10 Contract Negotiation Tips
Contract negotiation is definitely not for everyone. I know far too many people who are far too timid to be rough, hard, and determined to get the best contract possible, especially when it is B2B contract negotiation. I have gathered some of my best contract negotiation tactics and included them here. I negotiated local and national contracts for a few years, and I can say that each negotiation is very different, but there are several similar undertones, just like in the sales process.
- No emotion. No matter how well you know the individuals you are negotiating the contract with, you should always take the emotion out of the negotiations. If you don’t, then things can get personal and that is never good for business.
- Concessions. Be willing to make concessions. Negotiations are all about the give-and-take. If there’s something that you absolutely must have, know what you are willing to compromise on, but don’t offer that up too quickly.
- Negotiate in parts. Some negotiations can be broken into parts, depending on how complex the contract is. If there are multiple parts that you can break the contract into, do so. This will help everyone keep a clear picture of the negotiations and keep score, so to speak, of who is getting what.
- Make it a win-win. Don’t go in expecting to get everything for free, because that usually doesn’t happen (although, I’ve achieved these results in the past, but it’s quite rare). Make sure everyone is getting what they want out of the contract. Otherwise, why would there be a contract in the first place?
- Ask for what you want. There’s no harm in asking for what you want (i.e. the first 2 months free on rent for a new retail location, or a 30 day ramp up period before being charged, etc.). There’s no harm in asking. They just might grant your request, or ask for something in return.
- Know the contract. Knowing the contract before going into negotiations is so very important because if you don’t know what’s in the contract, how can you negotiate it?
- Clarify.If there are any points that you are unsure about, or think might have a different meaning than what you are interpreting it, ask. Ensuring full clarity on what is written is important to know what you should and should not ask for.
- Threats.Stay away from using threats or undermining the person / company you are negotiating with. If the other party threatens you (i.e. if you don’t agree to these terms then there is no contract), then you’ll need to decide whether the deal is worth it to agree to those terms.
- Use multiple tactics. In my negotiations I have used multiple tactics to get what I want out of the deal. The tactics you use (i.e. silence, the good guy/bad guy routine, low-balling, or the bait-and-switch) should depend on who you are negotiating with, how important the deal is to you, and how good you are at these tactics. I don’t ever recommend being unethical or undermining your opponent in negotiations.
- Take control / be assertive. Always be in control of the negotiation process and be assertive of what the other party says and how they react when you ask for certain things. This will help you gauge how to approach them for other items you want or don’t want in the contract. Also, being in control and being assertive will show them that you mean business and that there will be some concessions made, which will usually help them also prepare to make some concessions.
Contract negotiation is usually a learned skill and generally takes someone who can clearly see the big picture and what the desired end-result is. If you have someone negotiation a contract (or more) for you, then you should give them as much information as possible so they can see what the desired end-result is so they can move the negotiation process in that direction.
Do you have experience with contract negotiation? What additional advice do you have for newcomers to the negotiation process?