- Many times, your clients are much larger than you are.
They have power in the relationship.
That said, they don't have all the power
and they want your services because they don't have
the capabilities that you bring to the table.
Understand the negotiating process
and key negotiating techniques to ensure
that you don't get taken advantage of or end up
in a bad deal.
Here's some key negotiating points to remember.
Scope and price are going to be most important to you.
Focus on those.
Don't waste time on smaller terms in a contract
that you won't get to change anyway,
things like payment terms, confidentiality,
and agreement duration aren't going to be things
that a client is going to give up on.
However, you can use those terms as negotiating points
that you can concede on to get concessions
on price and scope.
I have one client where they had Net 90 terms.
What that means is I would do the work
and they would pay me 90 days later.
I wasn't happy about that, but I wasn't going to get
to change it anyway.
That said, I did use it to my advantage.
I said, "Okay, in this agreement if you want Net 90,
"I want x% more money."
And we went back and forth a few times,
but I got more money because they wanted that term.
Remember, there are going to be multiple rounds
of negotiation.
Don't give it all away on the first interaction.
We had one client situation where we did the first round
of negotiation and we got to a number
that we were happy with.
We gave them a pretty big discount and we thought
we were done.
They said, "This is going to be great.
"Let's move forward to contracting."
When we moved forward to contracting,
guess what?
Somebody else got involved and they said,
"Well that rate's a little bit high.
"Can you make it a little bit lower?"
and we gave up a little bit more money
and we thought we were done.
We weren't.
There was another round where another senior executive
got in and said, "Well that's still too much,
"we need the rate to be a little bit lower."
The next time we negotiated with that client,
we knew better.
We started our prices a lot higher
and we gave away less with each round of negotiation.
Remember, you're probably going to deal
with multiple rounds of negotiation too.
Do the math to see how important it is
to fight on a specific point.
Clients are going to negotiate all points
of your contract.
It's easy to get sucked into an argument
that doesn't matter.
I had one client situation where the guy
from procurement was arguing with me about a discount
in one area of the contract.
He and I got into it.
It was pretty heated.
I then stepped back and said, "Wait, what's the likelihood
"that this situation is going to happen?"
When I did the math, it was like $500
over the course of a year and this client relationship
was huge.
I immediately conceded the point.
It wasn't worth damaging the relationship.
Understand the first deal you strike sets precedent
for all others that follow.
The tone of the negotiation, the relationship
you build with the client, and your pricing terms
will follow you into contract re-negotiation.
Play for the long term.
Understand the choices you make now will impact you
down the road.
Remember, the deal is with your business customer.
Procurement and legal are going to get involved.
They may push you on points beyond what you agreed to
with the business customer.
When that happens, you can bring the business customer
back into the discussion to get things back on track.
I dealt with somebody in procurement one time
where I had already agreed to a price
with my business customer.
The individual from procurement kept pushing
and pushing and pushing on rate.
Eventually, I said, "You know what, this isn't going
"to work," and I call my business customer.
I said, "Look, the negotiations are off track.
"I need to get you back involved.
"You and I agreed on a number and that's what the number
"needs to be."
The business got back involved and they took care
of procurement.
We got the contract number that we had agreed to.
Be patient in the negotiating process.
Remember what's most important so you don't lose a deal
because of a meaningless point.
Your client is coming to you because they need something.
That gives you some power in the negotiating process.
Just make sure you use it wisely.