3 Tips to Know Before Negotiating Your Next E-Learning Contract
Making a living as a freelance instructional designer can be challenging, especially when it comes to negotiating new projects.
Depending on the health of your sales pipeline, you may be tempted to just say Yes! to any opportunity that comes your way. But it’s important to negotiate each project so that both you and your client are happy with the agreement.
I’ve negotiated several e-learning projects and learned a few things along the way. Here are my three tips for managing e-learning contracts that will set you up to thrill your clients and earn the compensation you deserve.
Tip 1: Know What Makes You Valuable
E-Learning designers bring a lot of unique skills to the table. Starting from scratch, we magically create courses that educate and excite learners. It’s unfortunate that many of us don’t realize the value we bring to our clients. As a result, we tend to sell our services short when negotiating projects.
This is bad news for several reasons. Chronic low-balling can lead to burnout over time, cause your client to regard your work as less valuable than your competitors, and even send the message that you’re desperate.
It’s your job to communicate your value clearly. Start thinking about the qualities you bring to the table. What value do you communicate to your potential clients? What is unique about you, your company, and your products and services?
If you don’t know, take some time to figure it out before you negotiate your next gig. Your answers will come in handy later.
Tip 2: Make Good Estimates
Once you’re clear on why you’re an awesome e-learning developer, you’ll want to put a dollar value on your services.
Estimating a project rate can be a challenge if you’re just starting out. There are several factors you’ll need to consider before you can come up with an accurate number:
- Timeframe of the project
- Complexity of the course
- Type of interactions the course requires (e.g., custom vs. built-in)
- Length of the course
- Audio and video needs of the course
- Type of design approach you think you’ll use (e.g., click-and-read vs. branched navigation)
When I understand the course requirements, I like to break down my e-learning projects into the following categories and tasks:
I use information from past projects to estimate the average time it takes to complete each task. (Pro tip: Always track your time on projects!)
By using a spreadsheet, I can quickly make adjustments as needed. For example, if the client provides a storyboard or has completed a front-end analysis for the project, I remove those calculations from my quote.
You can download a copy of this spreadsheet to use in your next project.
Tip 3: Share the Workload with Your Client
Once you know your costs, you’re ready to write and deliver your quote. It would be great if, at the end of every project pitch, our clients said, “That sounds great! Where do I send the check?” But the reality is sometimes you hear, “That’s a little more than we were thinking.”
Pricing is a sensitive topic for many e-learning designers, but if you know the value you bring to the relationship, it doesn’t have to be.
Everyone wants a deal, but it’s never a good tactic to enter into a price war. There will always be someone who is willing to charge less than you. Instead of lowering your prices, see if your client is willing to take on some of the responsibilities of the project.
Since you have an estimate of what each task costs, you’re in a position to helpfully say, “Would you be willing to do task X or task Y? That would decrease the project cost to X amount.” By delegating some of the project tasks to the client, you’re able to provide a “discount” without devaluing your work.
When using this strategy, make sure you have a well-written, crystal-clear statement of work that states your expectations. You may choose to charge a fee if your clients don’t shoulder their share of the work. I usually charge an hourly rate when I’m required to step in and help a client with something they offered to do originally.
If delegating doesn’t work, here are a few things you might consider in order to lower the overall quote without reducing your rates:
- Look for ways to shorten the course
- Reduce the number of interactions in the course
- Replace custom interactions with built-in standard interactions
- Use a standard player instead of a custom player for Articulate Storyline
- Use in-house narration in place of a professional narrator
- Use a template-based approach instead of designing from scratch
Using these strategies, you’ll be able to negotiate a contract that keeps your rates in place without losing the client.
If you spend the time up front identifying the value you bring to the business relationship and understanding your client’s needs, you’ll be able to settle on a project fee that meets everyone’s expectations. It’s a win-win: happy client, happy freelancer!
Great article, thanks! But I am dismayed to see we, as eLearning developers, aren't pricing our work as valued work. $25/hour for project management? Your plumber charges triple that rate to unclog your toilet. $50/hour for development? Your auto dealership charges more than that rate to change your windshield wipers. I've had the misfortune of seeing what some big corporate eLearning vendors charge for this type of work, and we're talking $200 an hour (!!!). Sure, freelancers can't get into those sweet levels of corporate insider arrangements, but $25 an hour? Good luck making a living after paying your self-employment taxes, your skyrocketing health insurance costs, your unpaid marketing time, your software and hardware costs, and on and on and on. Hey, I get it, we want to price our ... Expand
Chris, You make some excellent points and I agree. Note: If you look closely, you will see that these are sample numbers. They are not meant to be "industry standard" rates. I just used them to show calculations in the spreadsheet. With that being said, I do see a lot of people charging $20-$30 per hour which I think is sad. I've even seen some overseas "e-learning designers" offering to create courses for what calculates out to be $10/hour. If you do that enough, you will go out of business and/or burn out. I'm a strong advocate of encouraging people to charge competitive rates in the industry as doing anything less devalues what we bring to a business transaction. Of course, you have to have the knowledge/skills to deliver that value as well. That's why I encourage people ... Expand
So true. The question is... Who is creating this image? Until people in the L&D field start to see and present themselves as something more than "order takers", it's going to last for a lot longer in my opinion. Too many people at senior levels of management (e.g., those that control the budgets), look back to their college days and think that training is just delivering information and ANYONE can do it. I once had a friend that worked for a company that spent millions on training videos but could care less if they actually made a difference in how employees performed in their day to day jobs. Of course, we all know that Training is the first department to cut when things are going bad. I too have always been amazed at how many times I've consulted (while working as... Expand
I once had a manager say "Why should we pay eLearning developers $X just to do this **simulates typing on a keyboard** all day?" As if we are just doing clerical data entry or equally menial. Hmm, last time I checked, programmers, attorneys, accountants, and **gasp** managers also do this **simulates typing on a keyboard** all day. Yet somehow they're worth the big dollars. Bizarre. You're right, we're doing a terrible job of marketing our skills, and advertising our work for low hourly rates does not help the situation. I actually exiled myself from eLearning work in my organization for a few years because I had a major clash with my manager regarding an outsourced work project. It was an existing paper-based course that needed to be turned into a basic page turner. Cost per the ... Expand
Amanda, Unfortunately, working with senior management is a skill that has to be developed over time. To me, it comes down to picking your battles. If you are the only person on staff who has the skills and expertise, then it means you have to become the voice of reason. That being said, carrying that responsibility can be well.... tough! Believe me, I've been there, done that and have the T-shirts! I've heard it takes about 15 minutes to change an organization's culture in the wrong direction and more like 3-5 years to transform it in a positive way. One step in the right direction is for L&D professionals to understand the value they bring to the table, understand what the business drivers are for senior management, and then execute accordingly. Most Business Execs are not... Expand