Your frequently asked questions: answered by tutor Muriel McClymont

Q1. I’ve heard people speak about the bottom line in regard to negotiation, what exactly does that mean?

A1. Your bottom line is the absolute minimum price that you can accept. A good way to calculate this is to take the hours you have available to work, against what you need to earn to stay solvent. This lets you work out your minimum hourly or daily rate. In other words, it’s a calculation you make to ensure you never mistakenly commit 75% of your available time on a contract, which only pays you perhaps 40% of your required total income.

On rare occasions and for short-term work, you may choose to adjust your bottom line down below your normal acceptable rate, if the non-financial benefits in the long term are worth it, for example gaining experience that will secure more profitable work.

Once you’ve worked out your bottom line, it’s a good idea to set your ideal price (top line) – the one you would be thrilled to get. This rate shouldn’t be so ridiculously high that it immediately prices you out of the market though. Finally set a middle price line, which would be fair, and you would be happy to do this work for.

Using this information, and your analysis of all the other benefits to you of getting this work, you’ll be in a much better position to negotiate flexibly.

Q2. What are the most important things to think about when preparing for a negotiation?

A2. There are three main strands to preparation:

1. Preparing yourself and setting clear objectives
2. Understanding the client and their needs
3. Identifying as many variables as possible in addition to the cost.

To prepare yourself you need to know specifically what it is you want to get out of this contract. You need to be clear about why you want this work and what the benefits are to you, not just in terms of money, but how else it may benefit you, for example it could broaden your experience, expand your portfolio or even just give you an opportunity to make great industry contacts.

Only by considering all the benefits and what they are worth to you, can you then make decisions about what your lowest price should be in this instance.

The best way to understand the client’s perspective is to find out as much as you can about them, their business and what they produce. Once you have found out all you can, take some time to step into their shoes. Imagine what it would be like to be them:

• What are they looking for?
• How could their lives be made easier?
• What problems might they be struggling to resolve?

See yourself through their eyes, and ask how your knowledge and experience could help them?

Once you have thought this through thoroughly from your perspective and from the position of the client, you will usually have enough information to start identifying variables, which can become part of the negotiation.

For example:

• How important is the timing or length of the contract?
• Are there parts of the work that could be done differently or more efficiently?
• Is there any flexibility in how others roles interact with yours, that could be altered to make this run more smoothly?
• Does it matter where the work is done?

The more variables you can identify, the easier it will be to negotiate with the client in a joint problem solving way.

Q3. I’m convinced I’m not very good at negotiation. How do I start feeling more positive?

A3. The first step is to follow the advice in the answer above about preparation. The more prepared you are, the more comfortable you will be about the process.

If you are worried that the client has all the power in the relationship, remember that this is a two way process. The client needs a service provided, and you need the work. You are equals working out an equitable exchange of products or services in exchange for appropriate remuneration.

If the problem you are experiencing is nerves then take time to prepare yourself mentally. Imagine the discussions going well. Think about how much you would enjoy getting this job and demonstrating your skills to this client. Remind yourself about all your strengths and what makes you the ideal candidate. Take a few deep breaths to steady your nerves and give it your best shot.

Q4. How do I get someone to negotiate on other issues if they are fixated on the cost?

A4. Just because a client is negotiating with you, does not mean that they are a skilled or experienced negotiator. When you meet someone who just wants to haggle over the cost, you have to help them realise that there are benefits to widening the discussion.

It’s often useful to give a break down of total cost. For example, if you say the total cost is based on 10 days at £250, then instead of looking expensive (£2500), it might look more reasonable especially when compared to another quote, which is offering 4 days at £500 (£2000).

You can then explain why you have quoted for 10 days so that the client can either decide on that cost or can ask you to do fewer days and reduce the total cost accordingly.

Another effective strategy is to ask a question. As humans, we are programmed to answer questions so it helps to steer the conversation in a new direction. Some useful questions might be around:

• What are their priorities?
• What flexibility do they have in other areas apart from cost?
• What are their concerns?
• How else can you help and support them?

Once you get a two-way discussion going, you can start to negotiate using all available variables, not just cost.

Q5. I am about to renew a contract and recently found out that I’m being paid substantially less than a friend is getting for the same work with another company. How do I use this information to negotiate an increase in pay?

A5. Before rushing in screaming daylight robbery, I would suggest you do some homework. You may be being underpaid or your friend could have hit the jackpot and be enjoying a bonus rate at the moment.

