Business negotiatons....

[avenirup]

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

LOL.....the bottom line is you go high, they go low and both of you guys agree somewhere in the middle. I deal with this all the time. It is just apart of business.

 

[Becoming]

LOL.....the bottom line is you go high, they go low and both of you guys agree somewhere in the middle. I deal with this all the time. It is just apart of business.

as matt it explained it does not have to be... if you are dealing with certain cultures this is even more difficult to deal with, and some of them lowball you and DON'T compromise (that is how they percieve negotiating to be done).....

if you can get rid of that attitude you can make a much more productive relationship...

 

[MattTheSkywalker]

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.

Well, we have the advantage of our transactions being hundreds of millions per year, and big numbers attract the best people across the table - investment bankers, large corp CEOs, in other words a very sophisticated crowd.

We never fluff numbers. Nothing you can do will cause you to lose the attention of serious people faster.

When we run into that situation, there are a few ways to handle it.

1. Literally walk them through why it costs what it does. This is best done when you show a buyer what it would cost to do this function in-house, talk about their workflows etc. Understanding their angle will make them more comfortable with you.

2. Change the pricing structure. More up front, less up front etc. This of course changes your risk perception, but will also change the buyer's risk perception.

Provide guarantees. Many buyers of services want a guarantee. If you can guarantee a result with minimal risk to yourself, build it into the contract. Be careful though, you've just bought a lot of risk. We actually use insurance policies for this.

Another pricing structure you can do for the guarantee is allow any initial payments to go to an escrow account, and any shortcomings later on can be charged against that account. This is a nice risk mitigation technique.

You would consider the options laid out in (2) above because to sell anything to a corporate buyer, you have to demonstrate an understanding of their risks, which requires a deep understanding of their business down to the workflows sometimes at the DESK level, and show them that you have built a solution that not only is a solution but also mitigates their risk.

3. if the people across the table are ego-driven, walk. This usually gets them right back to the table.

 

[jerkbox]

LOL.....the bottom line is you go high, they go low and both of you guys agree somewhere in the middle. I deal with this all the time. It is just apart of business.

i don't like that.....I don't like being a bullshitter....I'm no good at it. I prefer to be very straightforward....and like Matt said, have a pricing model that makes sense....


i'm coming to the realization things don't work like that however....

 

[Apöllo]

As a graphic designer, I'm probably in the same boat as you. My best defense is a strong offense. My shit is good (or so I'm told). I usually show different levels of quality with different price points. However most of my work comes from other design studios so I really don't have to worry about clients.

Boils down to what Matt said earlier about holding the client's hand and detailing the work that is possible for differnet prices.

Another thing is that with the advent of desktop graphic design everyone can create shit. So it's typical for someone to balk at $100 an hour and this is where you have to show that quality work you've done in the past.

 

[Becoming]

....

Matt brought up a lot of good points about things you can consider using as tools in the negotiation process... but don't offer them willy nilly...

Asking what their concerns etc are is critical or you will be less effective and potentially offering out things which you may not have to...

If someone is worrying about the guarantee issues they might not reject a pricing structure change (they may see as a way to stop payments if something goes wrong) but you might be able to get all your money up front and negotiate a potentially less risky guarantee if you had asked what the concerns etc were...

Find out what their concerns are FIRST, then use suggestions like Matt's to bridge the gap

 

[jerkbox]

As a graphic designer, I'm probably in the same boat as you. My best defense is a strong offense. My shit is good (or so I'm told). I usually show different levels of quality with different price points. However most of my work comes from other design studios so I really don't have to worry about clients.

Boils down to what Matt said earlier about holding the client's hand and detailing the work that is possible for differnet prices.

Another thing is that with the advent of desktop graphic design everyone can create shit. So it's typical for someone to balk at $100 an hour and this is where you have to show that quality work you've done in the past.

LOL...that's what we do......(web & digital media)

it's so subjective....and extremely difficult to put numbers to results.

 

[jerkbox]

3. if the people across the table are ego-driven, walk. This usually gets them right back to the table.

i am pretty sure this is what I am dealing with here in this case....

bottom line is, he's trying to cut 1/4 of the cost, simply because we are a young partnership. Despite the fact that we have over 20yrs experience between the 3 of us.

There doesn't seem to be any real rhyme or reason for it, he like what he has seen so far from us. He seems confident that we can do the job. And he came to us.

Not to mention the cost we proposed is already AT LEAST 30-40% lower than typical market cost.

It's difficult to negotiate without being able to show metrics to justify cost...

 

[MattTheSkywalker]

i am pretty sure this is what I am dealing with here in this case....

bottom line is, he's trying to cut 1/4 of the cost, simply because we are a young partnership. Despite the fact that we have over 20yrs experience between the 3 of us.

There doesn't seem to be any real rhyme or reason for it, he like what he has seen so far from us. He seems confident that we can do the job. And he came to us.

Not to mention the cost we proposed is already AT LEAST 30-40% lower than typical market cost.

It's difficult to negotiate without being able to show metrics to justify cost...

base it on what they expect to get out of your services, what they have gotten out of your services in the past, and show pricing consistency. If this is a problem, walk.

 

[strongsmartsexy]

I have yet to win a contract I've bid on. Which I'm exceedingly happy for. Even after laying out my pricing model and schedules someone still comes in on a low bid.

Luckily for me they take the low bid.

How is that lucky? Well, because I end up coming in later on to FIX the crap the low bidders did. I generally make up to 2 - 4 times the amount of money I would have made on the contract to begin with. I smile all the way to the bank every time someone starts talking low numbers instead of QOS and dealing with pricing models.