Contract Negotiation is something careerists, freelancers and entrepreneurs have to do all the time, in all walks of life. When asking for a pay rise, agreeing terms for a new job, defining the terms of a new freelancing contract, buying a house.
“If you come to a negotiation table saying you have the final truth, that you know nothing but the truth and that is final, you will get nothing.” – Harri Holkeri
Given how often we encounter these conversations, many of us feel deeply uncomfortable with the exchange, so end up walking away unsatisfied with the deal that has just been struck. And kicking ourselves – why didn’t we just speak up? Why did we agree to that? Why didn’t I just say no? Or sometimes not negotiating at all – just accepting what’s been offered because we feel too scared to rock the boat or lose the deal completely.
I have been lucky to observe a true master of negotiation on multiple occasions – he was the head of procurement at a company I worked and secured contracts with suppliers I engaged for my projects. It was truly magical to watch – the switch of status across the room, the way this mild-mannered individual would have hard-bargaining salespeople wobbling at the knees. I have seen him encouraging suppliers to increase their prices to make sure the contract was worthwhile for them!
As freelancers or independent consultants, this is a great stage to be at. You are probably past one selection process and are onsite for the negotiating meeting. This is a critical part of setting up the relationship and getting to know the client. It will also be a good indicator of what working with this company will be like and set the tone for the relationship. If the conversations at this stage are open, honest and respectful, with both parties being clear and transparent, that is a good sign for the engagement.
So, here is the top 10 for negotiating your contract:
1. Understand exactly who your client is
There is likely to be more than one stakeholder who has an interest in you and the project. Before the meeting, find out from your contact who is involved, what their vested interests is, who will be overseeing your work and who owns the pursestrings. An awareness of the background dynamics will become hugely helpful for the negotiation stage, and during the course of the project. You need to understand who is backing the project and if there is any objection – why that is and with whom.
2. Always aim for a Win-Win
Negotiation is truly successful when both parties walk away from the table happy and satisfied. Don’t approach the discussion with a me-versus-them mindset, nor with the idea that you have to either accept or reject their offer. Consider what it is that the other party need from this agreement to be happy. What benefits can you bring to them, and in turn what benefits can they bring to you?
3. State Your Understanding of the Problem/ Need
Either the agency or your contact with the client will hopefully have provided you with a clear outline of why exactly your services are needed. Do your homework and get as much background as possible – find friends/ contacts/ acquaintances / random people on Linkedin who work or have worked there and do as much farming for information as possible. Just knowing this background will make you feel more confident and help you to understand the nuances of what is going on at the organisation.
Articulate during the meeting your understanding of the issue and, if appropriate, what the main challenges are as you see it. Your are likely to get further useful information and background during this meeting, as the client expands on the details. Explain what makes this project different, interesting, enticing to you, and reassure the client that you can be of help (if you can, of course!).
4. Never accept or decline an offer without having put both parties’ needs and wants on the table
This is critical. Both sides of the offer need to be discussed, agreed and clearly stated. This may sounds obvious but many of us see job offers or contract offers as a “yes/ no” option. Client makes an offer – we say yes or no. Remember negotiation is a discussion. I nearly lost some work because I simply declined the offer they were presenting without discussion. I called the Managing Director back after 20 minutes and asked for a further chat. After settling out my stall with all my needs and wants, we came to an agreement and I ended up consulting for that client for 2 years!
5. Remember that money is just one small element of a contract
We often get stuck on this point but for us to truly be effective in any job or working contract, there is a host of other elements at play. Make sure you think through every aspect of this work that you require in order to be a success. This could be time with certain individuals, access to key information, access to technology, the ability to visit certain sites, the days you can and cannot work, etc. Prepare this before the meeting and clearly state your needs, without apology. Don’t worry about being seen as demanding – the client will see you as diligent, mature and focussed on what it will take for the partnership to work. Have in mind the areas that you can be flexible on. If the client cannot meet all your needs, that is not necessarily a problem but it may be worth flagging as a risk or asking for some mitigating actions to be put in place.
Include in this what you expect from your main stakeholder – regular updates, support, input, etc, and in turn ask what they expect from you. Make sure you are clear on their expectations eg ask them “what end result will be a success for you?”, “what do you expect to have achieved over the next 6/9/12 months?”
6. Be prepared for a negotiation to take some time
It is unlikely that the first conversation will be the last one. It can sometimes take months for a conversation to go through the necessary journey, often due to external factors. Both parties need to reach mutual agreement over the needs and wants and may take some feedback from either side. If you are negotiating with a company, there may be HR sign off, procurement sign off, key stakeholder sign off. Stay patient and keep the door open to conversations during this time. Check in with your client from time to time and ask them if there is anything you can do to help.
7. Be prepared to walk away
Of course, easier said than done, particularly when it comes to a new client, but you will build trust and integrity if, after all exploratory conversations, you come to the conclusion that you cannot service what they are looking for, or that you are walking into a doomed project. Use your instinct to inform you if this is a success-in-the-making. It is not in your interest to take on something that is likely to affect your reputation or integrity.
8. Don’t feel pressured into agreeing on the spot
If you feel you need to take some time to evaluate where the conversation is at, then it is entirely within your right to do so. Take the weekend to think about it and contact them on Monday. Either with a yes, no, or counter offer. What would make the contract worthwhile for you or what assurances do you need? Or why are you declining the offer? You never know – the company may address your concerns more readily than you expect.
9. Acknowledge if the conversation is stuck
If you can’t seem to make progress, acknowledge it. Just say, “I think we’re not making progress. What do you think is the best way forward from here?” Try flush out any issues/ unsaid blockers that are holding back progress.
10. The Money Question
Of course – the bit we all dread, particularly when starting out. I find this easier to do via email so the body language doesn’t give anything away. If you are face to face or on the phone, then have a number in your mind. Very clearly in your mind. As humans, we can so easily slip into apologising or the classic of: “My rate is £600 a day, but I could probably drop it to £500 and, as my friend Clare put us in touch, I’ll do mates rates at £350,” all said before the client has even had a chance to react or say anything! Our mouths run away with us.
I always pitch at the top end of my range (if appropriate) and expect to get negotiated down. There is nothing to lose – if the client accepts you at a higher rate, great. If not, then you expected it so there is no loss. Just make sure it is worth your while. If the client is insistent they pay you a lower rate, is there some other condition that you can bring to the table to make it a sensible contract eg some sort of endorsement, marketing opportunity, etc. Be creative here!
Great, so hopefully you are in a position where you are ready to get cracking with a new client. At the end of the discussion or at some opportunity before you start the contract, check in with your client and get a feel for where they are at – how are they feeling about the project? Is there anything they have reservations about? Any aspect they are particularly keen to get involved in, etc?
With everything, use your gut instinct and if any aspect of the conversations is leaving you with a nagging feeling, go back to the client and clarify. There will always be unexpected elements to any new contract, but making sure as much as possible is flushed out before you start on site will put you in a good position.