• Advice

12 tips for contract negotiation

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There are a lot of tactics you can use to negotiate a contract, but the best move might be walking away.

Negotiating contract terms is often a source of anxiety for freelance professionals, independent artists and small business professionals.

Many feel that any attempts at trying to get a better deal could lead to losing the business completely. Others are confused or intimidated by the obtuse legalese of contract language.

Either way, many detrimental contracts are signed every day, leading to lost revenue, lost control and increased stress on the business.

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Eleven (Plus One) Tips for Contract Negotiation

The site Business 2 Community posted a piece this week entitled “Eleven Tips for Negotiating a Contract Like a Pro”.

The unknown author lays out a broad strategy applicable to salary negotiations, sales negotiations and other kinds of contract discussions. His tips include:

  1. Make the effort to negotiate
    The biggest mistake people make in negotiating is not negotiating.

  2. Know the basis for your negotiations
    Know all of the details of the project. The details are the chips that you can use in negotiation. Know what you're willing to compromise on and what you're not.

  3. Search for previous similar contracts
    Similar contracts can help you understand the scope of your own. You can see what was offered and whether the outcome was positive - then use these examples to your advantage.

  4. Back up your claims
    Provide examples of prior work or use data-oriented projections to demonstrate that you'll be able to tackle the task at hand. Your client will be more willing to negotiate if she believes you are competent and capable.

  5. Write your arguments down
    Negotiating can be stressful and it's easy to get flustered. Making notes ahead of time can keep the conversation focused.

  6. Ask questions
    Don't be afraid to ask for clarification. The more you know, the better you'll be able to assess the situation.

  7. Know who you’re dealing with
    Do your research on the client. The more you know about the business and its structure, the more leverage you'll have.

  8. Abandon your inhibitions
    If the conversation gets tense, continue to negotiate calmly and politely. Don't back down - this is your chance to ensure your happiness.

  9. Be Nice
    Keep it professional. While negotiations can become frustrating, it's important to keep your composure.

  10. Know your worth
    All too often, we underestimate our worth. If you struggle with low self-worth, seek help in the form of a career coach, therapist, or do some extensive soul-searching. You deserve to be well-compensated for your hard work.

  11. Set the precedent
    It may seem counterintuitive, but flexing your top-notch bargaining skills will actually increase your client's confidence in you. Ultimately, it's an exercise in personal branding and you set a precedent for the professionalism that you'll bring to the rest of the gig.

Each one of these points is useful as an element of contract negotiation strategy, although not all of them will be applicable or helpful all the time. I’d like to offer one more tip that will make all the others on this list more powerful.

12. Your Breaking Point

You don’t need to do every deal.

Not every contract needs to be signed.

Some business isn’t worth the headache or the potential loss.

Knowing when to walk away from a negotiation will often help you close better deals in the long run.

Late last year I wrote a post about walking away from a bad deal (See How to Reject a Bad Contract).

I offered five steps on how to leave a negotiation with grace and preserve your reputation in your industry.

What I failed to point out in the earlier post was the inherent power that comes with setting limits. If you know what you are and are not willing to accept before discussions start, you’ll:

  • Have a measuring stick to you can use to compare the other side’s offers
  • Display a sense of professional power by not looking desperate to take any deal on the table
  • Gain the freedom to pursue a better deal later

Of course, there will be times when you’re not in a position for aggressive negotiations (See Negotiating Power in Creative Contracts).

And some deals will be just fine right out of the box and you won’t need to engage in protracted negotiations at all.

But knowing how to push back and when to walk away are powerful skills for freelance professionals and business owners of all types.

Have fun.

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Gamal Hennessy is an attorney with a background in contract negotiation, entertainment licensing and business development. He has worked for large companies like MetLife and Marvel Enterprises, and freelance contractors of all types. You can find out more about the services he provides by visiting