Negotiating with Clients
Do you like negotiating with customers? We had no idea when we first began. We accepted the terms given to us, as well as the client’s payments and deadlines.
Although there is a vast potential market, there is fierce rivalry, and we must work hard to triumph. Being able to deal with clients successfully is one of the critical components of your success.
We are unaware of design courses, universities, or schools that teach “client negotiations.” But it should definitely be part of the subjects.
A crucial business skill is a negotiation. Whether you’re a recently graduated tradesperson, a freelancer, or a more seasoned professional, learning how to close a deal is crucial to your success.
We’ve been in business for more than 30 years, and over that time, we’ve gathered several practical strategies and tactics for enticing and negotiating with customers.
Top Tips for Negotiating Success
Long before the proposal or contract meeting, negotiation must be mastered. Creating the foundation as soon as your business or design studio is launched would be better.
In the same way, you design your brand and develop a catchy company name. You should lay the groundwork and procedures for productive customer negotiations.
We’re on a mission to provide small companies with accessible websites and the tools they need to develop online.
If you want to participate in the discussion, leave a comment below. If you need confidential assistance or to speak with a team member, contact us.
Successfully Negotiating With Clients
By the end of this article, you should have some immediate practical ways to assist you in effectively negotiating your next contract. Whether you’re in any profession and enjoy what you do, these techniques should be helpful at any negotiation table.
Know Your Worth
Whether you work as a freelancer or own a professional business, you must know your value or what you are worth.
The very first thing we want you to understand.
True, the market is quite competitive. Yes, there is global and local rivalry, and customers can choose. And, you must compete against other experts and enterprises in low-wage countries or labour.
But you can perform all of these tasks while earning fair pay.
You still need to keep an eye on the market and ensure that your business provides what customers want. Then you may adjust your prices.
You know that you have put a lot of time and effort into perfecting your skill set.
You should thus accept fair compensation for such skills.
You have a particular set of abilities that are in high demand, just like a lawyer, doctor, chef, plumber, or electrician.
Charge appropriately for them.
Find out the going rate for similar or specific projects and services from other organisations or specialists in the market. Make sure to gather as much information as you can:
- Details about the goods or services offered?
- If you could discover how much the fees are?
- How are they compensated?
And set your prices appropriately.
To avoid “negotiating” with yourself during a negotiation, use the questions above.
Many people engage in self-negotiation before meeting with a consumer. Let’s see; you’ve done your research and due diligence, determined the worth of your proposal to the customer and established a price.
But then, minutes before the meeting, you find yourself wondering,
- ‘Will they pay what I’m asking?’
- ‘Should I request more or less?’
- ‘Will other pros outbid me?’
- ‘Can I afford to lose this business?’
These are known as self-negotiation questions. You are already planning to bargain before you even begin the meeting. Don’t do it.
We all do the same thing all the time, and it never turns out well. So you know you can do better.
Set your pricing. Make sure it provides high value to the client and stick with it. Permitting self-doubt to creep in is no good. Avoid the habit of developing if you can.
We’re all guilty of engaging in self-negotiation before big customer meetings.
So, when you recognise the trap, take a moment to gather your thoughts and reaffirm the price and items you have in front of you.
So tell yourself, “I am worth what I charge,” and don’t feel guilty about it.
Know Your Market
As we mentioned before, freelance and professional services are highly competitive markets. It might be a local or worldwide market. Numerous intriguing businesses attract a large number of skilled individuals.
It also has a relatively low entrance hurdle. These factors combine to make the market for services and products difficult.
You must enjoy the industry and be willing to accept that it can be difficult to crack at times.
Some industries are likewise extremely fast-paced, with nothing remaining still.
It is critical to understand your market.
You have to deal with low-wage countries. You may have to compete with cultures far more skilled at bargaining than yours. You must compete with experts or corporations who will go to any length to obtain the deal.
You can, however, compete.
You may compete by providing something that others do not. We’ll get to it in a moment.
You can achieve success if you discover your key markets.
You may face several arguments; for example, a client may claim, “You’re rather expensive. I know other pros who will do the same for less money.”
So, what are your following words in reply?
Objections will be raised frequently, and you must be prepared to deal with them.
Knowing your worth and understanding the market and the client will all contribute to this.
By the way, your response to that remark should include the following:
You appreciate your qualifications and how you can provide what people want in a unique way.
