#88: The Art Of Negotiation In Founder Led Sales

Read Time: 3.5 min

Today I’m going to discuss how to negotiate effectively as a founder where you have the greatest odds of getting the best deal.

A deal will rarely close without some negotiation. Most customers are going to try and squeeze as much juice out of the deal as possible. Especially if they know you are new and have very few logos attached to your brand. You'll walk away with suboptimal outcomes and missed opportunities if you do not understand how to play the negotiation game.

The problem I see is founders are willing to move forward with almost any terms to just close the deal and get the revenue. This typically happens for two reasons. 

1. They do not know how to negotiate correctly.

2. They fear that by negotiating, they run the risk of losing the deal.

I’m going to show you how to make sure this never happens.

You don’t get paid for the time you put in; you get paid for the value you bring to the table. Make that clear in negotiations.

~ Jim Rohn

Some of the biggest advantages to improving your negotiation skills are:

• Higher margins

• It gives you more confidence

• Eliminates more of your risk

• Builds your reputation/brand

• Fosters stronger relationships

• Better and more favorable terms

• It gives you an advantage over competitors

Let’s dive into the five levers…

1. Understand what the needle movers are for the prospect.

   • Identify what the most important parts of the deal are for the prospect, and use it as leverage. This is the "must haves," as opposed to the "nice to haves."

   • Ideally, this should be understood during the discovery stage.
      

2. Know Every Negotiation Component of The Deal.

   • There might be multiple components.

   • Forex: Maybe you charge an implementation fee, a fixed price per seat up to a specific headcount, and charge a higher per-seat price for any additional users. These are all individual components of the deal that can be negotiated.
     
     

3. Play The Long Game

   • My idea of the long game is to maybe offer a sweetheart deal where the margin isn’t as great, but by associating your brand with the logo, you will create a lot of buzz. This buzz can generate social proof that you can use to close more logos. You can leverage something much more powerful in the long term by deferring gratification.
     
     

4. Be Flexible

   • Their goal is to negotiate the deal with more favorable terms for them. When they make proposals or requests, don't decline. Instead, use other levers to negotiate. The idea is to counter their request with something in return. Always be flexible. 

   • For example, a customer may request a lower price. You could counter by saying, "We're willing to offer you the service at that price for the next 6 months, but after that, you'll be retroactively put back onto our standard pricing. Or you can guarantee the price for 2 years and incorporate an opt-out clause where they could walk away from the deal after 12 months if they weren't completely satisfied."
      

5. Know Your Floor And Ceiling / Stand Your Ground

   • Floor - The price you are not willing to go below.

   • Ceiling - The ideal price you’d like to get for your product.

   • Let's say the ceiling (what you want to get) is $50,000, and the floor (what you will not go below) is $30,000. The negotiation happens between the two. And if the deal economically and socially (proof) doesn’t make sense, and they are unwilling to play ball, then you need to know when to stand your ground and walk away.

     
     

   
   Key Takeaways 

   1. Understand the needle movers

   2. Know the negotiation levers

   3. Play the long game

   4. Be flexible

   5. Know your floor and ceiling

That’s it for today!

See you all next week.

Darren

P.S. If you’re a venture-backed SaaS company interested in coaching, book a call here.

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