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February 03, 2011

The golden rule of effective negotiations

Really sexy blog post title, right? Back when I was asking daily, the post titles had to do with the things I was requesting day in and day out. Can I ride your segway scooter? Can I try your onion ring?

These days, posts are a bit more practical, but no less exhilarating. Take this example:

A few weeks after I learned about how hard it is to price services when you're a freelancer or independent contractor, I got a chance to redeem myself. This time around it was with a new client for a kind of job I'd done many times before. But there were still some challenges in figuring out the project fee:

1) I wasn't sure what the client's budget was, and this matters since I liked the work, I liked the supervisor and if we found a mutually agreeable rate, I wanted this to be a long term relationship.

2) I'd done that kind of work before in house, but never as a contractor.

3) We talked about money before I started the job but didn't come to an explicit agreement by the time I finished. This was totally 'my bad.' The employer said, "What should I pay you?" and I said I'll give an estimate, but instead I jumped in, exhilarated to get started and curious how this assignment would evolve. And then, before you could say "sign on the dotted line" the project was done. Boom. And I realized we never agreed on a fee. Ak.

Here's how I went about making the best of this situation.

1) To cover my bases, I did something I've never done before: I called people and flat out asked what they pay for that kind of work.

I didn't give away the name of the employer, but I described what I was doing and what my background is (in-house, now freelance, x-hour project with y results). And then I asked, "What do you pay for this kind of work?" They were friendly. Forthright. Insightful and nuanced. ("Depends on if it's a public or private employer." "What city are you in, if you don't mind saying?" "Tell me more about the tasks you did on a daily basis.") Almost like they get that kind of question twice a week. I couldn't believe it. I emerged with a range, and I had a target place in that range.

2) With this info, I felt very comfortable approaching my client. I apologized for not finalizing money before the work got started and said I'm sure we'll come to an easy agreement. The client asked what I wanted, I summarized what I did, about how long it took me and what the results were, and countered with, "What do you think is reasonable?" The client told me a figure. It was perfect. And by perfect, I mean exactly what I was hoping for.
The golden rule

Now that I think about it, there's one more step I took that ensure this transaction ended happily. It's more important than anything else I did in this case, and a completely lucky break. 

Long before talking or thinking about the work involved or the compensation, I made one right move: I chose a client who was honorable and trustworthy. Maybe this seems like obvious good move to you, gentle reader, and in retrospect it's a huge DUH, but trust me: as I've been evaluating clients, wondering which projects to take, I haven't been asking, "How likely is this person or firm to want to pay me fairly?"

After this experience, I've decided I'm going to ask that, of myself, before any discussions of rates or terms. It won't make or break a deal, but I hope that hunch will help guide me (with a dose of skepticism and an open mind, of course).

In this case, the client made it clear from the start that my work will be valued, and I didn't have a moment of doubt that I would be compensated adequately. If you start with that assurance, there's little that can go wrong.

Even in situations when you don't have that assurance -- and let's face it, in most situations you truly do not -- you can ask yourself "How would this negotiation end, in a perfect world?" and work toward that. Think about more than money, and if you want a long term relationship, aim for an outcome that works for both parties.

As for more antagonistic situations, like the dog eats dog world of projects and bidding and demanding clients and underselling competitors... well that's something I'm sure I'll experience as my business grows. For now I am thrilled to be working clients who, for the most part, fall in the former category -- honorable, worthy of respect and who respect my time and talent -- and I look forward to serving them in the future.

I leave you with a resource, a thought and a question:

For further reading:

When to make the first offer in negotiations, from Harvard Business School

A reflection: 

Maybe I should have countered and asked for more, on principle. I am The Daily Asker, right? I decided not to, for two reasons. If they paid me my target right off the bat, the amount I could have reasonably raised it -- say 10 or 15 percent -- by countering would have been trivial for a short term job and left a bad aftertaste (or so I felt). I felt they put their best offer on the table, and I wanted to reward that rather than quibble over a few dollars per hour. Second, I already sensed we'd be collaborating again, and each contract is subject to a new discussion.


Would a man have counter-offered? They say "Women Don't Ask" and men are aggressive about getting the best possible salary. I'd love to hear from male readers (or women who set salaries for male employees): What would a dude have done?

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