Industry Magazine Get JACK'D Magazine Fall 2017 | Page 9

NEGOTIATION SHORTCUT
NEGOTIATION
SHORTCUT TO
SAVE TIME,
RAISE FEES AND
WIN THE DEAL
Mike
Michalowicz
Mike Michalowicz is the
entrepreneur behind
three multimillion dollar
companies and is the
author of Profit First. He
is globally recognized as
the guy who “challenges
outdated business beliefs”
and teaches us what to
do about it. To learn more
about Mike and get access
to a treasure trove of
entrepreneurial tips, visit
MikeMichalowicz.com.
AT what point in a negotiation do you show your hand? Most
people believe if they know what their prospective client is thinking
it will give them an advantage. So they wait to quote a price. They
do their homework. They look for clues. Sometimes they just come
right out and ask. “What’s your budget?” “Are you looking for great
quality, a fast turnaround, or do you plan to go with the cheapest
option?” “What number are you thinking of?”
Big mistake.
If you want to come out on top, use this simple shortcut: be
first. No dancing around the issue, no hemming and hawing – just
give them a number right off the bat. In doing so, you’re setting the
starting point for the discussion, from which all further discussions
stem.
If you quote $8,000 to complete a project, your prospective client
may want to negotiate the price or other parameters of the deal, but
all negotiations start at $8,000. You may come down a bit in price or
agree to different payment or delivery terms, but if they hire you,
you’ll get a number close to $8,000. On the other hand, if you wait
for them to tell you that they expect to pay $2,000 for this project,
you may be able to negotiate an extra thousand or two, but you’re
never going to get the $8,000 you know you deserve.
But what if they can’t pay more than $2,000? Well, can you do
the work for $2,000 and still buy groceries? Probably not. (Ramen
noodles don’t count.) So what difference does it make if you scared
them away with your very reasonable price?
Divergence is a huge time waster. If a prospect can’t (or won’t) pay
a fair price, why would you spend one more second trying to land
them as a client? Even if you lose the deal because your price is too
high, you still come out on top because you haven’t invested much
time trying to win their business.
Another common mistake is to do “the range thing” – asking
prospects to tell you the range they are willing to spend, or giving
them the range they can expect to spend. Your prospect needs
a new phone system for his office. You do the dance, avoid the
giant dollar sign in the room and eventually say, “This will cost you
somewhere between $100 and $400 per phone. “Great,” he says,
thinking he’s getting a new phone system for only $100 per phone.
“Great,” you say, thinking you’re getting $400 per phone. From that
moment on, no one is happy. When he sees the written quote (which,
of course reflects the price you think you will get, $400 per phone)
he’ll grumble about the price. He heard $100, you heard $400, and
now you’re both frustrated. (And you probably won’t get the deal.)
How many times have you entered into a deal that you ultimately
regretted? When you try to read a prospect’s mind or wait for them
to reveal what they expect, you invariably end up doing more work
at a discounted rate. How are you going to make it using this old
negotiation strategy? (Hint: You won’t.)
Be fi rst. When I started applying this negotiation shortcut in my
first business, I was able to increase my prices by nearly 50 percent
and filter out prospects that were not a good fit for me much faster.
No more laboring over proposals for people who couldn’t afford my
services. No more playing guessing games with myself, trying to
figure out what they wanted. No more saying yes to low-ball deals,
which kept me working 100-hour weeks just to get by.
When it comes to successful negotiations,
the single most important question isn’t
“What are you thinking?” It’s “How fast can
you get YOUR number on the table?” The
guy who goes first wins. Period.
MikeMichalowicz.com
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