Start talking numbers: - GET ON A CALL OR IN PERSON MEETING. Do not do all this via e-mail. You should ideally have already been on a couple calls.
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- Never, ever make it so someone can reject you in an e-mail. This stuff is complicated and nuanced, and e-mail: 1) conveys inflexibility 2) does not build a relationship 3) does not convey complexity/nuance well 4) does not easily allow for a discussion and quick follow up.
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- First just ask if they have a number in mind or budget constraints. They might. - Then talk range, like "A big company pays this, a small company pays this." If you haven't done deals yet, name what you're thinking of charging. Be honest but confident. Trickier than it sounds.
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- Then give lots of options. They can pay more to get more, they can pay less and have more restrictions on the license, with option to upgrade the next year. Get creative, ask for suggestions from them, work together to find a good solution.
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- (I used to not do the above and adding this step in made it SO much more collaborative, which is a sign of good negotiation. Then it's no longer about haggling price on one thing, it's about tradeoffs and different choices.)
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- I don't have this problem as much anymore, but if you're small be prepared to get hit with "you're a small team" to try for a cheap price. Be very firm, redirect the conversation to value & what you charge others. If someone else pays that price, that's the market value, period
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- There are times, especially early on, where you'll want to give a discount for being a "first mover" on your product or maybe even things like PR. If you do this, make sure you explain reasoning (people talk to each other) & arrange to raise the price after a time period.
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- Don't feel pressure to close the deal in this meeting. Feel free to step away and think, talk to people, follow up later. - End on a positive note. Tell them how much you look forward to working with them, be nice, be empathetic, be genuine.
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And as I'm writing this I'm realizing I could say SO MUCH MORE on pricing but I'll leave it at that for now. Hopefully it helps a bit. All the best with your pricing negotiations, friends!
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Replying to @sehurlburt
The entire thread also works for negotiating consulting fees.
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Not necessarily. I've been in a lot of situations where the client's needs could be met in less total hours than this kind of relationship building. Then it's not a good return on time...
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