Just because they know someone less pricey does not imply they want to take the risk of working with them!
If the client is bargaining with you, it is for a purpose, and they see other benefits to working with you. So it’s a good indicator if they deal with you even when they know they can get it cheaper elsewhere.
Recognize it, and don’t allow it to influence your approach.
You know you’re worth the price, you ask. You are well aware that you provide good value. So it’s time to advise the potential client about that now.
If the customer is focused on pricing, that client may not be a good fit for you.
Perhaps it’s time to move on.
Know Your Client
Each customer is unique, with their own requirements, goals, and motivations.
Recognizing the various types is a business information skill.
Some customers will just care about the cost. Others will focus on convenience or value to their company. When dealing with them, it will assist if you can tell which is which.
- Some customers may wish to talk about how you might benefit their company.
- Others will need visual aids to help them picture how it will seem, feel, and work.
- Some people will believe what you say and leave you alone.
- Others, though, will need substantial proof.
Recognize these characteristics in your clients so you may tailor your pitch accordingly.
Knowing your customer will also enable you to gauge their level of the project value.
We’ll talk a bit more about value and pricing in a moment.
Always remember that the project is about the customer, not you. You must find a solution for them since it is their issue.
Its worth is strongly related to how the client views that worth. You will learn to emphasise that value in the negotiation as you get to know the customer better.
Barriers to Entry
Knowing the customer will help you to understand why they haven’t signed the contract. These are entry-level obstacles.
You can sign the contract more quickly if you can recognise them faster swiftly:
- Do they consider the price they are paying fair?
- Do they doubt your capacity to deliver?
- Do they have any doubts about your skills or background?
- Do they engage in simultaneous negotiations with other professionals or independent contractors?
- Do they need to wait for someone to pay them first, or do they not have the money?
You can find answers if you comprehend the possible causes of a client’s reluctance.
If you cannot overcome such obstacles, you might be able to refer them to someone who can.
We continue to invest a lot of effort in learning about our clients and addressing their problems.
You’ll get far if you include them and provide answers to your pitch!
Know the Difference Between Price and Value
When negotiating with a business customer, pricing is the most crucial element.
Some customers have a total fixation on the price of a project or service.
Some people might wish to examine each line item to make sure the numbers add up.
They might not be the ideal client, but if that’s the only drawback, you can work with it.
Some professionals and freelancers place an undue emphasis on price.
On both sides of the negotiation, it may not be easy to overcome.
If at all possible, avoid haggling only in terms of money.
Understanding the distinction between value and price is helpful during negotiations.
Reference Forbes Finance Council
One of America’s most prosperous businesspeople is Warren Buffett. The phrase “Price is what you pay, Value is what you get” is used by him.
It’s a saying that’s frequently used in sales, and with good reason.
What does that signify, then?
A project or service will have a predetermined price intended to cover the costs of your time and effort and some profit.
The capacity to adopt an innovation, for the client to start providing new services or reach new markets, might be the value of that product or service.
Therefore, from the customer’s perspective, the value of that good or service greatly surpasses the cost.
Given this information and your familiarity with the customer, you may estimate the value the client will place on the product or service you provide.
Understanding the client’s project value should make it easier for you to keep to your price and improve your negotiation position.
We create and provide all of the goods and services for our clients while keeping the previous principles in mind. We strive to be unique and dependable and provide remarkable user experiences.
Learn How to Say NO
When negotiating, no one wants to say no in business. Although it is an element of the dance, it isn’t the ideal part.
Using those two letters sparingly makes them much more potent when you keep them to a minimum.
It’s similar to swearing in a good film or television programme. Because profanity infrequently occurs in good movies, it has an effect when it does.
Too much profanity might turn viewers off and reduce its impact in low-budget films or TV programmes.
The same thing happens when you decline too frequently to customers.
A saying: The word NO can also mean “Next One.”
These are the only times we recommend you say NO to a client.
When they make the first offer – Accepting the first offer is a bad idea. No customer makes their best offer initially, and accepting the initial offer will make them question whether they might have offered less. In a negotiation, you want both parties to come away satisfied. Getting there by taking the first offer is complicated.
On your house or car, you wouldn’t take the first offer that came in. Why then do it at the job?