Negotiating an acceptable deal is all about reaching an agreement that benefits both parties. If you thought you were underpaid before, you may just have had your suspicions confirmed. If you were happy before, you need to find out more.

Check out the marketplace to find out current rates for the same kind of work. Use your union for recommended rates. Scan job adverts, speak to friends and contacts in the same area and ask what they are paying / being paid / rates they are aware of.

Ask your well-paid friend for more details about what they are doing. Often when a premium rate is paid, a premium service is expected. When you find out more from your friend, you may find that they are on call 24/7, travelling far and wide, attending meetings at weekends or providing some other service that you are not. They may have been available instantly, and that was worth paying extra for. Or they may just have negotiated more effectively.

Once you have done your homework about current rates, it’s time to assess your existing contract:

• Do you value this work?
• Have you a good relationship with this client?
• What are the long-term prospects?
• Does this contract work well for you and the client?
• Before you heard about your friend, did you feel you were treated fairly?

Once you have gathered all the information above, you need to decide whether you would like to negotiate a higher rate.

Q6. I have been negotiating with a company where I have done work before, and have a good relationship, but they are now asking me to reduce my price below what I am prepared to do. I don’t want to sour the relationship but really can’t say yes. What do you advise?

A6. If you can’t strike a deal that works for both of you, you have to walk away. What’s important is that you take steps to take care of the relationship in the process. It’s OK for them to ask for a lower price, and it’s OK for you to say no! It’s how you say no that’s important. Flouncing, being insulted or storming out is unnecessary and will damage a perfectly good relationship needlessly.

Be clear about why you can’t say yes. If they have found someone who can do exactly what you do, for the price they are suggesting then tell them that this must be hard for them to resist. Wish them well, and make sure you keep the door open for future work. It’s always possible that their alternative candidate may not live up to their expectation and standards, and your client could come back to you.

Even if you lose this particular contract, it is important that you look after the relationship. This may be an important contact in the future, or may know an important contract, and may recommend you to other people, even if they are unable to pay you the rate your require currently.

Q7. Everything is so competitive. If I ask for more money, I’m scared that I’ll lose the work. What do you suggest?

A7. Just as the client is entitled to ask for a reduction, you are entitled to ask for an increase. Make sure that an increase would be appropriate for that client and that specific job. For example, it’s never a good idea to put a your rates up because you have had another client cancel a contract and are feeling the pinch. You need to be able to justify your rate increase so that it seems fair to the client.

Try to flag up to your client well in advance that an increase is on the cards so that they are prepared for it.

If the contract is a long-term one, it may by fine just to point out that you have held your prices steady for X period of time, and now need to make an adjustment in line with increased costs etc.

If you feel you have underpriced the work, you need to explain the situation to the client, what the specification said, what you believed the scope of the work to be and what the reality is.

If the client feels you should have known this, they may be unsympathetic, and you may have to suck it up until contract renewal. Often though, the client will take a balanced view.

It’s always easier to negotiate down than up, so it is really important to try to make sure you charge enough in the first place. If you want to go in low for the experience, it is useful to explain that the going price for the work is usually £X but you are prepared to do a special deal of £Y for a limited period of time.

To justify an increase in price, see if you can identify any extra services you can offer. Ideally something that would not be a big deal for you, but would be very useful for the client. It’s important before you ask for an increase that you consider this from the client’s point of view and identify any benefits to them.

Before tackling this negotiation it is important to prepare thoroughly, make sure you take good care of the relationship and be clear about your bottom line so that you can arrange a graceful exit if that becomes your only option.

Q8. I have trouble trying to close the deal. I’m often so pleased that people like what I’m offering that I forget to pin them down and then I don’t know whether I’m being too pushy calling them afterwards. I have lost work through this. How can I avoid this in the future?

A8. Whenever you are negotiating, make sure you keep track of what is being discussed and what has been agreed. At the end of every meeting, verbally recap your understanding of what has been agreed, and what still needs to be resolved including who needs to do what. Then you can agree on the next steps.

Your summary could be the deal itself or it may be agreeing a time when you will next speak. Either way it is always good practice to send an e-mail confirming your understanding of your agreement.

If appropriate, it’s good to volunteer to call them because that way it’s in your control. If they say they will call you, agree when. If you don’t hear by that date, you can legitimately chase. Make sure you are sensitive to the possibility that they have other work and priorities.