"I think we should increase the budget on our contract" or "These price options seem too low, do you have anything higher?" aren't words you're likely to hear from a client or prospective customer anytime soon. The ball will always be in your court to negotiate pricing for the value you provide.
While it's never an easy conversation to have, the reason most contract negotiations fall flat is because the discussion is around dollar figures rather than value delivered. Data, pain points and listening skills may not be the first things that come to mind when thinking about a contract negotiation, but leveraging these tactics will pay off big time when you're in a position to raise rates.
So whether you're negotiating a new contract or attempting to increase an existing one, here are three ways to grab a bigger piece of the pie.
Lead with data
Before you go to a new client with your proposal, or approach an existing client with a change in your contract, give your customers the opportunity to transparently assess their own programs first. Some companies, like PR 2020 have prospects take a marketing assessment with their Marketing Score tool.
Intelligence tools like these give you data to support the proposal you plan on suggesting. Numbers don't lie, especially numbers that come directly from the prospective customer. The results also give you a way to demonstrate exactly how your offerings can help solve their problems and deliver value.
For existing customers, you may be able to identify other areas where they could use your support and leverage that into additional services. For example, you can position a free diagnostic that pinpoints potential improvement areas as a reward for their loyalty, and roll new services into a re-negotiated deal based on what the resulting data.
You can also put mid-year and annual reviews to better use by introducing data into the discussion. If you're working with a client on a retainer basis, prepare a list of potential service add-ons that aren't covered in your agreement, if the client assessment shows that they might be of value to your customer. Widening your service range deepens customer loyalty while also increasing your profits.
On the same token, following regular client reviews, you might find you are over servicing certain clients. If that's the case, you are due for a contract renegotiation. But again, use data and tie it back to the value you are delivering.
If you were to scale back on the scope of work to accommodate their current budget, where would that leave them? If they see the value, they'll pay for it.
Talk value, not tactics
Standing out in a cluttered marketplace is a matter of showing your value beyond the tangible; many companies lose out at the negotiating table because they don't grasp the importance of telling a value story.
If you were hired on to deliver on one job, but with a retainer agreement, what's next for you once the initial project is over? Customers will expect your prices to drop if you're not set to deliver the same number of services in the future. Many companies will panic and try to upsell with new tactics instead of big-picture growth strategies.
That's why value-based retainers are more advisable; they allow you to set the price of working with your company regardless of tactics. This allows you demonstrate how your ideas can do things like help clients improve their customer success, increase retention rates, grow their sales revenue, or save them time.
Clients aren't used to companies differentiating themselves in this way, so by focusing on how you provide value to their business, they start to grasp what they stand to lose by not contracting with you.
Always listen to your client's desired results and end goals -- you'll be better equipped to recommend service and pricing options to them. Again, let their self-assessment be your guide.
Most companies have tiered service packages that are designed to align with a customer's goals. Having their self-reported data (and pain points) clearly spelled out in front of you is a tremendous boon at the negotiating table.
Once you've heard your customer's goals and have recommended the appropriate service tier to them, you can again show additional value by offering add-ons that align with their aspirations but may not be covered in the plan they've selected. You can even feel free to meet customers at a lower price for additional services with the option to upgrade later on. Showing your preparedness to go above and beyond in solving customer pain points further demonstrates your value -- and is a win-win in negotiations.
There are plenty of ways to get what you want during a contract negotiation without ever talking money. At the end of the day, your job is to demonstrate more value to your customers than your competition, which means proving you've taken your clients' concerns to heart, are prepared to give them more than they expect, and are happy to include them in the assessment process. The only thing left to do is practice your signature and handshake.