It wasn’t until I started to work for myself that I realized how much negotiations are a part of the business world. Now it seems like I’m involved in some type of give and take almost every day as I work with new clients in an effort to set project prices and parameters that make it a win/win for both of us. Admittedly, this hasn’t always been a comfortable place for me to be.
In complete transparency, I had always been the person who avoided negotiations at all costs, even shunning off flea markets and farmers markets because I didn’t want to have to haggle over the price. It was fine for everyone else. I even understood that it was just part of business, but it wasn’t where I liked to be.
But now that I’ve been in business for myself for long enough, I realize that negotiating is often the key to getting what you want out of your business. Besides, if you don’t stand up for yourself, who will?
Not that you have to get more than the person you’re negotiating with, as I don’t believe that’s the best way. However, if you understand the art of making the deal, then you’re often able to state your position in a way that brings about better results.
So this is what I learned both in research and in experience…
Throw the First Number Out There
I’ve been on a few different webinars where the speakers have suggested that you never be the first person to talk about numbers as a solo business owner providing some type of service. Instead, they say that you ask about budget first so you “don’t leave money on the table.”
Here’s my problem with that: my price is my price. I’m not going to raise it just because you’re willing to pay more and I’m not going to lower it because you want to pay less. To do the former would make me dishonest and to do the latter would make me hate my career.
At this point, when a client asks about pricing, I get the details I need and I provide it. If it’s too high for them, I sometimes negotiate to a lower rate by reducing the services they want until we can get to a price they can afford. It’s not always possible, but if it is, then that’s okay with me.
Plus, as the person throwing the first number out there, I set the bar. I’ve now said, “This is what I’m worth.” That’s a very powerful feeling. And either they can afford me or they can’t. If they can and realize my worth, they’re willing to pay the price for it. If they can’t, then I’ve not wasted any more of my time or theirs than necessary.
Be Careful With Ranges
Now that we’ve talked about pricing, I’ve learned to be careful when giving price ranges. Think about it from their perspective. If someone tells you that they’ll do a job for you and it will cost you somewhere between $1,000 and $1,500, what happens when the end price is close to $1,500? You feel gipped, right? Like they nickle-and-dimed you to get as much as they could? You don’t want your clients to feel like this, so really watch range pricing.
If you’re in a field where there are just too many factors that could affect the price, then be very clear that the lower number is the rock-bottom, no-frills price and the top number includes some extras. That way, your potential client feels like the final number is within their control, enabling you to get the price you want for your services without creating any sort of tension with the people you serve.
Another option is to set the range a little higher so you always come in at the low end. This is kind of along the same premise of under-promising and over-delivering. When people feel as if they’re getting more than they pay for, it’s easier to negotiate a deal.
Don’t Be Afraid of Silence
When I was in law enforcement, I used to use silence all the time. People naturally tend to hate silence, so they start chattering away in an effort to stop the quiet. Usually, in doing so, they also admitted things that could help me put pieces of the case together to learn the truth about what really happened.
Well, I’ve also learned that silence is a beneficial part of business-related negotiations. And I learned it the hard way.
As a new writer, several years ago now, I didn’t have the confidence in my skill yet, so I hated the silence that existed when I was trying to get new clients. It gave me too much time to think about whether my pricing was right, if I was saying the right things, and overall left me doubting way too much.
To ease my discomfort, I would usually jump in and instantly cut my own rates in an effort just to hear a yes. The person on the other end would generally take me up on the lower amount (of course!) and I wound up at the point where I considered leaving freelancing because I felt overworked and underpaid.
What I had to remind myself was that I was the one who put myself there. Nothing was going to change until I did. I had to become comfortable with the silence, with the not knowing what the other person was thinking, and just be confident in who I was and what service I offered. It has taken some time, but I feel like I am there.
Now, when negotiating with a new client, I am okay with a little bit of silence, even prefer it, really. It gives me a little time to think before I speak or respond, which usually ends up with me in a better spot than if I’m talking just to fill the gaps.
Know Your Worth
I’ve talked about this a little bit already but, when you know your worth, you tend to stand on firmer ground. You’re less willing to concede on certain points and “give away the farm” because you understand your value. You know fully that your education and experience count for something and you’re not going to discount either just so a client can pay a lower price.
This isn’t always easy, especially if your business is new and you’re not very established. You realize that you’re competing against people who’ve been in the field for year and feel like a baby minnow among a sea of sharks.
However, each of us brings some value to the table that no one else offers. Maybe you have a unique way of doing things, something that none of your competitors do. Or perhaps you can crush them in customer service, doing the same amount of work in half the time.
Discover what you’re good at and make that your leverage when negotiating with new clients. Start giving yourself those morning pep talks and remind yourself daily that you’re worth whatever it is you’re charging. Once you believe it yourself, they will too.
Be Willing to Walk Away
If you walk into negotiations feeling as if your family is starving and you have to get this job or else they’ll perish, then the other person already has the upper hand. You’ll concede to pretty much whatever they want because you want the job that badly.
On the other hand, if you start negotiations with the willingness to walk away if you don’t get what you want (remember your worth), then you’re in a better position to do just that if the job parameters don’t work for you, for whatever reason. You begin in a position of strength.
Some deals just aren’t good deals. And I’m a believer that if the relationship isn’t a win/win situation, then it isn’t one I want to be in. If my client feels like he or she has conceded too much, then they won’t be a client for long, and it may even affect my reputation. If I feel like I’ve conceded too much, I start dreading my work and feel burnt out.
Not everyone is the right fit, so look for clients who are right for you and be willing to walk away from those who aren’t. You may lose a couple bucks in your pocket, but the sanity you will retain is more than worth the price!
Anything you’ve learned being a business owner that has helped you become a better negotiator? I’d love to hear about it (and maybe use it!), so please share it below!
I’m always interested in learning other small business owners’ thoughts on relevant topics and issues, so if you have a comment or unique article idea, feel free to contact me at [email protected] (put “Businessing Magazine” in the subject line, please). If I use it, it’s a free link to your website!