IN THE THREE YEARS THAT FARLA BINDER has run her home-based entertaining coaching and consulting business, she’s tapped into the professional negotiating skills she learned during the 25 years that she operated Creations By Farla, a Los Angeles-based corporate-party-planning company. Her philosophy? She believes in her product and her ability to deliver value; for those reasons, she stands by her fee. If clients ask her to lower her fee, Binder gets creative so she doesn’t look like she’s caving in to those demands. For example, Binder will offer less consulting time for less money, or she’ll offer a menu of services. That way clients can feel more in control of the fee.
“I don’t compromise on my prices,” says Binder. “However, by giving them a menu, I am giving them choices. But I don’t allow clients to negotiate on the menu’s fees.”
Stand Your Ground
Binder remembers the first time she demanded a fixed fee for a party centerpiece. Though she feared the client would balk at her fee, Binder stood by the price. “I remember taking a deep breath and saying `just do it,’” she recalls. The client paid the fee without haggling.
“Don’t compromise on price,” Binder says. “When you start negotiating on your fee once, then you’re teaching your client to always negotiate with you.”
You can have the same fortitude that Binder brings to the negotiating table. First, develop your strength of character during negotiations, says Mimi Donaldson, a Beverly Hills-based negotiating expert and author of Negotiating for Dummies ($20, IDG Books). Home-based business owners who formerly worked at companies where business development specialists handled all the negotiations with clients now have to learn to negotiate for themselves if they hope to win deals and sustain their business, she says.
“If you want to be a master negotiator, you’re going to have to cross the lines into foreign territory and be flexible and adaptable,” Donaldson says. “If you have a hard time doing this, get over it or leave the game.”
The best way to win at client negotiations is to be fully prepared going in, Donaldson says. Take time to study the client’s Web site to learn about the company’s products, industry, and personnel, she says. Ask industry contacts if they know anything about the company or its key players. “Go in armed to the teeth with that information before you start negotiating,” she says.
To make sure you get the fee that you’re after and know you deserve, know exactly what you’d like to earn, adds Bob Laser, senior managing partner for The Negotiating Alliance (www.negotiatingskills.com), an Atlanta- and San Francisco-based negotiating consultancy. After taking time to tend to marketing and other non-billable back-office functions, the maximum number of billable days per year that an independent professional has left to give to a client is usually 100 days (as opposed to 200 for company employees who don’t have to multi-task), he says. That translates to 800 billable client hours each year. If you decide that you want to make $60,000 a year, your hourly rate will be $20, says Laser. “Knowing you need to maintain that fee per hour will help you to establish a firm foundation for negotiating your price,” he says.
Most of all, toot your own horn, Donaldson says. While you may be bidding against others to land a project, your talents and expertise can set you apart from competing companies. “The person who wins the project is the person who is best at selling themselves,” she adds.
Get What You Deserve
Follow these five tips at the negotiating table:
Exude self-confidence Believe that you’re a professional who brings value to your clients
Keep two figures in mind Establish your ideal asking price and the lowest fee you’ll accept so you can stand your ground if a client tries to low-bail your number during negotiations
Know the market rates You’ll establish yourself as a professional, you won’t price yourself out of a project, and you won’t ask a ridiculously low fee
Offer a menu of services Avoid haggling over fees and protect your price integrity without discounting
Evaluate potential Some jobs might open doors to more work and new contacts