There is one line in which the founder of App Sumo Noah Kagan says how he negotiates. App Sumo does thousands of deals each year, so I had to listen to him carefully. He said that he gauges, how much ground the person is willing to cease his territory and he makes sure, he doesn’t make the person uncomfortable and then he gives the offer. I loved this strategy so much that I have made it one of the foundational principles for negotiating my deals.
Let me give you an incident where I felt so angry over a negotiation. I had booked an Uber; this was before the pandemic. I met a Sindhi guy in the Uber since it was a shared ride and we were both in the backseat, the guy was in his 60s and I love talking to older men as the young can barely make a conversation.
We hit off, and he narrated some good stories. He asked me what I do, and I said, I was a digital marketer, etc. He said he was a jeweller and had a silverware shop in Bandra on the high street. He also had boasted about attending some high-profile dinner parties with a Billionaire. At the end of the ride, he said he wanted me to send him a proposal for social media management.
I quoted him a 50k retainership over WhatsApp the next day after walking and checking his store from the outside and evaluating his brand. That was the price another client of mine was paying me, as I feel it was my entry point to another client. Well, after some time of sending the proposal this client gives me ten missed calls, one after another and I cannot pick up as I am on an important Zoom call.
He tells me this work costs only 5k per month. He doesn’t let me explain or discuss the scope of the work and hangs up. I tried to call back, and now he won’t pick up. I am exasperated; he won’t even let me explain.
This was a bad way to negotiate; he should have known better, and I should have tried to gauge his budget. I went for the glitz and sent him an offer which had angered him. These things happen a lot of time.
The problem with Indian Business owners is that they won’t give you transparency on the scope of work, or the budget range, they are aiming for next to free.
Now, I am very courteous to these kinds of businessmen, and say, I would love to work for you for free, but I have a rent to pay.
Another filter for me is to see how much capital investment a businessman has made into his business. If he doesn’t have an office it is a red flag, try to see his cashflow, as revenues you just cannot make out. Also, revenues are false filters, a business man can be making 10 crore revenue, but still be in losses and has debilitating cashflow issues. In summary, don’t look at the glitz and glory, look at transparency, modesty, frugality, sincerity and if the businessman has positive cashflow.
It is not easy, juggling these figures, when the prospect is a co-passenger in the car and fibbing his credentails, but that where experience and seniroty comes in. You should be able to make this math in before even he thinks of asking you to send him a proposal. Keep these people as friends and good story tellers and not as clients to have a happy life.
My rules for negotiation.
Never negotiate with a prospect who is not 80 percent within your price range. There is no point embarrassing the prospect that he cannot afford to pay your expected or well-deserving prices. He might be blissfully unaware of the talents, skills and expertise you are going to put at the project.
I ideally like to agree to a price if the owner has done what I am doing and can emphatise with my work. Then the client knows what he is getting, and it is just a price of delegaton, I am not creating a new system, I am just executing his job in the system he has setup. But if the prospect has no freaking idea of what is a CRM, what is a lead and other terms. Then, he has no business to tell me I am overcharging.
I hope this helps any reader who has trouble prospecting leads. prospecting your leads, is very important when you are trying to sell your time, as every time spent sending a proposal to a wrong prospect is time lost when you could have chased a credible prospect and see the sales funnel positively grow.