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Following is how I royally screwed up a contract negotiation for both me and my potential customer:
I received a referral for a website design, blog design and social media project from a great friend of mine and colleague.
The following activities ensued:
- I looked at the existing website of the potential customer (~30 mins)
- I “googled” their name and name of their business and looked at their overall web presence (~30 mins)
- I sent them an initial email introducing myself and asking for a phone conversation (~10 mins)
- We had an initial phone conversation and talked in depth about their business and their web presence (~40 mins)
- I drove to their office to meet in person, discuss the project more in depth (~120 mins)
- I typed up a formal proposal for the project and sent it over (~120 mins)
I then received an email stating:
“Thank you. We will not be moving forward.”
I shot back a response —- “Can you let me know why you won’t be moving forward?”
Response — “We don’t have anywhere close to that amount of money budgeted for this project.”
No One To Blame But Me
UGH!
I put ~350 minutes or almost 6 hours into this and it turns out that this project never had a prayer from the start.
I did the money dance for too long. You know — nobody likes to talk about the money. It’s uncomfortable. So, we dance around it for as long as possible before putting it out there.
Here is what I have realized — talking money is not more uncomfortable than realizing you just flushed 6 hours down the toilet.
Here are my 3 tips on negotiating a contract and avoiding losing valuable time doing the money dance.
- Know your own products/services inside and out.
- Address the money situation early with a range of costs. I should have mentioned the money in the initial email or the initial phone call at the latest.
- Understand that both you and the prospective customer will appreciate your candor. If I had discussed the money in the initial phone call, I would have saved myself 4 hours and the prospect 2 hours of time. Everyone wins.
Your turn. What are your thoughts about this? How do you approach the “money dance” with your prospects? Do you have a “money dance” story of your own?
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{ 6 comments… read them below or add one }
Russ I am “not” sorry that you learned this lesson.
at least not at this beginning phase of your business. Anytime we learn something this BIG…big as in … a lesson that has huge payoffs down the road.
Payoffs such as: more time to focus on projects, clients, and program development; more business contacts as you learn to package out and price out your services in various price point options, and of course, more profit now and in the future as you learn to invest your time with the projects and clients that you have “correctly qualified” for the time alotment and fees for service you have control over.
Kudos Russ…great post as it gets the real business mind going….
thanks!
Jennifer
@jennifer — I think the sooner you are able to discuss the money situation the better — within reason — it is just best for everyone involved. There are certainly other “qualifications” that I look for in a client, perhaps I should do a post about those as well.
Thanks for the great comment Jennifer!
I was leaving my accountant and asked a potential CPA how much he was going to cost after approx. the same 6 or so hours of reviewing our books and talking with everyone involved in the biz. He avoided my direct question several times throughout the process and continued telling me why his services were needed. Finally I point blank said you’ve seen my books “Can I afford you”? He answered with confidence and frankness and said absolutely STL Beds can afford me, and not only that STL Beds can’t afford not to hire me.
He is my CPA Today!
@Doug Belleville — Sounds like it worked out for your CPA to do the Money Dance with you — what do you suppose the benefit is of waiting so long to discuss his fees? Did it increase your chances of doing business with him?
Thanks for sharing Doug!
Great post! Recently I have too lost a contract due to the exact same situation you mentioned above. Although I would like to add to this post that your market also seeks something for nothing. Sometimes even proven track record of success, testimonials, and validation will not get you the business.
@Ivan Temelkov — No question — all the more reason to get the money talk started sooner than later — this way the prospect understands that this is not something you do for free. Honestly, sometimes when you are running a tiny business and running a content marketing strategy where you are giving away a ton of value for free, it is unclear what are paid services and what are not. We owe it to ourselves and the potential client to be upfront about cost as quickly as possible.
Thanks for stopping by Mr. Ivan!