Factum Survey Exposes Exploitative Practices in Freelance Price Negotiations Amid Rising Costs
Survey Background: The Struggle for Fair Compensation
Factum Inc., a provider of cash flow management support services, recently conducted a "Survey on Price Negotiations and Unreasonable Demands" targeting 300 freelancers and owners of small-to-medium enterprise (SME) subcontractors across Japan. As operational burdens grow due to rising inflation and the implementation of the new invoice system, the study aimed to shed light on how insensitive client behavior is currently obstructing the necessary passing on of costs to clients.
The Numbers: Over 70% of Price Increase Requests Rejected
Of the business owners who attempted to negotiate higher unit prices over the past year, a staggering 72.4% reported being either "completely rejected" or "put on hold with a promise to consider." Only 14.1% of respondents successfully secured the price increases they requested. These results highlight the extremely precarious position that subcontractors and freelancers occupy when attempting to adjust rates to reflect economic realities.
Ranking of Unreasonable Client Demands
The survey also cataloged the specific justifications and threats used by clients during price negotiations or payment delays. The most common responses were:
1. "We expect you to cover the increase through 'corporate effort' (internal cost-cutting)."
2. "We will switch to a cheaper vendor if you raise prices."
3. "Requests for discounts equivalent to the consumption tax."
Such actions are highly problematic, potentially violating the Subcontract Act or the Antimonopoly Act as an "abuse of superior bargaining position."
Recommendations: Managing Business Risks for the Future
Factum warns that continuously yielding to unreasonable demands is a major management risk that can lead to "black-ink bankruptcy"—where a company remains profitable on paper but collapses due to cash flow shortages. To protect their livelihoods, Factum recommends that service providers proactively diversify their client base and have the courage to terminate relationships with exploitative clients. Taking these steps is seen as essential for building a sustainable business in the current economic climate.