(Previously vol I, vol II)
A photographer friend got an unsolicited call from a major client, a hair care company. After a back and forth went into the info for the shoot, both parties agreed it sounded like a good fit. The photographer sent off the quote and waiting a few days.
The reply came back "We could only do it for 1/8th of what you quoted. Period."
Owch.
After recovering from the shock, the friend weighed options.The friend knew that this would be an awesome, high-visibility client that would further their business. At the same time, the counter-offer was so low that death by discounting was a very real fear. Not only that, but if they accepted this offer to such a huge client, word would get out about their low photography rates among other large clients and this would permanently stunt the friend's business.
Is this deal already at an impasse?
Where would you go in this situation?
---
Having been reading me for a while, I'm sure you've already guessed no.
My photographer friend came back with their counter offer. "I'll do the gig for the low price plus five years of hair care products."
The company jumped on it.
They had a deal.
---
Negotiation is about total value, not just price. It's easy to get caught up on dollar figures since dollars are easy for anyone to understand, but money is only one of many sources of value. In this case, the hair care client didn't have the budget to pay the full amount but they did have endless amounts of shampoo and conditioner. Adding the hair care products didn't cost the company much since they produced them at cost, but for the photographer who would otherwise have to pay retail, it was a huge gain in value.
This is why we should be explicit about what we want; value is defined on a personal basis. Even with concrete items such as money, value is personal. A billionaire will value a hundred dollars much less than the musician would value a hundred dollars in the same way the billionaire would value a private concert more than the musician.
One of your goals when negotiating should be to figure out if the other side has anything that costs the other party nothing but has a huge value to you, and vice versa. Big wins like this are not only excellent bargaining chips but they allow you much more flexibility in your bargaining process.
Value is personal.
Showing posts with label Negotiation Without Being A Jerk. Show all posts
Showing posts with label Negotiation Without Being A Jerk. Show all posts
5/29/12
The One Fatal Pricing Error
It's no secret that every artist wants to be able to make a living of their art.
Yet it's also no secret that many developing artists are reluctant to raise prices, especially since the idea of fan backlash like this can be terrifying for an artist to even imagine.
Let's talk about Price-o-phobia.
Price-o-phobia a highly prevalent, ambition-killing fear of raising prices that prevents people from getting paid what they are actually worth. Artists are highly succeptable since, unlike a hot dog stand at a state fair, there's no easy guideline for what the generally acceptable price would be for their work.
The first step is figuring out the underlying causes of our Price-o-phobia.
There's a tangle of roots often feeding this fear:
-"I only spent X on materials, there's no way I would charge someone more than 2X!"
-"If I raise prices, I might not sell every piece. It's safer to keep prices low so I'll move pieces."
-"It's not that great. I can't charge that much."
-"It's vulgar to raise prices for my work. I couldn't do that to my fans!"
-'What if my fans rebel and I lose everything I've worked for?"
These are quite common fears amongst artists and musicians alike. Some fears are productive, like being afraid to jump off a thirty story building into a pit of rusty spikes. Other fears, like being afraid to eat food, are clearly counter productive. Price-o-phobia falls into the latter category.
Let's unpack some of these fears.
"I only spent X on materials, there's no way I would charge someone more than 2X!"
Materials aren't the only consideration. Your time and musical talent have value that is just as real as the materials involved. Lawyers and doctors charge for their time and effort because what they do requires special skills that not many possess. As an artist, you should be no different.
"If I raise prices, I might not sell every piece. It's safer to keep prices low so I'll move pieces."
Everybody loves a deal. Sure, I'd love Kobe ribeye steak for $5 too, but prices like that would cause the restaurant to go out of business in months if not weeks. Now nobody gets steaks anymore. Not. Cool.
"It's not that great. I can't charge that much."
a) Sometimes modesty is a virture. Sometimes modesty is a vice. If you're regularly selling pieces, chances are you might be too modest to support yourself.
b) If it's actually not that great, stop reading right now and go practice.
"It's vulgar to raise prices for my work. My fans are my friends!"
Your fans want more art than they want a deal. If that's not true, they're not fans. (Remember, I'm assuming you've got an extraordinary product. If you don't have that, then you should be practicing instead of reading this.)
'What if my fans rebel and I lose everything I've worked for?"
Let's dig deep into this one.
In December 2010, Jack White caught flak from fans for selling his limited edition vinyl on eBay. As the prices rose to eventually reach $510, fans became outraged at this price saying it was "exploitation".
At what price is it exploitive for a fan to pay for a work of art?
Or better yet, how do we know the true value of art?
Jack White explains:
Let's put it another way: If someone loves your art so much they're willing to give you $500 for it, should you let them?
If you actually care about becoming a self-sufficent artist, the answer is clear.
