3 Tips to a More Successful Full-Fee Negotiation

Apr 8, 2014
This article is part of a series called Tips & Tricks.

Negotiation cartoon-freeEverything begins with a sale. Be it a product, service or idea, we are all selling something. But even the greatest salesperson has nothing if the sale is without profit.

A common pitfall in today’s business climate is for sales professionals to become too enamored with the sale itself, and then lose the deal through poor negotiation. This is an unfortunate outcome our firm has worked hard to avoid and, through mastering negotiations, our team is realizing some of their highest commissions and profits in 20 years. Not bad at a time when I still see so many blaming circumstances and playing the slow economy card.

External factors are rarely the problem. Instead look inside, be honest, and focus on the internal issues — issues you actually have control over. You can achieve the same results once you understand and implement some simple strategies of power negotiating and stop giving yourself and your company away.

Cut or Grow

When you negotiate poorly, not only are you robbing your employer but you are taking food from your own children’s mouths. Keep a picture on your desk as a reminder of whom you are truly working for and why you do what you do. Next, put yourself in your client’s shoes, and gain an understanding of their current perspective. They want what we all want — to improve their bottom line and they have two ways to achieve that end: increase sales or cut costs.

Yes, we did just come through the worst part of a bad recession where slashing budgets and cutting costs became standard operating procedure for many companies. That hurt us in two ways. First, it eliminated a lot of jobs, but perhaps even worse, our clients became considerably more astute about negotiating better deals to achieve their cost-cutting objectives. Frankly, many of us are not keeping up. Recruiters must become better at the strategic and tactical functions of negotiation. It is on this field we will die or thrive — and so will the firms we represent.

Of course entire volumes have been devoted to mastering the art of sales negotiation and it is certainly a subject too complex to be covered in a single article, but here are three essentials to remember and implement immediately:

1. Stay Humble and Accessible.

I’ve never met a great salesperson who didn’t also have a great ego. The two just go hand-in-hand,  and I think we all know it. Ironically, the negotiating table is no place for egos to show. When you define negotiations in terms of personal victory or loss, you allow your ego to take center stage and will find it difficult to remain objective throughout the process. You must learn to contain that beast and present a persona that is genuinely humble, honest and gracious. This is no time for one-upmanship. If your client ever feels like you took advantage of them, they overpaid, or you won at their expense, you lose. Remain calm, pleasant and don’t allow emotions to undermine your objectives. Just because they hit you with an absurdly low offer or try stalling tactics to get you to budge, maintain a professional, ego-free demeanor at all times.

Having the emotional advantage in any negotiation is quite powerful. This is a business discussion, don’t let it become personal.

2. Lead High – Expect Your Full Price

If you allow fear of rejection to compromise your worth and so start at the bottom, you have nowhere to go. Start your negotiation at your full price or higher.

Several years ago, we decided to test this by setting our price at a full one third vs. 30% of the first year’s compensation. To our surprise, once we came to terms with it, we faced very little rejection in the market. Clients paid our fee. For those who questioned it, we were able to fall back to 30% or 28%  rather than the rookie fallback of 25%.

After you have explained the value of what you bring to your client, confidently name your price. You’ll know in seconds where you stand. If the offer is met with crazy eyes, carefully imply some limited room for movement might be available. If you must yield to a lower cost solution, then also reduce the level of services. Always steer the conversation towards the client’s needs and challenges and how you will resolve them. If necessary, simply ask to put the price component aside for a moment to address the other obstacles to achieving a solution.

3. Never Counter to Your Own Offer

If tell a client my rate is one-third of the candidate’s first year’s salary and he balks, I put the ball back in his court by asking something like, “Well what did you have in mind, or what do you propose?”

If instead, I just immediately retreat and offer a 25% rate, I have made the rookie sales mistake of negotiating with myself. This demonstrates that I never had any strong convictions about my original price or value to begin with. It announces to my client that we are now playing “Rate Limbo” and the race is on to find out “how low can you go?” Let them propose a counter to your original offer. It may actually be reasonable — or it may be ridiculously off-base. But it puts you back in the driver’s seat and in control of the negotiation.

A powerful negotiating tactic is to never accept the first counter-offer. Always reject or at least hesitate. If you do compromise, make sure that you are getting something you want for every dollar you are throwing away.

Getting the sale is only half the battle. A powerful negotiator will generate more revenue with three good clients than a weak negotiator will with 10. It all comes back to a familiar theme I have followed and preached for years: Work smarter, not harder.

Negotiating more money from a smaller group of exceptional clients means you have more time to devote to providing a higher quality product and exceptional customer service. That leads to more referrals, more business and more success. Once you master the concept, your entire working life will be easier and more rewarding.

Image courtesy of jscreationzs /
This article is part of a series called Tips & Tricks.
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