspapers, blogs and other web content and has designed products for Disney/Pixar, Warner Bros., Harley-Davidson, ESPN, Mattel, DC and Marvel Comics, Cartoon Network and Nickelodeon among other notable companies. Speider is a former member of the board for the Graphic Artists Guild, co-chair of the GAG Professional Practices Committee and a former board member of the Society of Illustrators. He also continues to speak at art schools across the United States on business and professional practices and telling frightening stories that make students question their career choice (just kidding).

  1. 1

    Tevi Hirschhorn

    July 8, 2010 6:29 am

    haha – too true!

    Renegotiating is a tricky business. I don’t give up final files until I’ve been paid, nor do I transfer rights ownership until I’ve been paid. It’s in the contract, and I remind the client that. I only renegotiate if I really, really believe I’ll get more business further down the road. Generally, not with new clients.

  2. 2

    your horror story with the family discount sounds very familiar…
    Just got a similar experience here in italy… at the end the nephew of the real boss who assumed command over the website/advertisement got fired…and i’m still with them.

    I kept myself out of the firing range (so to speak) my having a back up of all the emails i got from him…
    Altough I don’t have to do any ads (for in print) anymore… i got some bigger web projects now in return.

  3. 3

    That’s an excellent read, thanks Speider Schneider and thanks Smashing for involving such a great author. As a freelancer I find much value in this article. It opens my eyes on situations when I screwed up dealing with clients and gives some practical advice, too. And I just love the humor the author puts in his writing!

    • 4

      Thank you very much! I appreciate the kind words and support. There are some other articles I’ve done for Smashing that might help (click on the author link to go to a list of the other stories) and there are more in the queue, awaiting publication. I’m sure you have a few, too!

  4. 5

    This is a great article, i always run into clients that want more for way less even though they got the big bucks for the project.

  5. 6


    July 8, 2010 7:04 am

    Great article, I did love the “Satan wins again!” slogan :).
    That happens allot, people want things for free, no matter what, hopefully not every client is that way.

    • 7

      If every client was like this then the industry would fall apart. It happens from time to time, usually because the client literally ignores the hours as the project goes along and then adds up the fees and realizes there’s no budget to finish or is just a cheat and thinks the midway scare will lower the fee. The latter, as people have posted, can be negotiated right down to the wire where you refuse to deliver or transfer the copyright unless payment is rendered. Do you take half the fee and chalk it up to experience? Sometimes when full payment looks bleak. Does walking out at the last minute, refusing to deliver work? Clients scream they are being blackmailed but it often works because they are as stuck between a rock and a hard place. I have literally stood there and not released my grip on files until the check was in my hand, followed by a trail of insults and threats from the client as I walk off into the sunset. What have I lost? A bothersome client who doesn’t want to pay.

      Thanks for reading and posting your thoughts!

  6. 8

    Renegotiating can be art in itself. The worst is when you finally reach a point that you both agree at, and then the client runs the other way.

  7. 12

    #1. Never deal with secretaries, wives or the boss’ kids/nephews.

    #2. When I switched from hourly to a ‘product / flat rate’ — clients were WAY more comfortable.

    #3. Make revision / ‘customization’ charges HURT like heck.

    • 13

      High five!

      • 14

        dont do that.

        Dont make it ‘hurt like heck’.

        Make it be a reasonable cost based on your time, effort and materials and also ensure that the client knows that this little detour away from their spec is costing them, both in terms of ultimate deliverable/milestone compliance, but also in terms of -is this new direction really helping us achieve or goals? will it equate to more sales?

        “Making revisions ‘hurt like heck’ ” seems petulant and mean

        • 15

          There comes a time for mean. Petulant, should be left out. Professional and courteous, even in the worst of situations is always the high road. Although I’m dipping into another article, I will divulge an often heard saying when I speak to young professionals (and we more experienced ones need to hear it often, too!), “be nice to the people you meet on the way up the professional ladder because you will meet them on the way down.”

          You never know who may be sitting at that committee table who will move on elsewhere and either recommend you or warn against you. Word of mouth is the original viral video.

          I am always receiving calls from people who may have been a lower level marketing person who went on to bigger and better, remember my talent and my professional behavior, even when the project blows up (and they think I’m hilarious).

          One marketing person who brought me onto a job that imploded, thanks to the editor of a well-known NYC publication, was so horrified by how I was treated and how well I carried myself through some really abusive behavior, she offered me a chance for some “horizontal hunka-chunka.” She backed out later, so I guess I just got screwed by her boss. One would have cancelled out the other.

          Just keep in mind that people watch you and while a client may laugh behind your back at how he/she screwed you, those around the boss will empathize with you because he/she does it to them everyday. It’s hidden allies. Show professional demeanor, gain trust, grow a relationship and you will find life so much easier.

  8. 16

    Lenny Terenzi

    July 8, 2010 7:32 am

    GREAT article. Really engaging read… thanks!

  9. 17

    Excellent article, thanks

  10. 18

    Really funny and engaging. Now I know at least I’m not the only person that gets ripped off by clients. Thanks!!!!

  11. 20

    These types of articles are every bit as important as technical advice. In the (hopefully) near future, I will be the business manager/bouncer for a very talented but meek Web developer. Knowing in advance what pitfalls and tricks to be looking out for will make a real difference.

    • 21

      The meek shall inherit the Earth but the tough negotiators will strip it clean first.

  12. 22

    Sunny Kumar

    July 8, 2010 8:11 am

    Great Article…

  13. 23

    I love horror stories. But one day… it could be you. Always get 40% up-front, 50% if you’re bold enough to ask. Even better, agree in advance to three or four specific milestones for payment.

