The Designer's Coach

The Negotiation Coach

You work hard to build a business and it all comes down to one thing: Being a successful negotiator. How do you convince someone to agree to your terms, or settle for a compromise? Let's look at some questions to consider:
1) How can you develop the skills necessary to ask for and receive our full value?
2) How will you develop a negotiation system that will guide you through the selling process?
3) How do you take control of the negotiation?
4) How can you learn the closing techniques of getting what you want, and your clients feeling as if they have won as well?
5) How can you downplay price by increasing the value of your offer?

You must communicate your Value-Message
With an intimate knowledge of your target market, how do you communicate your "value message"?
What are your clients willing to pay for?
What is important to them? What is not?
Creating a value message is important, but you must consider what will your most likely client care about? If you target a price-conscious consumer, a value-based message is something they won’t consider that they want to pay for. They are willing to give up something for a better price.

4 Rules to Negotiating
Rule #1
In negotiating ask for more then you expect to get. When you go in with a high price you achieve some positive points. First, the perceived value of your service is viewed more prestigiously and second, you give yourself more wiggle room to negotiate later.
Rule #2
Buyers usually turn down the initial offer. Be prepared for this and have your defenses up to snuff.
Rule #3
Savvy buyers use the “wince" technique. This is where they make a facial gesture of shock at your price, don't fall for it.
Rule # 4
Play hard to get. A good negotiator will smell out a hungry sales person. Even if you are down to your last cent, don't act like it.

Being an Effective Negotiator
To be effective as a negotiator, you must understand that outcomes are determined by emotions. To have an effect, and influence a positive result, you must address 5 concerns during the sales process:
1) Listen
You need to acknowledge and understand her point of view, regardless of its merit. It is critical that you demonstrate that you are a good listener. You need to communicate that you understand her perspective and honor it.
2) Establish a Rapport
You need to reduce any emotional distance by establishing common bonds. How do you build a rapport? This bond building is crucial to giving you an edge during the negotiation.
3) Who is "The Decider"?
Uncover the source of the decision making responsibilities. Can she decide without consulting him? Is it just to inform? Does he care? What does he care about? Is there going to be a joint negotiation? How do we build a bond with an "invisible stake-holder"?
Perhaps the decision does not require more than informing the other after the fact. Sometimes a partner may have the authority to make decisions, but only after consulting. Then there are the couples that consider decorating a big decision, where all involved want to have a final say.
In decorating, the decision making process is never very clear. Our challenge is to figure it out.
She tells you that she loves everything, but she needs to speak with her husband. You can counter by appealing to her ego. She certainly can make decorating decisions on her own. If she agrees but says she still needs to consult with her spouse, make sure you are clear on the deal that she will present to him. Also, try to get her to commit to something: Maybe a time and date when you can call her for a second appointment.
4) Respect
Many times you may stumble into an uncomfortable situation, where one partner is verbally abusive. You need to tread carefully here. It is a good idea to make the weaker partner feel important and acknowledged. Everyone wants to have a sense of importance. If you can make an advocate without alienating anyone, you will gain added trust.
5) Trust
Determine if the role she is playing is real or misleading. Does she act as if she is using her last 2 cents to decorate? Does she promise you, if you do a good job, and give her good price, she will refer you to her friends, with all of them waiting on the outcome of her decorating project? Does she already know too much information? Are you the second or third designer?

Negotiate the Offer, not the Price
Do you negotiate on price or on the offer?
If you had a series of "negotiating defenses", would this help save on price reductions?
How can you train your sales team to practice and learn these strategies?
You must understand that your prices are not arbitrary, and are based on providing the extraordinary service and products you offer. Until you believe it yourself, you will never be able to convince your clients. Price reductions are not an option, unless the client is willing to sacrifice something in exchange, such as a less expensive fabric.

Get it Back
If you feel that you have given up something more then you wanted during the negotiation, try to get some of it back when the negotiation is psychologically over. Make sure you show obvious signs of defeat when you give in to their demands, this way you add on extras at the end, such as: a few pillows, or maybe a lamp shade, you can recover some of the lost profit. You do this when everything has been decided upon. Maybe you are writing up the order when you say” by the way, why don’t we add in a few pillows”? This is psychologically the best time to do this. Do not wait because they won't feel the same way again.
Overcoming Price
It is a fact, that price weighs heavier on the designer then it does the client. You must not think with your pocketbook. However, you must give your client a reason to spend more. You can do this by convincing them that they can't find a better deal anywhere else. The feeling of getting a great deal is more important then the actual dollar amount spent.
But let's be realistic, some clients want a better price and won't settle for not negotiating on price. If your attitude is "take it or leave it" you will lose out on a possible sale. This is why you must come in with a high price and to be willing to settle. This is the only way for some buyers to feel that they have won.
Here are the 5 reasons to ask for a higher price then you might expect:
1) You might just get it.
2) It gives you wiggle room.
3) It raises the perceived value of your offer.
4) It prevents the negotiation from deadlocking.
5) It creates a climate in which the other side feels they won.
If you do make a price concession, do not agree on the first offer. You must find the middle ground slowly and carefully. If you agree right away, the client will feel that they could have gone lower. Make sure you physically "flinch" at their lower price offer.
Great Negotiating Tip
Do not perform any service without negotiating a fee up front. Your trip to the design center is valuable today, for example: When she is desperate to find a certain trim. But the value of a service will always diminish rapidly after you performed the service. If you tried to get paid a month later, it will not be valued as much.
Why will someone pay more?There are several reasons why you can ask for and get top dollar.
1) When you have a specialty, a niche, you are the expert, and experts get the big bucks.
2) When you create a bond with your clients, they will trust you and they will reward you for it.
10 reasons what a client wants, besides a great price:
1) An easy relationship.
2) Predictability, reliability, and dependability.
3) Quick reaction to their needs
4) Accurate quoting of delivery times.
5) Cost reduction by not allowing costly mistakes.
6) Total product knowledge and sources.
7) A willingness to go to bat when a problem arises.
8) Early notice of any delays of delivery.
9) Ease of doing business with.
10) Quick and no hassle remedies to problems.
And of course, an experience they won’t forget, and they will tell their friends!

Are you tracking all costs for each job?
Do you have a system for tracking all costs of a job?
Are you really tracking all the costs of a job?
How do you value your time?
How much of it do you give away?
It has been remarkable how many times I have coached designers who give their time away. This business requires a lot of time to put a job together. You need to put a value to your time, and track it for each client. Once you see this in dollars and cents, you will be very reluctant to negotiate on price. I use Quick Books, a great accounting program that provides a way to assign labor costs to each job.

Have you created a pricing and estimating strategy?
How does your pricing strategy maximize your profitability?
Do you fluctuate between a pricing strategy of value and price?
If you are able to develop an effective and consistent pricing strategy, how do you think it would add profit to the bottom line?
If you charge with a value message, then your pricing strategy will involve managing the expectations of your clients. If you charge more then the competition, you had better deliver a flawless client experience. Is your company up for the challenge? Where do you need to do to perfect your systems before you charge based on what your clients are "willing to pay" for a great experience?
What are your pricing metrics? Do you charge per hour, per yard, labor per foot? Is there any other way you can change the metrics any add margins to the bottom line?
To remain in business, you must have margins that allow you to succeed. "Volume" is a fool’s game. It can create some impressive sales numbers, but are you making any money? There are many strategies to pricing out your jobs. I do like the concept of charging on what they are "willing to pay". A cost plus method leaves money on the table. Why should you charge the same labor for a swag when the fabric is $30 a yard or $130 a yard? You shouldn’t, you need to charge more. Why? There is more risk; More risk, more reward.