When they ask for unreasonable additions – Some customers may offer a brief, ask for minor adjustments, and then be happy to move on. Others may want frequent input, ongoing meetings, and free additions of new features or components to their project, among other things. Say yes in good faith to accept requests, but learn to decline when they become outrageous.
Although it is a harsh measure, refusing or terminating a customer may be well worth the effort.
When they become more trouble than they are worth – We’ve all had customers we regret taking on in the first place.
Those who continuously demand progress, input, or modifications, as well as those for whom ‘scope, creep’ is expected rather than a generous gesture. It may be challenging to say no to these clients, but it will be well worth it!
It takes time to learn to recognise scope creep and other legitimate requests.
Just don’t take too long!
Always Use a Written Contract
You would think that most professionals always know to cover a project with a written agreement, even if you’re working for a regular client.
After the negotiations to finalise, a contract should cover and benefit both parties.
If a client doesn’t want a written contract, ask why and consider walking away. It is that important.
Too many people view contracts as negative, but we think they are the opposite.
We have always insisted on contracts and always will.
Even the basic terms on the website form part of a contract. We believe in fairness and transparency with all our clients, and a contract helps with that.
What's in a Contract?
All contracts should include some basic but fundamental elements.
The scope of work – A complete outline of what you’re doing, how you’re doing it and how much you’re charging. Make it as straightforward as possible to avoid confusion and prevent scope creep later.
The payment schedule – should include specifics about the total cost and how and when the client will pay. It should also cover payment methods, any interest charged or anything else concerning the payment.
Milestones – Milestones are essential for managing expectations. Outlining them in writing illustrates every project stage and when certain elements will be completed. If the contract includes staged payments, that should be mentioned here too.
Client responsibilities – Your responsibilities will be outlined in the scope of work. Now it’s time to outline those of the client. This should cover providing images, outlines, written content, testimonials, feedback and testing. Assign dates to each of these and outline the deadlines you agree to depending on the client meeting theirs.
Intellectual property and rights – IP and content rights are the final elements of a contract. They are a common source of conflict between freelancers, designers, professionals, and clients, so covering it off in a contract protects you – it covers exclusive ownership, shared rights, and terms relevant to the project.
Nobody likes contracts, but they are there to protect you and the client. There are lots of sample contracts online you can use for inspiration. Lawyers will also draw up proforma contract templates you can use too for a fee.
We are not a fan of the administrative side of the business, but contracts are one area where we don’t compromise.
It would be best if you did the same.
Never Ignore the Upsell
All projects and services include many opportunities to upsell. Use them all.
You could give the customer the basics and leave it there. You get paid fairly for your work and move on to the next client.
Everyone walks away happy.
However, you could also offer extras like maintenance service, or anything you can think of your industry will supply and is known to provide.
That’s what we do, and it works incredibly well.
Those services offer value to the client while costing you relatively little (cost versus value).
Those services also provide an extra opportunity to deliver exceptional service and an extra opportunity to build a long-term relationship with that client.
Not all value is monetary.
Positive client relationships don’t have a monetary value but are critical to your success.
Anything that allows you to build strong relationships is a good thing.
If you make a little money doing it, all the better!
We have built our entire business on this principle.
We begin with a consultation, adding products, offering value-added services, and combining them into a single solution.
It’s a workable idea as it delivers for the client as much as it provides for you!
Ignore Your First Instinct
The first instinct of many new professionals is to close the deal as quickly as possible, as it could rob you of extra upsell opportunities.
Instead, take the time to outline all the extra services you offer and show the value those services could have to the client.
Take the ideas shared in ‘Never ignore the upsell’ and use them well in your negotiation.
If you took the time to learn about the client, you already know their pain points, whether it’s no time, no skill or something else.
You can use those pain points to upsell, negotiate, and make a little more profit on every deal.
Some of the extra services you offer could bring in monthly extras.
That recurring income will be the lifeblood of your business.
We call it a tick-tock business and not a wheelbarrow business.
(We hope you get our point)
Try to answer all or a particular need the client will likely have while adding recurring income for you.
It’s a win-win!
Don’t Offer Freebies
Never offer something for free. It’s something we have all done, and many of us still do, especially if we are new to working for ourselves.
Even though you began by offering something for free, we wouldn’t advise it.
There is an excellent commercial reason for never offering something for free.
Let’s say you offer a 10% discount on a product or service or throw in something free to secure a deal.
