How To Negotiate A Contract

So before I dig into strategy, I think it’s really important that you do some self-reflection around your feelings and beliefs regarding negotiating. Honestly, negotiation is a conversation about power. If you’re uncomfortable in or unclear about your power negotiating will probably feel uncomfortable for you. You’ll also be more likely to shortchange yourself if you’re unclear about the power that you’re bringing to the table. 

So, if negotiating makes you feel uncomfortable, I want you to think about why, and start doing some mindset work around what about negotiating makes you uncomfortable. I also need you to clarify your power. Not the power you think you may or may not have, but your true power. That might mean you go over a list of your accomplishments, heck it might mean that you compile a list of your accomplishments. Whatever it is that you do, you need to know exactly how powerful you are, and start believing in your power. 

Now I’m not saying that once you do this, you’re going to be super comfortable negotiating and you’re going to love it and want to do it in your sleep, but it will go a long way towards managing that feeling of discomfort. In business, you’re going to need to negotiate, and being in business for yourself, means you’re going to have to negotiate regularly. And there's a way to do it in which you're still honoring your values, beliefs and who you are. 

So, now that we’ve got that mindset work in, I want to share the strategy that is most helpful for me. I used to feel uncomfortable with negotiating, and I realized that part of my lack of comfort was coming from the fact that I didn’t plan in advance. What I mean is that I didn’t think through the conversation in advance. I wasn’t strategic about what I wanted to say, what my ask was, or what stance I’d decided to take. 

In short, I didn’t prepare well. Now as an educator, once I figured that out, I was like “Okay bet, I can just make a lesson plan for the conversation.” So this strategy I use is one that helps me be really clear about what I’m willing to compromise on and what I won’t. It’s called BATNA, which stands for Best Alternative to a Negotiated Agreement. 

If you go with the BATNA approach, it automatically forces you to plan, because you need to know what your BATNA is before you go into the meeting. It’s kind of like having a contingency plan. It’s also a great way for you to set your boundaries. If a client isn’t willing to negotiate to what you truly want or your BATNA, then working with that client probably goes against your values, beliefs and what you deserve. 

Let me give you an example. Say you’re buying a car, and you know exactly what kind of make and model you want along with the price point you’re willing to pay, and the interest rate you’re willing to accept when you take out a loan for the car. You’ve figured out the ideal situation for buying that car. 

Now think about your less desirable but still acceptable situation. Maybe you get a loan with an .5% higher interest rate, or have a $1000 higher downpayment. That’s where you start to determine your BATNA. Once you’ve got that figured out, you know your limits.

So let’s say you get to the bank and they’re offering you a loan with a 2% higher interest rate than you were planning. That’s not in your BATNA, so you walk. Maybe the interest rate is .3% higher and your down payment is $500 higher than your ideal. That’s within your BATNA, so you could accept the deal. You might have one or two BATNA’s, but the BATNA serves as a boundary that can help remove that frazzled feeling of “not knowing what to ask for” in a negotiation. 

Here’s an example from the consulting side:

Say you have a $15,000 contract, and you decide that your goal is to do 3, 4-5 hour PD Sessions. When you start to think of your BATNA, think about what you would offer if they only have a budget of $10,000. Perhaps instead of 3 sessions, you offer 2. Or you offer two and request an introduction to a colleague who also has PD needs that you can serve. You could also request that you have permission to collect the contact information of the attendees that attend your sessions, to start/continue building your network.

These are the things that you want to start thinking about for your BATNA. You also want to determine what your limit is. Say the client comes back and says they can only offer $7,000. Maybe you offer 1 PD session, or you offer something else entirely, but you’re also well within your right to say that your budgets don’t align and move on. 

Keep in mind that people often think of monetary compensation when they hear ‘negotiation’ but there are plenty of other ways you can be compensated. If you determine what these things are for you and devise a clear BATNA, you’ll find yourself feeling a lot more comfortable with negotiating because you’ve come with a plan.

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