  14. 24

    It seems I have a long way to go… But still I have already experience some of the horror above! Gees It’s so scary dealing with future clients…

    • 25

      Noelj, it is a delicate dance of business and creatives are usually not trained to deal with the business side of the industry. Never beat yourself up if you feel you’ve been cheated — learn a lesson. The only reason I am able to write these articles is that I have been through this all many, many times. Each time I get stronger and learn how to best deal with it.

      I few months ago a neighbor, who was becoming friendly with me, asked me to design his new company logo. I spoke to him about logos and branding and he didn’t want “any branding.” There was the usual request for a discount and the neighborly trust of no contract. Sure enough, it fell apart, I got paid a fourth of what I had already rolled up in charges and I was pissed at a neighbor.

      The good side is that I did have enough emails with terms and such (worded in a careful manner to introduce rights without scaring the client) so I could have gone to small claims court and been awarded the rest (*note: winning an award in small claims court is just an order to pay but it doesn’t mean you WILL get paid) and the neighbor, who had shown himself to be a sloppy alcoholic, was off my back and I never had to deal with him again. Well worth the lost fees!

  15. 26

    Great article. I’ve written posts on this myself and the warning signs to watch out for. Some clients are only trying to see what they can get away with. Experience on how to spot potentially horrible clients comes with experience.

    Thanks for sharing

  16. 27

    I’m sure it was a great article but I kinda got bored. Its almost impossible to just sit and read that whole thing. It needs to be broken up a bit.

    I may just be having a bad day though, not sure :)

    • 28

      Read part and come back later for the rest. It can also be depressing to read about things that happen to us, while we sit in the comfort zone in front of our computer.

  17. 29

    great article, really really true facts!

  18. 31

    I am having issues with a client that wanted the moon and stars on a shoestring budget. I completed the project in January and stretched the payments over a year. $2 million in business last year and they can’t pay me $6000.

    Anyway, I completed their product and launched it with a small down payment. I got paid January-March, but in April, the check bounced. The owner’s wife (who is extremely passive aggressive) became my point of contact because the owner didn’t want to deal with it.

    She gave me this sob story about how they were hurting for business, and needed a break. I explained that they were the first client I had ever extended payments for and that was a considerable break in my opinion. She got all bitchy and said that they just couldn’t pay me.

    So, at this point, I’ve been paid around $1700 for a $6000 contract, with no prospects of getting paid. Part of the contract was that I would design an e-mail a month for them to send to around 100 people using Mailchimp. On Tuesday, I received an e-mail from the client’s wife saying that they needed an e-mail designed for a promotion that started today.

    I informed her that 1. That just could not be done in such a short period of time (I know it can, but I was trying to be nice) and 2. They are about four months behind. In her passive-aggressive nature, she threatens to sue me for breach of contract.

    • 32

      I understand and it’s a fork in the road…and either way you get forked! Take the current path and you won’t get paid or see further work. Seems like you want to keep walking that path. Let me try to imagine the path or the unknown; you explain you can do it and hope the rift can be repaired. Say you understand that times are tough and you are in the same boat. Could they pay half the regular payments and give you a check when you deliver the card? Sounds like you may be past that and merely writing that made me throw up in my mouth a little. But it doesn’t cost a thing except pride and a little lunch to ask.

      You have a contract but what terms are quoted for transfer of rights, payments and is there an escape clause? That is rare but I’m thinking of putting it into my contract in no uncertain terms. When it comes down to it, do you need to go to court to enforce the recognition of the terms and breach thereof or give the client one last chance and send it to collections if they balk?

      I’m guessing the path to conflict is the one you must travel. You’ll have lots of company.

  19. 33

    I love it! and seriously considering printing out the list of on-the-spot renegotiations and putting it right by my computer incase I get the call..

  20. 34

    “If you have the deposit fee, walking away is an option, but if you don’t then you’re in a tough spot.” What does that tell us? Never, EVER begin work without 50% down. Write it into the contract. Also write in the payment schedule and if possible make 25% due at midpoint and the last 25% due at the end. As one commenter here said, write into the contract that the client does not get rights to the work or final files until payment is made in full. Thirty days is a jail term, by the way—not a valid excuse for paying late.

    If a prospective client balks at paying up front and presses the point, we are free to remind him that we must pay many of our expenses ahead of time, not the least of which are our monthly rent/lease and all insurance premiums.

    When asked for a discount, don’t give a price break. Instead, offer an extra service at no charge (“Charging less wouldn’t be fair to my other clients, but here’s what I can do for friends and family…”). And then explain the extra service, being sure to add “Normally I charge $200 for that.” If you can’t bring yourself to charge full price, then do it for free and nail down the terms to your liking. No kidding.

    The bottom line is, if we expect to be treated as professionals, we must act like professionals. That means a detailed contract and a businesslike approach when discussing the money. No hemming and hawing. The attitude must come through: This is what I charge because I ‘m worth it.

    • 35

      I LOVE “Thirty days is a jail term, by the way—not a valid excuse for paying late!” Thanks for sharing that and I’m sure readers will be adding that to their objection responses as well. With the hits these articles get, it should be in Wikipedia in seventeen hours. ;)

      Everything you say is true. I always, always insist people have a strong contract with those points (please read my article “How to Spot Sketchy Clients (Plus Contract Template)” if you have no contract to use). But, what happens when the client says, “no!” to the terms half way through? How much is the possible payoff? What will it cost you to enforce a contract?

      It is, as I always say, a delicate dance and sometimes a dance partner stumbles. The other partner has to pick them up off the floor…or just put the mercy bullet into their head.


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