3 Elements to Negotiating Better Deals
3 Elements to Negotiating Better Deals
by Andrew Cooke, Growth & Profit Solutions
How you can use scope, budget and timescales to get to the customer’s needs, and to create better deals more quickly.
When negotiating with clients or prospects over potential work there are three aspects to consider which are common to any piece of work – whether it be consulting, selling services, manufacturing or production. The three elements are the scope of the work, the time for the work to be done, and the cost of the work.
Let’s look at them each in more detail:
Scope – this is the similar to having a “frame” around a picture. It defines the extent of the work to be done and provides the focus and limits for that piece of work. Equally important it defines what work is not going to be done – that is anything that is not within the scope lies outside it.
Timeframe – this is when the work will be done. It establishes when the work is to be done by, the outcomes realised and the level of urgency for the client or prospect. If there is a short timeframe, then additional resources may be required to complete the work within the agreed timescale, or other work may be delayed or impacted as a result. This needs to be considered when negotiating this with the client or prospect.
Cost – this is how much is the client or prospect willing to pay, or how much you are going to charge them given scope and timeframes that have been agreed.
So how do you negotiate with the client or prospect around these three elements? Let’s look at a fictitious conversation to illustrate how to use this.
I like to be generous! I tell the prospect that they can choose any two out of the three elements and I will have the third. Thus, for example, the prospect may say “I want to do everything (scope), and I need to do it quickly in the next six weeks (short timeframe)”.
This leaves me with the cost element. I then say “OK, this will cost you at least $75,000 to do all that by then” (note: I do not give firm numbers yet as I do not have all the information I need, but I can give them an indication what they might expect the cost to be).
The prospect then may say:
“That is too expensive for me. Can’t you reduce it?”
I reply, as you will guess, “If you are not happy with the cost, then pick any two of the three elements”.
And so you start again…..
This process allows the prospect to determine what is really important for them, and for you to begin to understand this where they may have some flexibility or not. This helps to open up the conversation so you really understand what they need, by when and why.
Think how you might use this with your prospects or clients. Try out the different combinations of choices that might occur and prepare for them. This will give you an easier way to focus the negotiation process, control the conversation and to make progress. Let’s face it – two out of three ‘ain’t bad!
What works for you in getting to your client’s needs, timing and budget? Share your thoughts ideas and experience here.
Share the knowledge, share the wealth!
Click here to find out more about Andrew Cooke and Growth & Profit Solutions.
