Business negotiatons....

If you have a service industry business, where you generally provide services on a contract basis, is it pretty much expected that your clients will try to low ball you on the price and negotiate a cheaper quote?

I find this to be a very frustrating part of my job.....I put together quotes of what I think it's going to take to get the work done, and am constantly being low balled....

Often I get personally offended, because I know what my time is worth, and what current market rates are.....and being as I am just starting out on my own, I quote low. Yet, I still get low balled....it's a constant battle.

I'm just trying to understand the workings of the business world in this sense, and develop some negotiating tactics.

and the point of this post was..............

The Ejaculator said:

and the point of this post was..............

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it's probably a bit over your head little guy....sit down and let the grown ups talk.

of course it's common to be low-balled if you are negotiating. that's what negotiating is all about.

I think you kind of answered your own question. You said that you're just starting out. So, there will be a period while you build your "reputation". Then after establishing yourself thing should work out.

we do this as a business, we make hundreds of millions per yer for our clients, we are one of the largest professional services firms in the insurance industry. We're the best in the industry at this sort of thing....any industry.

If you are fighting over price and playing the low-ball game then there is ineffective communication.

Any price you offer someone has to be based on the services. The buyer has to understand the value that the seller offers. If the buyer is hung up on the number, then they are not getting that.

As a seller you have to literally grab the buyer's hand and walk them through your pricing model, explaining in detailed fashion how you arrived at that number, and why it is the right number.

Ineffective or stupid sellers of services get to that number and then try to build in extra revenue above it; buyers smell bullshit and are put off. Sophistcated buyers will walk.

Your mistake is where you said "how much I think it will take to get the work done" - you need to know exactly how much it is going to take and buyers must understand exactly where your number comes from.


Make sense so far?

Smurfy said:

of course it's common to be low-balled if you are negotiating. that's what negotiating is all about.

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I do lots of such negotiations in my work... it is pretty easy now, but yeah you get some peeps that think they are johnny negotiator sometimes and think lowballing is what it is about...

To sum it up, in order to get things moving and have a constructive negotiation you have to, 1) Eliminate facades and get to the real stuff, 2) Eliminate "positional" postures

And a lot of times it comes down to knowing what your value is and being ready to walk away... You cannot concede your way to a true partnership, if you let them walk all over you now, they certainly won't think twice about it later...

If you are right, you have the best solution, and you know the marketplace they will come back.

Commoditizing your service/solution is the best way I know to lower your percieved value and lose business in the long run...

MattTheSkywalker said:

we do this as a business, we make hundreds of millions per yer for our clients, we are one of the largest professional services firms in the insurance industry. We're the best in the industry at this sort of thing....any industry.

If you are fighting over price and playing the low-ball game then there is ineffective communication.

Any price you offer someone has to be based on the services. The buyer has to understand the value that the seller offers. If the buyer is hung up on the number, then they are not getting that.

As a seller you have to literally grab the buyer's hand and walk them through your pricing model, explaining in detailed fashion how you arrived at that number, and why it is the right number.

Ineffective or stupid sellers of services get to that number and then try to build in extra revenue above it; buyers smell bullshit and are put off. Sophistcated buyers will walk.

Make sense so far?

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I'm with you.....it's a challenge with some clients, especially in my industry. Often hard to make them see the value in the service I am providing, and why it costs what it does. They know they want something great, yet they don't understand why making something "look nice" should cost so much.

And then, it seems there are folks who just want a better price no matter what....I don't know if it's an ego thing or what.

what do you do in that case? Do you compromise? Do you lower your rate, even if it may be unprofitable, with the hopes that it will lead to other bigger and better things? Do you walk away from the deal? Do you fluff numbers to begin with?

I'm sure you run into these obstacles now matter how tight your presentation is....

I'm just starting out....I have tons to learn.

MattTheSkywalker said:

If you are fighting over price and playing the low-ball game then there is ineffective communication.

Any price you offer someone has to be based on the services. The buyer has to understand the value that the seller offers. If the buyer is hung up on the number, then they are not getting that.

As a seller you have to literally grab the buyer's hand and walk them through your pricing model, explaining in detailed fashion how you arrived at that number, and why it is the right number.

Click to expand...

awesome job spelling it out

jerkbox said:

And then, it seems there are folks who just want a better price no matter what....I don't know if it's an ego thing or what.

what do you do in that case? Do you compromise? Do you lower your rate, even if it may be unprofitable, with the hopes that it will lead to other bigger and better things? Do you walk away from the deal? Do you fluff numbers to begin with?

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Find out what their objections/concerns/perceptions are so that you can address them - just ask "why?"

then see my previous post for people with unreasonable expectations

The longer I do these type of things the less and less I run into these problems....