Dear BDC: How Do I Negotiate Contracts Better? / Human Resources / Last Modified: February 22, 2017

If you're like most people, you feel apprehensive when it comes to contract negotiations. Here's why and how you should overcome this.

Dear BDC,

I don’t like to rock the boat in my personal relationships, but my inability to say “no” is really starting to hurt my business. I’ve always been terrible about negotiating my salary, but now that I own my own interior design firm, I’m forced to make deals every day. My clients want lower prices, but my subcontractors want higher compensation. I’m in the business of deal making, but I’m so nervous demanding sufficient prices and sticking up for myself. I’m worried that if I do, I’ll lose good business. I just can’t lose clients! How do remain confident when I know everyone has mouths to feed??

-Doormat Designer

Dear Doormat Designer,

First, let’s remember that you have your own mouth to feed and a business to expand. You seem like a compassionate person, but it’s time to strengthen your backbone. And secondly, you’re not alone in this discomfort. According to a study, 48% of people are apprehensive when it comes to negotiations. Only 13% claim no nervous feelings when negotiating contracts or salary. The biggest reason (32% of respondents) for this hesitation is fear (just like yours) of losing a job offer. Twenty-two percent said they lack the skills necessary to properly bargain.

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And if you’re a woman, your tendency to keep quiet during negotiations is doubled. Various surveys found that women are 2.5 times more likely to feel "a great deal of apprehension" about negotiating. Men also initiate negotiations about four times as often as women. But no matter your gender or reason for timidity, here’s why negotiation is important. Then you’ll learn how to master the art.

Why you should negotiate

Sure, you’re vulnerable and kindhearted. Yet, if you don’t stick up for yourself, you could lose a lot of cash in the long run. If your clients keep cutting you $1,000 per project each month on behalf of your sympathy, that number could reach $12,000 by the end of the year.

But contracts comprise much more than money. You must reach to an agreement, with all parties involved, on terms of use, payment, and expected work. Being realistic about what’s required (time and resources) will also avoid unrealistic expectations on delivery date and quality.

How to master the art of negotiation

1. Keep emotions out of it: Many people tend to view negotiation through a warlike lens. No one wins and no one is your adversary. It’s a mutual communication where two parties come to what’s best for everyone involved. Also, don’t apologize. Establish the value of your service and don’t be sorry for anything.

2. Prepare beforehand and stand firm: The easiest way for someone to take advantage of you is when you haven’t done your research. If you give a one-off, hesitant ‘estimate’, you’ll appear insecure and negotiations will arise quickly. Prepare your price, time, and work estimates. Then be able to justify them in detail.

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3. Dealing with three different scenarios: Now it’s time for the messy stuff. Ed Brodow, author of Negotiation Boot Camp: How to Resolve Conflict, Satisfy Customers, and Make Better Deals, identifies three common buyer negotiation tactics.

  • The first is a move called The Flinch. It’s used when a buyer acts completely shocked by your price (“Your price is WHAT?!”). Most people respond by backpedaling or feeling self-conscious. Brodow advises to remain silent, persistent, and calmly repeat your price.
  • The Squeeze is another common strategy, where the buyer says something like “I can get it for less from another designer”. Your response? “Sell your unique qualifications. Take the focus off of the price,” says Brodow,“Get them to agree that yours is the one they want, and that the price is only a technicality. If they really want yours, they will find a way to pay for it.”
  • Lastly, watch out for The Sob Story. “We only have XX dollars to spend on this” or “Our budget is tighter than that”. Again Brodow advises to remain firm. They’re testing you.

4. Walk away if necessary: News flash, it’s okay to say no. If the terms you’re dealing with are non-negotiable and unacceptable, you’ll quickly find another client. If you remain true to yourself and your employees you’ll gain respect from yourself and those around you.

5. If you do lower your price, still negotiate: Maybe you decide you’ll compromise on price. Try to get something out of the settlement. For example try something like “I’ll lower the final price under these conditions…”

Good luck Doormat Designer. Stick to your guns and watch your confidence thicken.

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