Why Clients Negotiate and How To Stop It

Why do we negotiate?

We negotiate when we believe there’s an opportunity to get more. We negotiate when we believe we may be overpaying versus what others get. We negotiate when we believe we can get something someone else didn’t get. We negotiate because we always want to feel like we got a good deal.

When don’t we negotiate?

When we’re confident. Confident that we are paying the same as others, confident there is nothing else we can get, and confident we’ve gotten the best deal we can under the circumstances.

When you go to the grocery store, cart full, do you ever go to the cashier and say, “I have a budget issue. I only have $75. Final offer.”

They reply, “Buy less stuff.”

How about your airfare, your Uber rides, a meal at a restaurant, or your mobile phone bill? We don’t even consider negotiating when we subconsciously trust that the price is the price, based on something, and that others are paying the same amount for a similar item.

For professional speakers, myself included, that confidence begins with how we communicate our fee.

We Often Invite the Negotiation

When I first started, I unintentionally signaled that my price wasn’t really my price. I’m pretty sure I said things to prospects like…

“My fee is $15,000, but I may have some flexibility.”

“What I normally charge is $15,000.”

“My fee is usually between $12,500–$17,500…”

“I’d really love to make this work, and would hate to lose this over budget.”

…or even presenting the fee apologetically.

When the prospect believes the fee you’ve delivered is simply a starting point, they immediately assume their ability to negotiate determines the final fee. You are likely the same exact way when someone delivers a price to you, and as it turns out, your prospects are humans, just like you.

The Four Levers Behind My Pricing

Peers connect more easily than ever, AI is illuminating and exposing pricing models, and your clients hopefully take you with them to other organizations and roles. In that era, how is it sustainable to have each of your clients paying a different amount based on how well or poorly it was negotiated?

Being firm does not mean you have to be rigid. Instead, being able to easily deliver your pricing around the four elements that economically justify pricing differences builds trust, reduces the pricing conversation anxiety you likely have, increases your engagement value, and should make forecasting your calendar more accurate, too.

My pricing is based on four elements. These are the things a client can adjust to create value for my speaking business, while receiving value in return:

1) Volume

My business thrives when I’m able to trade my time for larger engagements, or a larger number of engagements. A single, small engagement isn’t as valuable to my business as a series of large ones. That’s reflected in my pricing.

2) Timing of Cash

As it turns out, I like money. Clients who are willing to pay me faster are better for my business than clients who want to pay me slower. That’s reflected in my pricing.

3) Length of Commitment

Clients who contract for a year-long relationship are better for my business than those who simply want a one-time engagement. Those are not economically identical. That is reflected in my pricing.

4) Timing of the Deal

Predictability has value in a speaking business. When clients are willing to finalize an engagement earlier, it helps me plan my calendar, protect dates, and manage travel. That is reflected in my pricing.

When I deliver pricing or a proposal, I simply explain…

“For an engagement like this, my fee is $20,000 plus expenses. It’s based on (volume), (timing of cash), (length of commitment), and (timing of the deal).”

When a client responds, “Well, we only have $17,500 available for this event,” what do you do?

First, be a human being. Don’t immediately jump down their throat, and instead, be curious. Why that number?

Second, re-explain your pricing, confidently. “As we discussed, my pricing is based on (the Four Levers). If we need to get that down, we can talk through each and see what we can do to get us a little closer.”

Third, do just that! Maybe they need to commit to a little smaller volume, just like the grocery store analogy at the beginning. However, maybe they can pay you faster? Maybe they can commit to a series? Maybe they can commit faster and more predictably?

Otherwise, your concessions are not only charity to their bottom line, but also a signal that there’s more to be had. And that concession will stay with you for the rest of your relationship with that individual and that client.

How about when a client wants to pay you Net 60, or slower? Be a human first, walk them back through your pricing model, then give them the levers to make the adjustment. In those instances, the Net 60 payment term request just goes away more often than it doesn’t. You can use this approach for any commercial term request.

When you can confidently deliver your fee with the structure behind it, that confidence becomes contagious. Decision cycles shrink. Trust builds. Confidence builds. Your planning becomes more accurate.

Negotiating should be reserved for circumstances in which each scenario is so unique that it requires a collaborative effort to reach a mutually agreeable outcome. Things like union labor disputes, hostage negotiations, peace treaties between warring nations, or even brand-new solutions that have not yet established any defensible market value.

Giving the buyer confidence that your price is your price is easy, with flexibility through the four levers that drive your business and your pricing, and, as it so happens, define every for-profit business in the world.

Now is the time.

Todd Caponi, CSP® is a multitime C-Level sales leader, a behavioral science and sales history nerd, and has led through two companies with successful exits. He now speaks and teaches revenue organizations and their leaders on leveraging transparency and decision science to maximize their revenue capacity as Principal of Sales Melon LLC. He’s the author of two previous award-winning books, The Transparency Sale and The Transparent Sales Leader. His newly released book is Four Levers Negotiating: The Simple, Counterintuitive Way to Higher Deal Values and Lasting Trust.