As a freelancer or a business owner or someone applying for a job or even buying vegetables, we all have to deal with negotiating the fees/ rates/ salary with strangers. Being raised as a humble middle-class kid, I wasn’t too comfortable asking for money from other people at first. But when you have to pay the bills and own your responsibility to fulfill your dreams, this is the no. 1 trait everyone must learn in order to get success.
After negotiating a salary with 3 employers when I started my private practice 7 years back it wasn’t easy for me to go out and scout for work. After doing some small certification assignments for one year, I was presented with an opportunity with an MNC company for some work across their different plants. At that time I was desperate for work and was ready to get the assignment for peanuts. But I held myself high and discussed synergies I could bring to my client and successfully got the assignment for about INR 700,000. The confidence I got from that assignment helps me today as well, to send out proposals to my client. Here are the steps I personally used to quote the fees and negotiate like a boss:
- Research your potential client
- Know your worth/ cost
- Leave a room for discussion/ negotiation
- Be flexible
- Know your bottom price
Research your potential client
When you get a request for proposal, ask details from your potential client about their requirement. Know your clients, their backgrounds, the specifications of the job, their budgets, the timelines for deliverables, the quality standards required for the project. I know you may not guess all these variables at first and you get better with practice. Some companies ask quotes from multiple vendors. The final decision to choose among various quotes is not always the lowest fee, they do a trade-off between best quality services with the lowest fees. Your job is to identify the qualities they appreciate is covered in your proposal and they will be willing to pay a higher price for the quality.
Know your worth/ cost
Now that you know the specifications from your clients, estimate the time cost/ material costs you will need to incur in order to deliver your product/ service to your potential client. For example, when I give a fee proposal to a client and I know that the assignment is hard pressed for the deadline and the time available to complete the assignment is very limited, I factor the additional hours I will have to spend beyond the usual business hour to finish my deliverable on the due date. I will give exclusivity as quality to my client for the period of the assignment. Many clients would love to pay a higher price if they know you work exclusively for their assignment.
Leave a room for negotiation
While communicating your price, if you sound rigid to your client and give a fees quote – take it or leave it, this will not give a good experience to your potential client and they may not even consider you for any future engagements. Hence, always leave some room for negotiation and quote a price a little higher than you would be okay to work with. When your client asks you to lower your fees or give you counter fees, you know you have the room to accommodate their wishes and not press your quality of work. Be very confident when telling your fees to your clients and don’t ever forget to add the points why your services score an edge on quality.
While discussing the fees, always remember your potential clients will be your potential marketers. One assignment can be a gateway of your recurring assignments with the Company or future potential referrals from the Company. Be willing to accommodate if they have any special requests. Think long term client relationships than short term wins.
Know your bottom price
While you know your price and give a higher quote, sometimes a client will come back and ask for more than 50% reduction in your proposed fees. That’s when it is best for you to know your bottom price beyond which it is okay for you to leave the assignment. This will help you to identify the kind of clients you would want to work with. It is always good to say NO to a client if they don’t value your services and the price. This will help you create a brand for your business and also find the clients who would love your services and the value you provide to them. NEVER BE DESPERATE.
WC Actionable: I would like to give you one BONUS step while negotiating is TO BE CONFIDENT in your communications. If you are confident in yourself, the client will gauge that you can deliver the value that you are promising. Confidence is the differentiator that will get you the price that you wanted to charge and not the price your client wants to pay. Hope the above points help you in adding value to you and your potential clients. Would love to hear about your experiences.
PS - This is a guest post by CA Sonia Dawar, who is a fe-money-ist and is a practicing chartered accountant with over 8 years of experience. Negotiation and discussing fees is a part of her everyday assignment. She has taken charge of her money for herself, her family and her business. Looking forward to more insightful posts from her.