Negotiation is a key part of business, especially when it comes to settling a price with your clients. Unfortunately, many founders and freelancers don’t feel confident in negotiations, which can lead to bad deals and missed opportunities. 

If you feel like this applies to you, don’t worry. Anybody can improve their negotiation skills by following these simple strategies:

  • Don’t negotiate if you don’t want to. 
  • Have a minimum price in mind. 
  • Give yourself room to manoeuvre. 
  • Find out your client’s budget. 
  • Justify your pricing. 
  • Negotiate payment terms. 
  • Ask for something in return. 

How negotiation works

Negotiation is all about two different sides, like a client and a business, coming to an agreement. In this case, we’re talking about price. 

Good negotiation is all about compromise. It won’t work unless both sides are willing to change their position slightly. The difficult part is making sure you don’t change your position so much that you’re losing out on profits. 

As the saying goes, the sign of a good compromise is when neither side feels like they won.  

Don’t negotiate if you don’t want to

Before you start haggling with a client, ask yourself if you really want or need to. 

You might be in a position where you’re too busy to take on the extra work, or maybe you just don’t like the look of the project. Either way, if a client is trying to get a lower price and you don’t actually need to take them on, it puts you in an incredibly strong negotiation position. 

Just tell them no. If they decide not to work with you, that’s fine – you didn’t need them anyway. If they agree with your original price, congratulations – you have won the negotiation.  

Have a minimum price in mind

Before entering into a negotiation, you need to know the lowest possible price you’re willing to accept. Having the exact figure in mind will give you more confidence in negotiations because you won’t be at risk of accepting too low an offer, or asking for too much. 

Your minimum price should reflect the lowest amount you can accept while still making a reasonable amount of profit, so you’ll need a detailed understanding of all your operating costs

There may be some special cases where you can afford to make a loss with a client, but there has to be a good reason for it. 

Give yourself room to manoeuvre

If you do get into a price negotiation, always offer a higher price than you’d normally request to give yourself somewhere to go when they propose a counter offer. 

You might feel uncomfortable about quoting a high price, but don’t worry – chances are they won’t agree to it anyway. Plus, when they reject the offer and you settle on a lower price, it’ll give the illusion that you’re giving them a discount. 

Find out your client’s budget

If your client says they can’t afford your prices, the next step is usually a back and forth with pricing. The best way to avoid this and cut straight to the point is to ask them what their budget is. 

Just by asking, you’ll achieve two things:

  • You know the maximum price they’re willing to pay.
  • You’ll know whether the negotiation is worth having.

Justify your pricing 

If a client thinks your pricing is a bit too high, it could help to give them a breakdown of the services. Once they can see everything you’re offering, it might make them feel a little more comfortable with the price. 

Additionally, it gives you more room to negotiate. You might not be able to budge on an essential service, but you could offer a discount on other areas, like shipping. 

Negotiate payment terms

If you can’t offer a lower price, you could try offering more forgiving payment terms to help convince a client. For example, you could ask for 50% before and 50% after the project is finished. 

For an unfamiliar client, in particular, this could be an attractive selling point – they might not want to pay a large amount for a service they’re unfamiliar with. 

Ask for something in return

If you do end up negotiating a lower price with a client, don’t be afraid to ask them for something in return. After all, it’s a negotiation – not a shakedown. 

You could ask them for a guaranteed contract term, ensuring their business in the future, a public endorsement for your business, a referral, or a promise that they’ll recommend you to some of their other contacts. 

Again, there’s no need to feel shy about asking for something a little extra. The point of negotiation is to find a good outcome for both parties, so there’s no point losing out on money while getting nothing in return. 

Don’t compromise when it comes to financial management

Successful negotiations will lead to more income for your business, but it doesn’t have to lead to more complicated financial admin – especially if your business current account takes care of financial admin for you. 

Countingup is the business current account with built-in accounting software that allows you to manage all your financial data in one place. Download the app and get access to a range of features that are useful to both you and your clients, including:

  • Invoicing on the go – Create and send professional invoices to your clients from one simple app. 
  • Cash flow insights – Receive accurate, real-time cash flow insights and see how your business is performing with profit and loss statements. 

You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Seamless, simple, and straightforward! 

Start your three-month free trial today. 

Find out more here.