In the bookkeeping and accounting marketplace, many of the people who seek your assistance are looking to establish an ongoing business relationship with you.
They want to know what you will charge them to do their bookkeeping, for example. What is the extra fee to have you prepare their Sales Tax report each quarter? Do you provide a package that includes tax planning for their company and themselves?
When you and the client have determined their needs during the discovery phase you then normally prepare a proposal outlining your fee that must obviously cover your costs and allow you to make a fair profit.
In many instances, the person seeking your assistance agrees and signs on with you on the spot. For others, however, your proposal is just the opening move in a series of negotiations to secure a “cheaper” quote.
If you want to have a successful and profitable business, you need to know how to conduct win-win negotiations. This negotiating skill will also come in handy when you are contracting goods and services for yourself to ensure that you look after your own interests and get the best possible value.
Many people hate to negotiate. It is stressful and full of controversy and they just want to walk away from it all. Others see it as a game and revel in the process.
Negotiation is neither an irritation nor a game
Negotiation is merely one businessperson trying to protect their business by securing the best possible deal for the services or supplies they need.
For the person attempting to do business with them, it is a case of the small business provider of goods and services protecting their own profit margins and ensuring their economic survival.
Sometimes, negotiation is nothing more than someone needing to better understand the value of the service offering.
Learning that negotiation is nothing more than a process, not a game or a war, makes all the difference in your success in achieving win-win conclusions.
Negotiation is a skill that you can be learned with thought and practice. You cannot operate your business on the assumption that you will never have to negotiate. It is as essential as doing any other aspects of your business.
Start the process by ensuring it is not personal
If you are not an experienced negotiator, it is easy to fall into the trap of taking it too personally. This is especially a concern when your quote for a product or service is challenged.
This is where belief in yourself and your value becomes critically important. When you open your business and establish your rates, which you consider reasonable and fair for your marketplace and economic survival, it is always disconcerting when clients want to negotiate a better deal with you.
You must refrain from taking such a question as a personal attack on your worth and expertise. It is not. The person is just testing you to see if you can fall into the amount that he or she is mentally prepared to pay for that service. Again, it could be they just need to understand the value of your services better, or perhaps they are just testing you to see if there is any room for negotiation.
Do not meet their request with an immediate counter-offer
Don’t fall into the trap of counter-offering as an immediate reaction to a challenge to your rates. Be polite and explain that your rates are competitive in your industry and reasonable for the work and expertise required to do the job needed.
Perhaps you can invite the potential client to sit down and tell you a little more about their business. Maybe, you can help them identify additional pain points that you can solve further enhancing the value of your service and moving the discussion away from price negotiation.
It also indicates that you are responsive to their question, and it saves you from making a rapid judgment. Your goal in expanding the conversation is to find clues to get a win-win agreement.
For example, some people just want to be able to go back to tell their board chair that they negotiated a good deal. Some are financially strapped and just can’t pay more, although that is less common than you might imagine. Some want you to offer them something as a way of courtship to get their business. And some even negotiate simply to prove to themselves that they received the very best deal possible.
In fact, I can remember Mark Wickersham – one of our industry’s gurus on pricing – telling me that if you don’t get pushback on your pricing then you know your price is too low.
And, simply reducing your price is never the right solution.
Offer options that don’t erode your profit
If you quoted as close to your bottom line as you could, going lower is going to end up with you subsidizing your client and resenting them. That is not good for your business or for your relationship with them.
Many people leave themselves a little wiggle room on the initial quote to see if a negotiation follows, and if that is how you operate, use it at this point to close the deal. However, always remember to position yourself the following way – “If you need the price to be lower, let’s take a look and see what services we can remove to help get the pricing within your budget.” This helps to maintain your credibility and shows the prospective new client that you are trying to work with them, but that lower price also means less services.
But if you can’t sweeten the deal financially because you quoted low to get ahead of your competition or secure the business because you know it will lead to more, then you have to get creative. You stick to your rate, but you come up with something else that won’t result in them walking away.
Perhaps offer payment terms, or include an additional service that has a minimal cost to you. Do whatever you can to close the sale, but don’t reduce your price simply because they asked you to.
Stay respectful and positive, no matter how annoyed you feel
To ensure that both of you feel like a winner at the end of the negotiation, you have to be creative, especially if you can’t make any adjustment to the quoted price.
For example, you can be empathetic, explaining that you understand why they have to ask for a deal, but that you don’t give a quote with the expectation that it can change. You offer the absolute best value you can and ensure the best service. Quite often that is enough to reach an agreement.
In a standard negotiation between small businesses, always remember that if you negotiate only on rate alone, it won’t end well for you. You have to put something else on the table that doesn’t cost you money, but is attractive to your perspective client.
No matter what happens, or how the negotiation ends, always remain respectful and positive. Remember, this negotiation is not personal, so don’t take it that way.
Sneaky tools to hold your own
When you are courting a new account for your business, it still makes sense to learn as much as you can about the person you will be meeting with and the company before you sit down to talk with them. Find out from mutual acquaintances if they drive a hard bargain and are really into negotiating. If they are, perhaps make your initial quote a little higher than you planned, or at the very least you can prepare yourself for the negotiation ahead of time.
Do not be taken aback by the client who becomes emotionally upset during the negotiation, even if they seem to get angry or are manipulative. It is a valid rule that the person who loses their cool in negotiations is the one who ultimately loses the advantage.
In the same way, be aware of the charms of the super-obliging negotiator who is so pleasant that you actually want to give away the bottom line to make them happy. Nice is more effective than nasty and the best negotiators know it.
Don’t take your eye off your bottom line
If you are driving a car and getting tired, you know that you can’t take your eye off the centre line that keeps everything in balance. If you get distracted and let your attention slide for even a second and drift over that line, disaster could be the result.
The same goes for negotiations. Always keep your eye on the bottom line of your business. Never let yourself be caught up in somebody else’s figures or arguments and forget about what you really need to cover your labor, overhead costs, and still make a profit.
Otherwise, your business might end up on the road to disaster.
Thank you for reading. Until next time. Take care.
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