The songs we associate with our first drive in our first car (Groove Armada - Superstylin') or an amazing road trip with friends (Snoop Dogg - Ain't Nuthin but A G Thang), they're the memories that define our lives. Music is a link to our history and our identity.
Creating music is creating love for our fans.
It's your duty to allow your fans to return the favor.
Fans want to support you! If your lucky, some of your fans may have connections that help you book better clubs or tour with bigger bands. Fanastic! Most fans, however, are normal people who just dig your art. Buying art is the one way anyone can help support their favorite artist. When we buy from our favorite artist, we actively say "I love your vision so much that the world is a better place because of your creations. Let me help you on your quest!"
Some fans will complain when you raise prices and that's perfectly ok. You shouldn't always listen to your fans. In fact, fans that care only about price aren't really fans at all.(Provided you're not raising the price waaaaay outside of traditional market value, such as raising prices on a t shirt from $10 to $80. That's a little silly.)
As of May 2012, Jack White's new solo album Blunderbuss hit number on on the Billboard 200. The man makes great art, is it any surprise fans still love his work?
The one fatal pricing error is pricing yourself too low to continue making art.
In order to be a full-time artist, your prices must be high enough to support yourself comfortably. Anything less is unsustainable in the long term. Even if you're moving a million paintings, if you're not capable of keeping the electricity bills paid there's a good chance you'll eventually burn out on art altogether. Ramen every night should be a choice, not the choice.
The only way to get paid what people truly feel your art is worth is to start out high and negotiate price down. If you do price too high, you can always adjust downwards as needed. But fans will never say "Hey, I really liked your show last night. Here's an extra forty bucks because it was worth that." No, they walk away thinking "Wow, what a deal!"
Think about all your sales for last year. What if you had charged as little as 5% more? For an artist, this is an easy task since you set the prices, but you'd have to be really lucky at a traditional job to get a raise of 5% in today's market.
In either case, you won't get a raise if you don't ask.
Your mission, should you choose to accept it, is to make brilliant art. Getting paid what you're worth is vital to this mission.
Yet it's also no secret that many developing artists are reluctant to raise prices, especially since the idea of fan backlash like this can be terrifying for an artist to even imagine.
Let's talk about Price-o-phobia.
Price-o-phobia a highly prevalent, ambition-killing fear of raising prices that prevents people from getting paid what they are actually worth. Artists are highly succeptable since, unlike a hot dog stand at a state fair, there's no easy guideline for what the generally acceptable price would be for their work.
The first step is figuring out the underlying causes of our Price-o-phobia.
There's a tangle of roots often feeding this fear:
-"I only spent X on materials, there's no way I would charge someone more than 2X!"
-"If I raise prices, I might not sell every piece. It's safer to keep prices low so I'll move pieces."
-"It's not that great. I can't charge that much."
-"It's vulgar to raise prices for my work. I couldn't do that to my fans!"
-'What if my fans rebel and I lose everything I've worked for?"
These are quite common fears amongst artists and musicians alike. Some fears are productive, like being afraid to jump off a thirty story building into a pit of rusty spikes. Other fears, like being afraid to eat food, are clearly counter productive. Price-o-phobia falls into the latter category.
Let's unpack some of these fears.
"I only spent X on materials, there's no way I would charge someone more than 2X!"
Materials aren't the only consideration. Your time and musical talent have value that is just as real as the materials involved. Lawyers and doctors charge for their time and effort because what they do requires special skills that not many possess. As an artist, you should be no different.
"If I raise prices, I might not sell every piece. It's safer to keep prices low so I'll move pieces."
Everybody loves a deal. Sure, I'd love Kobe ribeye steak for $5 too, but prices like that would cause the restaurant to go out of business in months if not weeks. Now nobody gets steaks anymore. Not. Cool.
"It's not that great. I can't charge that much."
a) Sometimes modesty is a virture. Sometimes modesty is a vice. If you're regularly selling pieces, chances are you might be too modest to support yourself.
b) If it's actually not that great, stop reading right now and go practice.
"It's vulgar to raise prices for my work. My fans are my friends!"
Your fans want more art than they want a deal. If that's not true, they're not fans. (Remember, I'm assuming you've got an extraordinary product. If you don't have that, then you should be practicing instead of reading this.)
'What if my fans rebel and I lose everything I've worked for?"
Let's dig deep into this one.
In December 2010, Jack White caught flak from fans for selling his limited edition vinyl on eBay. As the prices rose to eventually reach $510, fans became outraged at this price saying it was "exploitation".
At what price is it exploitive for a fan to pay for a work of art?
Or better yet, how do we know the true value of art?
Jack White explains:
"We sell a Wanda Jackson split record for 10 bucks, the eBay flipper turns around and sells it for 300," he explained. "If 300 is what it's worth, then why doesn't Third Man Records sell it for 300? If we sell them for more, the artist gets more, the flipper gets nothing. We're not in the business of making flippers a living. We're in the business of giving fans what they want."Is this exploitation?
