The life skill that is negotiation is sometimes one that does not sit easily. We all know it’s important, but somehow it can appear at odds with the high concepts of professional practice and technical expertise: a bit tawdry, perhaps? This feeling can lead to some surprisingly “odd” behaviours and outcomes.
When it comes to fee negotiations, such oddness has been known to induce apoplexy for colleagues in the finance department, as profit margin is frittered and whittled away by nervous, embarrassed, or unknowing professionals. To preserve good health (and the salaries or bonus of everyone else), here are three things to remember when there is money talk afoot.
First….say nothing. In a recently observed presentation to a potential client, the money section was interesting – in that it kicked off with the immediate, unprompted offer of a healthy discount for the prospect should they decide to engage the presenting provider. Who knows what the client thought of what was originally on offer!
In meetings and phone conversations across the land, with potential or existing clients, we have seen or heard of similar behaviours much more frequently than should be. It’s bonkers. It is also a recipe for ever-declining margins if your price points are so quickly discredited thus.
The answer when presenting or tabling the investment in your services is nothing. Say nothing else. At all. Put a sock in it. And just let the negotiating process proceed along more engaging and profitable lines (cf. Tip 3).
Apples with apples? “Your estimate is 20% more expensive than our current provider” It is surprising on how many occasions negotiating statements like this are taken and remain at face value (cue a bout of panicked discounting by the potential provider). If you are on the receiving end of this, it pays to remain calm and explore “what lies beneath”. Exactly what is being offered by the incumbent..in detail? How does it compare with ours? Are we comparing like with like or are there reasons for such a discrepancy?
For some, asking questions like this takes massive bravery; for professional negotiators, it is standard practice. So let’s be professional.
Research, Reveal, Reframe. The three Rs represent a process that should inform most negotiations so that better outcomes are reached for both parties. Unfortunately, some negotiations can progress from initial specification to a proposed solution with undue rapidity, so that one or both parties lose out on a more advantageous deal: “marry in haste” etc.
Taking a fully explored brief via Research and really digging into what is required is the start-point. In a decent dialogue this should lead to identification of what elements of service are most important to the client: the Reveal. With the power of this knowledge, often, there is more than one way to satisfy the need. These alternatives then allow both parties to Reframe the challenges or problems to be overcome, enabling a more creative exploration of the options and usually a wiser negotiation end-product.
Of course, not every negotiation proceeds in such an open way. But, these Rs should be the process of first choice.