A Different Method of Negotiating With Clients

Originally posted on December 29, 2009 Filed Under:

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When my boss taught me these simple tips I thought I was being brought into a get-rich-quick scheme. After learning these tips, I found that the ideas taught could be applied to so many different things in my own life.

With my freelancing, I’ve earned sometimes near $500 more on projects I would never have thought of getting. While it may not be the best idea to show how I do this with my clients in a place they’re likely to see, I’ll hopefully share with you some tips that can help you out with that beautifully hated thing we call “Proposals”.

Now, I’d like to note first that everyone has a different way to go about the negotiations process, and this is the one I use most often. I’ve included some articles at the end of this article of other people’s ways of going through the negotiation so you can figure out which is best for you, and (more importantly) the type of client you’re dealing with. Also, this art of negotiating works best on smaller negotiations tables when you’re more in touch with the client and they keep you in touch with the process. Like I said, different methods work best in different places, so knowing a multitude of methods always helps!

A Different Method Of Negotiating With Clients

The Art of Negotiating With Clients
When I think about it, the art of negotiating can be related to the attitude a five year old. When a five year old sees something they want, they go for it and keep trying. They never ask once. They keep trying. So should we be when we want something.

STEP ONE: HAVE A GOOD PRODUCT

In this process we talk about getting more money than what you may have originally thought of asking for. To do this, however, you have to be able to show that you’re worth the extra $X. This means having a few things:

  • First and foremost, have a good product or service. This means also having something to prove that you have this product and to show it off. Have a nice portfolio or resume, and make sure it only contains work that you’ve actually done and you’re proud of. If you have a huge portfolio, then make sure you customize it for the client you’re trying to get.
  • Know what you’re selling inside and out and know it in two languages: Tech-speak to make you sound smart, and social-speak so the client understands what you’re saying.
  • Have a list of services – and more than that, tell clients they’re getting more than they’re asking for. This doesn’t mean only charge for design, but do all the development for free. While you may want to do that if you really want the client, instead tell them what you’re good at, and push your services with selling points like how long you’ve been doing it, or having testimonials.

STEP TWO: PADDING NEVER HURT ANYONE

How many times have you been in the proposal process, proposed what you thought was the perfect price for the project (a little competitive, but not too competitive whereas you’re labeled as a “cheap” designer), and gotten less than what you originally asked for?

The proposal process is touchy. You have to be very particular with everything, especially if you don’t have a personal relationship with the business or anyone in it. This means every word and number (especially your price tag), has to be scrutinized and ensured that it’s reasonable. This process is something that is improved with over time and practice. Still, it is always a good idea to know what the market value of completing any given project is so you don’t overthrow (or under pitch) unintentionally.

What I suggest, however, is to overthrow just a little. Depending on the client and the size of the business, this could mean adding an extra $50 (which would let you…), or even $500 (which would get you…). It doesn’t mean you’re going to what you propose – that’s what proposals are for. If the client likes your work and thinks you’re the best out of the pack, they’ll hire you for the project. They may negotiate you down a bit, but ideally you’ll either get you more than what you originally asked for, or exactly what you asked for.

STEP THREE: BE PERSISTENT, BUT NOT DESPERATE

When negotiating, you have to be persistent. You can’t give up after the first round of negotiations and fall towards a client’s budget right away. Of course, charging $20,000 for a project whose budget is $2,000 isn’t going to get you anywhere. As well, we may not necessarily know a clients’ budget going into the proposal process, so it may be tough to tell. Throw out a number (a finely researched and thought-of one), and they’ll more than likely come back to you and the other agencies with each others numbers to try and get into an auctioning process that can only be referred to as annoying. Still, at this point you’ll be able to tell whether the project is worth your time for the amount that they want to pay you, given the quality of your work.

If you figure it’s still worth your time (already at this point they’ve probably tried to bring your numbers down), still try to overshoot what they’re budgeting for the project. What I suggest at this point is bringing in that 5-year-older’s mentality. That’s right. Get your temper tantrum on.

As soon as they tell you a number that one of your competitors offered and t’s less than yours, figure out why that is. When it’s far less, use your selling points that we figured out in step one to determine the reason for the margin of difference. Then, use the 7 Habits principle of (seek first to) understand, then seek to be understood. First, tell them you understand for whatever reason (using the market is usually) that they can’t afford the margin. Then, flip this, and tell them why they need it and why it’s good for them.

I like the rule of thirds (or, in this case, threes) and like to apply it to negotiations as well as goals and other things. Let’s do the same here: Do this same step three times, using different reasons, and really try to get them to see that you understand what they’re saying, but you want to have the resources to give them the best product possible.

If nothing else works and you keep coming down to less than what you asked for, offer the client things. I know, I know – this means giving into the client a little. Still, getting an extra $200 now, or in a month is fine for me.

Payment plans are usually really effective. This could mean a terms that gives the client 10% of the project back on early payment (which, trust me, is a huge incentive to clients), or giving them 45 days upon receiving invoice to pay instead of your regular 15 or 30.

At this point, you can’t become desperate. This will make them think they have control over you, and won’t transfer well into when you’re working with them later on.

CONCLUSION

Everyone handles the proposal process differently. What do you do in the proposal project to ensure you’re getting the amount you ask for?

Here are a few resources to find out about the proposal process:

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James handles creative direction and business operations at The Phuse. He spends most of his time trying to bring our design and coding standards to the next level, and believes there is always room for improvement. When he isn't figuring out how to improve our work environment or make sense of Excel he enjoys playing board games with loved ones.

2 Comments (Leave One)

  • Peter Ebenezer on December 31, 2009 Reply

    Thanks for a great article and very handy links.
    I shall be starting out on the world of freelancing in the summer and have always been nervous about the idea of proposals.
    Thanks!

  • Amber Weinberg on December 31, 2009 Reply

    I don’t really “negotiate” rates. Most clients who come to me know what they’re paying for and getting for the money. Those who’ve talked me down off my price are normally problem clients in the long run.

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