Freelancers and full-timers alike often hate to talk about money. We’d much rather fiddle with optimization funnels or simply work extra hours if it means we can avoid having a single uncomfortable conversation about money. And that’s a real shame because an hour spent really nailing a money conversation can pay dividends orders of magnitude larger than fiddling with anything else less uncomfortable.
I’ve spent several years running a consulting company where I have to talk about money, and have to do so frequently. So, here I’m hoping to pass along some tricks I’ve learned to make the conversation less uncomfortable.
First and foremost, remove all emotion from the conversation, especially your own.
In any context (money, marriage, hostage negotiation), emotion makes difficult conversations several times harder. While you’re not in control of your boss or client’s emotions, you are in control of your own. So work hard to keep you emotion out of it. Spawn a background thread in your mind that’s continuously reminding you things like “this isn’t about you” and “take a deep breath” and “focus on the facts” and “keep my ego out of it.”
Just come out with it, don’t beat around the bush.
One fast way to make an uncomfortable conversation even more uncomfortable is to dance around the subject. Both of you in the conversation know why you’re there and what you’re supposed to be talking about it. Hemming and hawing and dancing around what you want is only going to make things awkward. Both of you will be sitting there dreading the moment when things become serious. So, just like with removing Band Aids in one quick pull, dive into the meat of your conversation as soon a politeness allows. Paradoxically, you’ll actually feel yourself relax the moment you utter the words “I’d like to raise my rates.” And your client (or boss) will, too.
Say everything out loud.
I’m really bad about drawing conclusions in my head, moving three steps ahead of them, and then finally verbalizing what I’m thinking. It took me almost ten years of (happy, joyous, blissful, did I mention joyous?) marriage before my patient wife finally drilled it into my head that I needed to say things out loud or she won’t be following the same train of thought I am. The same thing applies in money conversations. If you’re thinking this:
“I know they hired Rock Star Web Developers for $500/hr last summer for an ad campaign and I deserve at least that much.”
But only saying this:
“I’ll do that project for $500/hr.”
Then you’re depriving your conversational partner the opportunity to add light to the conversation. Maybe Rock Star Web Developers got a performance bonus on that gig. Or maybe the company (justly) fired the guy who hired them for wasting too much money. Or maybe Rock Star Web Developers was straight-up lying. But you’ll never know the real truth if you’re not bringing the other person along in the conversation.
That said, ask for what you want, not what others are getting.
I’ll never forget the first pay raise conversation I had with a boss (a guy named Ishi, who was a cool boss as you’ll see). I’d exhaustively researched what other developers of similar experience were making (harder before the days of Glassdoor) and presented it to him very methodically, building to the punch line…I’d like more money please just to, you know, be fair and all. He stopped me in the middle, before I even got to some of the best parts that I was really proud of, and said: “Tim, why are you telling me this? You know what you should do? You need to just walk in here and say ‘I want a 15% raise’ and leave it at that. I don’t care what other people are making. I care about what you’re making and whether or not you stay here to make it.”
Reduce your asking amount because nobody will pay it, not because you thought it was “unfair”.
In a fair market without monopolies and fraud, there is no “fair” price. There’s what people will pay and what people won’t pay. How much salary you make or what hourly rate you charge is not a moral question, it’s a business question. So before entering a conversation about pay, say to yourself in the mirror five times: “If they’ll pay it, then I’m worth it.”
There is one caveat to this advice: you shouldn’t worry about your client being “mad” at you for asking too much, but you should worry about them turning you down for repeat business if you ask too much. Both are kind-of the same, but notice how the second one is quantifiable and the first one is not.
Don’t increase your asking amount in little increments, ask for big chunks.
In a human sense, there’s a certain emotional overhead from being asked for something. That overhead is the same no matter if what we’re asked for is small or if it’s big. So, if you want a total raise of $25/hr and you ask for $10 now and $15 six weeks from now, the total emotional damage to your client will be larger than if you’d just asked for the $25 in the first place.
In addition, if your client is a big organization, then paying you more money is actually the least difficult thing to do. Changing what you’re paid is the most difficult thing to do. It involves meetings and forms and justifications and budget negotiations and windows of opportunity and political will. If the sponsor at your client has to go to the well twice instead of once then you’re causing much more hassle for them. And there’s a very real chance some bean counter or blanket corporate policy will foil their second attempt.
Ask sooner rather than later.
Don’t wait to have your difficult conversation about money. The longer you wait, the longer it will be hanging over you. And if you’re feeling especially underpaid, you’ll start to build up resentment and frustration with your client (or boss) that they don’t even know is there (see: “Say everything out loud” above). Maybe one day that results in you exploding in a meeting and your clients looking at each other like “hey, what’s eating him?”
Also, there’s the practical consideration that changing how much money you make will take time. There might be budget calendars you’re not aware of. There might be internal discussions to be had. You can’t know these things ahead of time, so it’s better to get the ball rolling well before it becomes a personal emergency for yourself.
Prepare the field by dropping hints.
Nobody likes to be surprised by difficult conversations. When I worked as a manager in the corporate world, we did formal, annual performance reviews. I considered it a personal failing if my employee walked into one of those conversations not already knowing how it was going to go (for better or for worse). The same thing should go for your money conversation. You client (or boss) should already suspect what you want to talk about before you open your mouth. They might not know details and figures, but they should know the gist.
Back yourself into a corner.
Nothing makes asking for more money easier than not having an alternative. I found this out when I launched my company in 2009. When I still had my cushy job and was chasing side work, I found it difficult to ask clients for money. But the moment I quit with only 3 months of runway, those conversations got a lot simpler. They still weren’t easy, but they were a lot eas-ier.
Don’t rely on tricks and gimmicks.
If you’re still uncomfortable enough talking about money to be reading this post, then that’s what you need to work on first. The Internet is full of tips and tricks and hacks for raising rates and salaries. Do Annual Pricing! Use Blue Fonts to Double Your Rate! 10 Resume Key Words to Triple Your Salary! All of these hacks are a waste of time if you’re still struggling with the very notion of talking about money. Get comfortable with the subject first, and then worry about optimizing your message.
All of the above counts double for dealing with friends.
I’ve done plenty of business with friends. In fact, the majority of my business has been with friends or acquaintances. Some of those friends even stopped using me when I raised rates over the years and they’re still my friends. I’m having drinks with one of them tonight, in fact.
Our friendships survived partially because I applied the above advice (well, and did a good job). You may be tempted to think you can slack off a little with friends but you couldn’t be more wrong. There’s nothing that preserves a business friendship like a strong and clearly-worded contract.
So, what’s your difficult conversation?
I’d love to find out in the comments what your experience with money conversations has been. Is anything holding you back? Why?