Let's put it another way: If someone loves your art so much they're willing to give you $500 for it, should you let them?
If you actually care about becoming a self-sufficent artist, the answer is clear.
The songs we associate with our first drive in our first car (Groove Armada - Superstylin') or an amazing road trip with friends (Snoop Dogg - Ain't Nuthin but A G Thang), they're the memories that define our lives. Music is a link to our history and our identity.
Creating music is creating love for our fans.
It's your duty to allow your fans to return the favor.
Fans want to support you! If your lucky, some of your fans may have connections that help you book better clubs or tour with bigger bands. Fanastic! Most fans, however, are normal people who just dig your art. Buying art is the one way anyone can help support their favorite artist. When we buy from our favorite artist, we actively say "I love your vision so much that the world is a better place because of your creations. Let me help you on your quest!"
Some fans will complain when you raise prices and that's perfectly ok. You shouldn't always listen to your fans. In fact, fans that care only about price aren't really fans at all.(Provided you're not raising the price waaaaay outside of traditional market value, such as raising prices on a t shirt from $10 to $80. That's a little silly.)
As of May 2012, Jack White's new solo album Blunderbuss hit number on on the Billboard 200. The man makes great art, is it any surprise fans still love his work?
The one fatal pricing error is pricing yourself too low to continue making art.
In order to be a full-time artist, your prices must be high enough to support yourself comfortably. Anything less is unsustainable in the long term. Even if you're moving a million paintings, if you're not capable of keeping the electricity bills paid there's a good chance you'll eventually burn out on art altogether. Ramen every night should be a choice, not the choice.
The only way to get paid what people truly feel your art is worth is to start out high and negotiate price down. If you do price too high, you can always adjust downwards as needed. But fans will never say "Hey, I really liked your show last night. Here's an extra forty bucks because it was worth that." No, they walk away thinking "Wow, what a deal!"
Think about all your sales for last year. What if you had charged as little as 5% more? For an artist, this is an easy task since you set the prices, but you'd have to be really lucky at a traditional job to get a raise of 5% in today's market.
In either case, you won't get a raise if you don't ask.
Your mission, should you choose to accept it, is to make brilliant art. Getting paid what you're worth is vital to this mission.
2/23/12
Negotiation Without Being a Jerk Vol. II
You're halfway through negotiating a sponsorship deal with a major guitar string company, conversation is fluid and light. Envisioning the bliss that would be free guitar strings sends a flood of warmth through your mind.
Everything feels groovy.
A buzz.
The representative reads the text and her expression darkens.
The room begins to feel colder.
"It looks like the terms we initially proposed to you are off the table. We can only offer you half price or nothing."
What do you say?
---
Negotiation is a delicate dance of power and persuasion. While each dancer may have an endless repertoire of moves, it is the beat they bring to the dance that colors their movements. And that beat is called the BATNA (Best Alternative to a Negotiated Agreement).
A BATNA provides an anchor for you to determine how valuable the offer currently on the table. How attractive is the offer from the example above when:
- You have a meeting with another guitar string company in two hours?
- You've already got an offer for a 60% discount?
- You don't have any other offer?
- Your band doesn't play any guitars?
The dynamics of any interaction change depending on your other options. Getting turned down for an audition hurts much less when.you've got three more lined up next week. Greasy diner food sounds a lot better when you haven't eaten for the last twelve hours.
So how do we use our knowledge of BATNA to improve our negotiations?
IMPROVE YOUR BATNA
1. Getting multiple offers will give you some leverage to negotiate with. Don't hinge your entire career and happiness on one label, make sure to court a few different labels. The way the field is built is how the game is played. Look back at the example above. Even if your backup offer is something really unimpressive like 5%, this gives you guidelines to determine how good a deal is.
2. Learning to talk persuasively increases others' perception of your BATNA. Desperation is a stinky perfume. If your language conveys that you don't value yourself or that your band isn't that great, the other side of the table will pick up on these cues. It's not just the actual value of your BATNA that influences your outcome, but the perception of your BATNA. Learn to frame your conversations and issues to present your product (band) in the best light. Appearing confident makes others believe you are confident as most negotiators are not psychic, and this imbued confidence will strengthen your negotiation position. This doesn't mean be arrogant, as that usually is a bad idea, but being able to clearly and firmly articulate your position will increase the value of your BATNA, even if you don't have one.
Perception creates reality.
3. Create a list of alternatives to the main deal that you can propose should the main offer become undesirable. Unless you're working with a vending machine, there are many more ways to win than just in terms of cash. In the next installment of this series we'll get deeper into this topic.
Previous entries: (Vol 1)
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