I love making deals and negotiating. I remember as a young boy walking the old markets in Bangkok and Jerusalem. Negotiating a better price was expected and it was fun.
It’s critical that you believe in yourself and the value you create.
My goal was never to pressure the other side into giving me an unreasonably low price. In fact, I remember seeing tourists in Bangkok haggling over 50 cents – which to them was nothing – yet to the Thai market stall seller was a significant amount. That’s not the kind of business I believe in.
You must see value in your offering and have confidence in it. If you don’t, if you doubt the value you’re creating or feel your fee is ‘too high’ your counterpart will sense that.
I’m sure you’ve heard it before – a great negotiation is where both sides win. If one wins and one losses you’ve lost your opportunity to do business with that person again.
That doesn’t mean that you don’t go after making a great deal. You certainly do and this mindset and approach is the same with consulting buyers and clients.
Your ability to handle objections (I’ll cover this in another article soon) as well as how you deal with pricing, proposals and potential negotiations when the buyer wants you to lower your price – are all critical.
Here are 10 tactics to help you become a better negotiator:
- Establish trust – There is an old school of thought around negotiating that says you shouldn’t share information with your counterpart in the negotiation. This Harvard article supports the idea that sharing information makes sense. It comes back to the law of reciprocity. People want to give back when someone has given something of value to them. Of course you’ll want to avoid giving away highly sensitive information around your pricing or anything that may help you to get what you want. You’ll want to balance what you hold back with offering enough that your counterpart appreciates your offer and trusts you for the action.
- Danger of “Between” – In this article from Inc Magazine Mike Hofman suggests that you should avoid the word “between in negotiations.” This might sound odd, that just a single word can be so dangerous. Yet when you really think about it, it does make sense. You see, when you say “I was thinking between $150,000 and $400,000” your counterpart is more likely to hone in on the lower amount (that they have to pay). In this case, they will do their best to hold you to $150,000 because that’s the number that you mentioned so it must be a possibility. If you are going to give ranges in negotiations ensure that the lowest number you offer is one you’d be happy to settle for.
- It’s not personal – You never want to take a negotiation personally. Far too many take business personally regardless. In a negotiation you must keep your cool. Like the poker player holding their cards – you don’t want to reveal any stress or anger you might be feeling. If someone makes you a lowball offer or doesn’t give you the terms you want – don’t take it personally. Talk calmly and tell them “that’s not going to work for me/us” and go on to explain why. Remember, what most people want is to get a part of what they want. If they can get it all, great. However, if they can get most of it, they’ll be happy too. Your job is to find that middle ground where both people get the most important things they want. If that means both of you can’t have everything so be it. Which brings me to the next point…
- Be clear on what you and your counterpart want – When you enter a negotiation be clear on exactly what you want. What is your number one priority? What is the true goal of the negotiation? If you had to give up some of the items on your ‘must have’ list, what would they be? The same goes for your counterpart. You’ll want to know as much as you can about what they truly want. And you’ll get some of this from research. But ask them. Don’t be shy to engage in a meaningful conversation where you find out what they really care about. This exercise prepares you for the unavoidable scenario where you and your counterpart need to make compromises.
- Do your research – I believe Tony Robbins said that before he enters a room to conduct an interview he spends 40+ hours researching the person. His goal is to know as much about their history and current situation. What drives them? What are their goals? What activities are they involved in? The result is that a scheduled 30 min interview often turns into a 3 hour passionate discussion where people share more with him then they ever planned on. Going into a negotiation is the same. Do as much digging as you can to learn about your counterpart. The more you learn about them before the negotiation the more personable the conversation can be. Which results in both sides creating a stronger bond, a better relationship and more mutually beneficial deal.
- Your final offer – When you enter a negotiation two things often happen regarding price and terms. You either see an opportunity to get more than you originally planned or you end up going lower than you’d like. In the first case you must be careful. While the blood is rushing it may be easy to believe that you can get more than you initially planned, however there is a danger. The danger is that you become greedy. That your confidence takes you too far. If you see an opportunity to get more without damaging your relationship with your counterpart – where they will still be happy with the result – go for it. On the other hand, if the greed kicks in and you do go too far, not only will you damage the relationship you’re trying to build, you’ll lose the deal. The second case is just as important if not more. Here you want to ensure that you know what the lowest you’ll go is. Sometimes you’ll find yourself so hungry to win the business that you take a deal that in the end doesn’t provide enough value for you (and your team). So yes, you may win the business, but you’ve also filled your schedule with a lower paying client (that potentially the next higher paying client would have filled but now can’t because you don’t have ‘time’). Don’t be afraid to stand firm and be clear that you can’t go any lower. Focus on the value you’ll create in the relationship. And if your counterpart still doesn’t want to work together, that’s fine. Wish them the best and move on. Focus on the next opportunity.
- Make the first offer – Research from Adam Grant and Adam Galinsky suggest that you SHOULD make the first offer. You’ve likely read or heard that you should get the other party to make the first offer – yet this research doesn’t agree. Here’s why. When you make the first offer the number (or terms) you state become the initial anchor point. The conversation will then revolve around that anchor point (higher or lower for example). But at least you have a start point to work from – and it’s one that you set! Failure to do this means that the other party sets the initial anchor point – and if they do – and their number is much lower than you had in mind – it will be harder to get it back up to where you want it.
- Don’t accept right away – Don’t take that first offer right away. Even if your counterpart gives you exactly what you want, don’t rush to jump in and say “yes”. Instead, delay a few seconds or minutes to ask a few more questions and establish a bit of back and forth. Since they’ve already offered what you want (and are willing to take) they won’t take that away. Yet in all negotiations both sides want to feel like they are making a good deal. If you say “yes” to quickly the other party will wonder if they made a bad deal and will often try to add terms or make exceptions. You want both sides to feel like they are winning.
- Don’t go too low – I touched on this above yet it’s worth saying again. If you’re new to the consulting business and feel compelled to take any offer you get – don’t. Unless you’re just getting your feet wet (it’s okay to take on lower paying projects if you’re brand new), otherwise don’t fill your schedule with lower paying clients. Would you rather work with 50 clients paying you $1000 each or 5 clients paying you $10000 each? Or how about 2 clients paying you $25000 each? You get the idea, right?
- Confidence and value – One of most important elements in running a successful business is mindset and confidence. You must see value in your offering and have confidence in it. If you don’t, if you doubt the value you’re creating or feel your fee is ‘too high’ your counterpart will sense that. It’s critical that you believe in yourself and the value you create. Don’t apologize for a high fee or the terms you need to have to make things work. As long as you’re providing your clients with significant value and return on their investment be confident!
If you found these 10 negotiation tactics helpful please take a second to click the social buttons to share this with your colleagues and friends.
I also welcome your input. What other tactics have you found to work well in negotiations? Any stories or lessons you’d like to share? Any questions you have? Post in the comments below…