Whether you’re just starting a business or are considering taking on a new batch of projects, eventually you’ll have to negotiate with clients. It’s an important part of being an entrepreneur. If you’re used to asking for more money from a boss, congratulations. According to one study, less than half of employees have ever asked for a raise in their current field. Still, negotiating with a client is different because it involves so many variables. If you’re running a young company you’re likely more worried about losing clients than you are about doing more work for less money. That’s a mistake. Burnout will cost you more than you’d ever earn in profits. Setting your prices too low could even put you out of business.
You’ve likely reviewed some popular negotiation strategies but my issue with them is they tend to lean into becoming increasingly aggressive. Many of us aren’t comfortable with that as a tactic. Besides, your “victory” will be a Pyrrhic one if your client feels so battered they immediately start shopping for your replacement. My goal as a business coach and founder of a ghostwriting house is to find a happy medium whenever I work with my clients. Although like all skills negotiating is one that takes practice, the first step is learning how to be assertive without damaging your relationship. Here are some tips on how to negotiate with clients.
Listen More, Speak Less
Start any negotiation by asking about your client’s expectations and listening to their concerns. They might bring up bad experiences before you came into the picture. They could discuss their meetings with your competitors and what they are offering. Letting them speak provides the opportunity to see what value you can add. Just as some brick and mortar retailers compete with online businesses by offering exemplary customer service, quality you need to feel to believe and top-notch in-store experiences, there are ways you can add value without lowballing price. Perhaps you can meet an accelerated deadline or commit to follow-ups to make sure the product or service is meeting your client’s expectations. The key is uncovering what they really care about –– rather than just repeating your price over and over.
Have Your Priorities Ranked
Before you enter the meeting, have a list of what you hope to achieve and what’s most important. Know what you are willing to give up and what you are willing to walk away for. Author and Wharton professor Adam Grant recommends a strategy called rank-ordering. He believes you can achieve better outcomes not only by ranking your points but being transparent about them. This allows you to compare your rankings with your client’s –– if they reciprocate, you’ll be able to reach an accord.
Drop an Anchor
You need to approach every negotiation with a firm number in mind. That figure represents the lowest amount you can accept while covering your costs and turning a profit. This is your anchor. If your client makes an offer below that figure, politely tell them it is too low and you’ll revisit the matter when the number is adjusted upward. The key is to never start negotiating with a number below your lowest profitable figure. Yes, there are times when gaining experience is worth more than money. There may even be circumstances when working for free is necessary. Unfortunately, this can easily become a habit because your clients will be so happy –– most of us like getting something of value for nothing. Instead, if the client won’t meet your request, then it’s time to pull up your anchor and sail away.
It’s Okay to Drop a Number First
If you’re still wondering how to negotiate with clients, one key difference between people you do work for and the people for whom you once worked is that the classic advice that the first person to speak loses doesn’t always apply. If you maintain a firm anchor, then it’s acceptable to mention your range –– after all the higher the first offer, the higher the final compromise. Again this doesn’t apply to job hunting, but rather to negotiating as an entrepreneur.
Keep Emotions Out of the Equation
No matter how much you love doing work for the client or how much they say they love you, love won’t pay your mortgage (at least I hope not!) Keeping a client who consistently underpays you is like staying in a romantic relationship with someone who takes advantage of you. You’ll eventually resent a low-paying client anyways, so why prolong the process? Yes, this is extra tough when your client list is small. Still, the time you devote to work that doesn’t pay enough could be better spent drumming up new business. You know, with clients who recognize your value and aren’t afraid to compensate for it.
Remember, like all skills, negotiating is something that improves with practice. See each time you negotiate as a chance to get better at something that will not only make you more money but also increase your value to future clients.
Want to launch your dream business? Click HERE for a FREE course on how to jumpstart your very own biz!