How to become a better negotiator

Jan 6, 2021

You finally receive a reply to the quote for your recent marketing proposal.

“Is there any chance you could lower the price?”

You are now officially in negotiations with the prospect. This is a major step in the sales process and one of the most dreaded parts by many sales reps and freelancers.

It is not always the price, by the way. Sometimes, the request could be a change in scope, timeline, or any one of a thousand variables. But quite often it starts with the cost.

Your first thoughts may range from ”No, that was already as low as possible” to “Absolutely, if we can get this project.”

Freelance work is heavily reliant upon the negotiation process—both on the seller and the buyer side. If all a purchasing person did was beat vendors up on price, they would not have a job for long, because there is more to business than getting the lowest price.

This goes for freelancers, as well. Your business may always charge the lowest price, but that is going to affect what is delivered. Your service or quality won’t be able to compete in the marketplace, and your company will always be relegated to being the low-cost solution. If you choose to make that your business model, there is nothing wrong with that.

Most freelancers, however, usually do not want to get by on razor-thin margins.

If you are not good at negotiating, here are three tactics to keep in mind

I happen to love the negotiation process. For me, it is like dancing. They move, you counter, then lead and so on. When done right, both the buyer and seller finish the exchange feeling satisfied with the experience.

Like any skill, it requires practice. Freelancers will become far better at the process if they work on it every day.

Always Be Willing to Walk Away

You communicate and negotiate differently when you “have to” get the deal. There is a certain amount of desperation that comes across, and potential customers can sense it. Often, this will encourage them to be more aggressive in their negotiation and cause them to place less value on your services.

You’ll also end up making a higher number of concessions than you would if you did not feel like the sale was critical.

It is human nature for customers to press their advantage and for freelancers to concede when they feel they are in need. If you can engage with a potential client knowing that you can walk away without the deal, you will negotiate more effectively.

Know Why They are Asking for a Concession

You may find this hard to believe, but lowering the price does not guarantee you will get the business. Sometimes, a person will set off a firecracker in a crowded room just to see who will jump out the window. If you are in negotiations with a company for the first time, a seasoned buyer will want to know what they can get away with—not just for this deal, but for future engagements as well.

If you are quick to make a pricing concession, they will approach you in the same manner for future opportunities. It is a tough cycle to break, but even with existing customers, you can change this behavior.

What you need to find out is why they are making the request. This doesn’t just go for price; they could be asking to change the project timing, add additional services, or any other request.

Knowing the why provides you the ability to negotiate better by knowing your options and countering them.

They are asking you to lower your price because:

● They do not see the project being worth the cost

● Your services are not high-value in their mind

● They hired another company previously but switched and now half of their budget is gone

● They are incentivized on Profit & Loss

● The owner simply told them to ask you

Every one of these situations is different, and negotiating for each requires you to pivot in your strategy.

Since practice is key, sit down and write out every request you have received in all of your previous negotiations. Determine the multitude of reasons they were requested. Now, write out how you would respond to each.

Never Give Without Getting Something In Return

Buyers aren’t the only ones focused on price. If your agency does not have other goals, you are not thinking creatively enough. Value comes in many forms:

● Consistency of your schedule

● Reputation in the industry

● Long-term commitments

● Opportunities for future engagements

● Lower-cost but higher-margin solutions

When you have a solid grasp of what is important to your business, negotiation becomes a little easier. When you are asked for anything outside of the scope and quote that you presented, you’ll be prepared to offer other options.

I have seen plenty of companies that were focused on reducing the hourly rate or capping the cost of a project, but had no issue whatsoever paying for the project in full on Day 1. Would that align with your company’s secondary goals?

There is also a mutual respect that factors into the negotiation process. If you take 25% off the price of a web design project, the customer has a lower perceived value of what you are providing that will carry over to future engagements.

If, however, they also make a concession, they’ll attribute a cost to that discount, erasing that low-value perception. The concession can be anything.

I have known companies to find long-term contracts, delayed start dates, large deposits, and other requests to be no big deal in exchange for getting exactly who they request to be managing their project. I have worked with other companies that would not accept any of those terms.

Remember, just because they ask you to make a concession does not necessarily mean they won’t buy from you. Sometimes, it doesn’t hurt to ask.

Customer: “This project is higher than we budgeted for; is there any way we can trim it down to $20,000?”

Seller: “Actually, I just completed a big project last week and am in between projects right now. If we could start Thursday, I can reduce that cost. This would work out for both you and me.”

Keep these strategies in mind, practice when you can, and you will become more confident as a negotiator.

Rob Delory

Rob Delory is a digital marketer in Raleigh, NC, and has been in the industry for over 10 years. He has years of experience selling to small and medium sized businesses.