More comment than question.. I'm trying to sign my first consulting client after a long stint in the enterprise world. I really had to struggle to not underbid. I went through the same thought process as you discussed and in the end I'm glad that I didn't underbid. Hopefully the client signs but if not, there'll be others.
Thanks for a very timely podcast (at least for me). Now to read the rest.
You probably still underpriced yourself! Remember: clients are almost never spending their own money. Budget money is monopoly money to IT decision makers. If you're over and that's the reason you're going to lose the gig, usually the client will tell you so. (On the other hand, savvy clients will "tell you so" no matter what).
Remember you are almost never rejected as over-priced the moment you mention money.
for example, asked your rate, just double the amount you thought of.
If you build in plenty of ceiling, you can have the other guy look like a negotiation genius to his boss, and you still have achieved your original goal. But don't ever just cut your rates, ask for something in return - IP rights to software, endorsements on your site, just don't cut your rates. (I have, I always regret it)
PS I think tpateck has "don't cut your rates" as a tattoo.
:-)
PPS - getting something in return really makes the other guy look like a negotiating genius
Thanks for a very timely podcast (at least for me). Now to read the rest.