When it comes time to negotiate again, the client will begin at that position and already have that free offer in mind before you carry on with the negotiation.
You’re already losing potential income before you even start.
That doesn’t mean you cannot offer value-added features to a deal. You have to make the client work for it.
For example, you can offer that 10% discount on products or services, but they have to take extras too or service. Or you sign up for 18 or 24 months and give a discount value only for the first six months.
Then they are still getting something for free as an inducement, but they have to offer something in return.
It feels free but isn’t.
You can offer consultation services as part of the initial deal. Then built it into those early products and services.
It cost us nothing except a bit of time, but it offered value to the client. They get something for free as part of the deal when they buy the products or services or other arrangements.
It works for everyone involved!
Avoid Breaking Down the Cost Wherever Possible
We’re back to cost or price versus value again. We told you it was necessary!
And this time, it’s treading a fine line between being fair and transparent and being a good business person.
You won’t come across this type of client all the time, but if you do.
When putting an offer together for a product or service to a client, it’s a good idea not to include a complete breakdown of costs if you can avoid it.
Some clients demand a complete breakdown, and that’s fine. If you can avoid it, do so.
The effect is called the “Salami Effect.” Salami slicing tactics, also known as salami slicing, the salami-slice strategy, or salami attacks, is a divide-and-conquer process of overcoming opposition.
The Salami Effect
Let’s say you break down a proposal of $3,500 for a product and Service, $250 for a year’s licence, $600 per month for Service, $250 a month for priority support and $350 per month for email outreach or content and marketing.
So far, so good, right?
Not so much.
A particular client can then say, ‘well, I can get the year licence cheaper elsewhere, so take that out, and I can live without priority support, so remove that. I can also get Service elsewhere, so remove that.’
You have lost $1,100 off the deal in less than two minutes with no real opportunity to leverage it back in.
That’s why we recommend avoiding cost breakdowns where at all possible.
Had you outlined the deal as a total cost that includes all these outstanding services for just $4,950, there would have been no room for the client to remove elements to bring the price down?
If you use this alongside offering something for free-not-free, you provide the illusion of value and being approachable while still making a profit.
What’s not to like?
We’ll admit, this one is difficult to work into your business.
But we think it’s important enough to make it work if you can.
There’s a big difference between $4,950 and $3,850!
Ask Why if a Client Changes the Tempo
When you begin negotiating with clients, you suddenly notice a different tempo.
This can vary by the client, but you should soon realise there is a recognisable tempo to the regularity of their replies, calls, and meetings.
It’s like a pattern or a rhythm.
Learning to spot this with every client can be essential to your profitability.
Some clients will regularly respond the next day, while others will periodically take longer.
Once you recognise it, remember it.
If the client changes that tempo, be aware. Very aware.
There will usually be a reason a client changes the tempo during the negotiating procedure, and you need to find out why.
It could be something benign, such as an impending vacation, public holiday, or more serious.
You’ll want to know both before it’s too late.
There are two reasons clients can change the tempo that you need to be aware of:
You have made a mistake during negotiation – This is a popular reason for clients wanting to sign the contract. The client wants the deal signed before you notice or change your mind. You made a mistake in the negotiations and offered something you didn’t want to or a price you didn’t initially quote.
They see something you don’t – Clients will often speed up negotiations if they perceive an advantage in the deal you have yet to recognise. For example, a popular Item is about to double in price, and they know you don’t. Or they know that the servicing company you use is about to be bought by a larger company with a habit of increasing prices across the board.
A change in tempo is not usually a buying signal.
The client often notices a mistake or knows something you don’t, which is their advantage.
If a client changes tempo, go through the contract and study the negotiation carefully.
Take a team member sanity check everything you did and calculate if you can.
You may be good, but you are also human.
It’s better to spot the issue early and admit your mistake than lose out on potential revenue.
You’ll also lose a bit of respect for yourself and your client.
Client Negotiating Skills
Those are some critical tips for negotiating with clients, and these tips could effectively work with any negotiation.
However, we have picked up a lot through experience and by asking experts over the past decades.
We were hoping to help you in some way and also help to lessen some mistakes we made over that time, and you would utilise as many of these as you can.
You’ll be so happy you did!
Do you have any practical tips for handling negotiation? Want to share them? Tell us about them below if you do!
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We’ve also got a special eBook for you.
Latest Update on December 03, 2022