At the End, It Comes to This
We’ve been there, you crunch the numbers, you add in a profit margin, you present it to your client, and they say “can you do better?” Now what? Do you reduce the price? Do you tell them to “take it or leave it”? It’s tough, but there are a lot of other options.
Start Before It Starts
Set up a persuasive relationship. Be sure that they understand that you are not a price leader (unless you are), and that quality comes with a price; but be sure to do this well before the conversation gets to price negotiation. A statement like this works well for me:
“Obviously I am not going to charge you a million dollars for this, we do really good work and you will certainly be happy with the result“
The “million dollars” anchor’s their mental state to a figure far higher than you expect to quote (i.e. an $800 I-phone seems cheap after it’s been marked down from $1750), and the rest of the statement states that there is a price associated with skill.
We Don’t Negotiate with Friends
If a friend asks you for a favor, it usually doesn’t become a negotiation. In fact, you may even give them more than they asked for! Why? Because they are your friend.
How is that fact relevant? Make your clients your friends. You don’t have to like them; you just need to make them feel like you do. Friends do not negotiate with friends.
Here’s a few tips to building relationships quickly:
- Mirror them: When they say something, repeat back the last few words, or the main point of the statement. Start with “I’m sorry” to make it even better; they will give you better info.
Client: I want the walls to be pink
You: I’m sorry, you want the walls to be pink
Client: Yes, #FFC0CB to is what we are thinking
- Label their feelings: If they are stuck on something, simply label it. Use words similar to “it seems like” rather than “you think”. Staying away from phrases that could be accusatory will keep the friendship growing.
Client: (going of forever) I have a very tight budget
You: It seems like the initial cost of the job is a higher priority to you than the maintenance costs
Client: Well, it is important, but the long term costs matter a lot as well.
You: I’m sorry, the long term costs?
Client:Yes, this building has been a financial drain, so I really need to watch my spending
You: I see. I think then, if we do the extra quality procedure, you will easily save money…
- Pause: That’s right, let there be silence! Especially after a mirror or a label. You find that this is as close to mind control as you can get.
No
“No” Starts the Negotiation: Don’t worry about the word “No”. If somebody accepts your first price, you were too low (most of the time).
You may not know it, but two of the three types of “yes” are actually a “no” in disguise. How often have you told somebody “yes” just to get them to leave you alone. You were not committed, you just wanted out.
You are not looking for somebody to tell you that you are right, but that the think that you said is right. Stop looking for right and start looking for “that’s right”. Here’s a contrasting example:
You: You really should use higher quality windows, it will save you money in the long run
Client: You’re right, but I just can’t afford it right now
OR
You: It seems like long term costs and comfort are high priority for this building
Client: Yes it is, but our budget is tight with all of the tenant problems we have had
You: It sounds like things are tight; most building owners are finding that the higher quality produces higher returns rather quickly. Pushing these problems down the road will probably cost you in the short and long term.
Client: I suppose that’s right, would you please give me both quotes?
Conclusion
In the world of negotiation, there is a lot to know, and when you navigate it well you will find that price is just a small drop in a pool.
These points were primarily taken from the book “Never Split the Difference” by Chris Voss.
Best of luck increasing your profits,
Devon Lybbert, P.Eng