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 He is globally recognized as the guy who “challenges outdated business beliefs” and teaches us what to do about it.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 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. 9