It can be hard being a small business. We’re afraid our numbers will be too low (and we get stuck with lots of work for low pay). Or, that we’ll bid too high and lose the project.
But what if you didn’t “negotiate” at all? And still got higher paying clients?
A recent post about negotiation on Copyblogger urged (among other things) to “build value”—spell out all the tasks you do to perform a job. Build a picture of all your hard work in your prospect’s head. This makes them more likely to agree to hire you and pay your fee.
I’ve seen advice like this before. It’s not bad advice. But, it’s not the best advice either.
Don’t “negotiate” at all
Building a step-by-step list of tasks focuses on the wrong thing. It turns your knowledge and expertise into a long to-do list. You check off each item, and get a reward in the form of an additional part of your fee.
It puts the emphasis on the work done, rather than the value received.
The real value isn’t in a list of tasks you do for the client. If your work can be reduced to a checklist that anyone can follow, then you’re not really providing something special and truly valuable.
What they get, not what you do
When you talk to a prospect, set aside the details. Instead, ask what their goals are. That’s where the value really is. Not in a new web site, or an ad.
The client doesn’t really want a new web site or an ad. What she really wants is 5 new coaching clients. Or an additional $50,000 in sales. Or 20 new leads. Or a savings of $5,000.
The real value is in what the client gets from your work. They get more profits, save more money, or grow faster than they could otherwise. The value is in the impact you have, not the time you spend.
Results, not tasks
Say your prospect has a website. She’s selling custom handmade embroidered silk nightgowns at $500-$1350 each. She’s running a multi-million dollar business and sales are brisk.
Unfortunately, her phone system keeps crashing. It’s down for an hour a day. Her staff of ten can’t answer all the calls. Productivity is down, and the staff is frustrated.
Instead of spending time on new designs and building partnerships with new outlets for her products, she’s running around calming down her staff, calling the phone company, and even trying to fix it herself.
The solution to her problem is a $27,000 phone system. Said that way, it sounds like an awful lot of money.
Reframe the price
Here’s how to make that large number look like a bargain. Calculate all the money she’s losing in hourly wages, lost sales, frustrated employees, and her own time. After you’ve done the math, you find that her broken system is costing her $425,000 per year in lost sales, plus another $115,000 in lost productivity.
Then, you offer her a brand-new system that would fix her problem and cost $27,000. Problem solved, and $540,000 reclaimed. Do you think she’d take it? Or quibble about the price?
$27,000 is a lot of money, but not compared to a $540,000 loss. Right? What do you think?