Do your negotiations with potential clients look like this?
Guy: Hello. Iâ€™d like to buy a widget from you guys.
Me: Thatâ€™s great! Thanks for choosing us for your widget needs. Widgets cost $X.
Guy: Oh, wellâ€¦ Thatâ€™s a bit more than what we planned to spend. Our research indicates that we can get widgets for 10% of $X.
Me: Here, let me e-mail you some information about widgets and once youâ€™ve had a chance to take a look at the information, youâ€™ll see why it costs $X.
Guy: Thanks. Iâ€™ll get back to you. One Month Laterâ€¦
Guy: Youâ€™ve gotta help me. We bought a widget for 10% of $X from another company and it doesnâ€™t work right.
Me: What seems to be the problem?
Guy: Well, it seems to work only in Japan when the relative humidity is 50% or less.
Me: Thatâ€™s unfortunate. I wish you had bought your widget from us. Our widgets work worldwide. It was in that information I sent you.
Guy: Well, what if you sold me a widget for 5% of $X? That would get me off the hook and it would get you our widget business exclusively.
Me: Iâ€™m sorry, but if I sell widgets for less than 90% of $X, we lose money. And we lose time, too â€“ time I could spend with my other clients who happily pay $X for widgets.
Two Weeks Laterâ€¦
Guy: How about if you gave us the widget for free, and weâ€™ll give you a percentage of what we make using your widget?
Me: Iâ€™m sorry. I canâ€™t take that kind of risk. We know our widgets work, but thereâ€™s simply too much we donâ€™t have control over to be able to be 100% confident that you can make money using our widget. I mean, what if you have the wrong widget holder or you fail to properly maintain your widget? We canâ€™t be responsible for that.
Guy: Well, I canâ€™t afford to pay you full price for the widget, because I spent the budget on the widget we got for 10% of $X.
Me: I can come down on price to 90% of $X if you sign an exclusive deal with us, but I lose money if I sell widgets for less than 90% of $X.
Guy: Youâ€™re being inflexible! I canâ€™t work like this!
Me: Then why do you keep calling me back?
Two Weeks Laterâ€¦
Guy: Okay, weâ€™ll give you 90% of $X for a widget.
Me: Thatâ€™s great. Iâ€™ll draw up the paperwork.
Guy: Not so fast. We need to test your widget first. Iâ€™ll give you 9% of $X for 1/10th of a widget. And if it works, weâ€™ll buy the rest of the widget.
Me: Iâ€™m sorry, but a fractional widget isnâ€™t going to get the job done for you. Weâ€™ll be set up to fail. You wonâ€™t be happy, you wonâ€™t buy from us anymore and it will be a big waste of time and money for the both of us.
Guy: But how do I know whether or not your widgets work?
Me: In the information I sent you a while ago, there were plenty of case studies from other satisfied customers that attest to how well our widgets work.
Guy: Yeah, but no one else is using your widgets to build a barnacle removal business in Upper Volta and Transylvania. How do I know whether or not your widgets will perform in that capacity?
Me: Well, no one else is using the widgets to do specifically that, but thereâ€™s a case study in there from a boat refinishing business in Miami. They were very happy. Isnâ€™t that close enough?
Guy: No. They donâ€™t do business in Transylvania.
Me: I donâ€™t think anyone who sells widgets right now will be able to provide you a case study specifically for barnacle removal in your particular markets. But all business is not without risk.
Guy: What if you paid for a market research study to predict how your widgets would do in Transylvania?
Me: Why should I pay for that? If you donâ€™t do business with me, how would I recoup those costs? I donâ€™t know anyone else who is running a barnacle removal business in Transylvania. The resale value of that research is practically nil.
Guy: Until you can do market research proving that your widgets have 100% success rates in Transylvania, I canâ€™t do business with you.
Me: Okay, forget it then.
One Week Laterâ€¦
Guy: Youâ€™ve gotta help me! My boss is going to fire me unless I get this widget business straightened out!
Me: You know the prices. Can you pay $X yet? Or at least 90% of $X?
Guy: We had a budget cut! I canâ€™t afford $X. Or 90% of $X. Heck, I canâ€™t even afford $X minus $X!
Me: Sorry. We canâ€™t give widgets away.
Guy: But if you donâ€™t give me a widget, Iâ€™ll lose my job! How about this? If you give me a widget, weâ€™ll let you share in the profits of the resale of stripped barnacles in Transylvaniaâ€¦
Me: I think I explained that we canâ€™t do revenue-sharing agreements.
Guy: Iâ€™ll throw in a percentage of the profits in Upper Volta.
Me: No. Iâ€™m sorry.
Me: Please donâ€™t call back until youâ€™re prepared to pay at least 90% of $X.
Three Days Laterâ€¦
Guy: Okay, Iâ€™ll pay you 90 percent of $X. We had to fire three hard-working barnacle strippers to be able to afford your widgets. I hope youâ€™re happy.
Me: Iâ€™m sorry your business isnâ€™t doing so well. And it sucks to have to let people go. But Iâ€™m sure youâ€™ll be happy with this widget and maybe it will help things turn around for you.
Guy: Do you have a contract?
Me: I just e-mailed it to you.
Guy: Iâ€™ll check it out and fax it back to you.
Two Hours Laterâ€¦
Guy: I made some changes to the contract and signed off on it.
Me: Letâ€™s see hereâ€¦ You inserted a clause that says we have to pay you six million dollars in Romanian lei if I walk my dog on a Tuesday morning. Thereâ€™s also a clause in here about my need to maintain $50 million worth of insurance against vampire attacks in order to do business with you.
Guy: Thatâ€™s just standard stuff. Donâ€™t worry about it.
Me: Iâ€™m sort of fond of walking my dog on Tuesdays before work. And I donâ€™t see how walking my dog has anything to do with the quality of the widgets Iâ€™m providing to you. Oh, and vampires arenâ€™t real.
Guy: This is how they do things in Transylvania! I thought you had experience doing business with Transylvanian companies!
Me: No client has ever tried to tell me when I can and canâ€™t walk my dog. And even though the risk of vampire attack is nonexistent, carrying $50 million worth of insurance isnâ€™t exactly cheap.
Guy: Let me talk to legal.
Three Weeks Laterâ€¦
Guy: Okay, I spoke to the legal department and we were able to get the dog-walking and vampire insurance clauses waived.
Me: Thatâ€™s great! When can you sign off on the paperwork?
Guy: Right now. We just need to make a teensy adjustment to the payment schedule.
Me: What sort of adjustment?
Guy: Weâ€™ll pay you 20,000 lei net 90 and the balance in monthly installments of 10,000 lei.
Me: U.S. dollars only, please. And your payment plan would get us paid off in 2012, so I think we ought to look to accelerate those payments a bit.
Guy: Youâ€™re being inflexible! Iâ€™ll take my business to your competitors!
Me: You tried that already. It didnâ€™t work, remember?
Three Weeks Laterâ€¦
Guy: Hi, this is Guy. Remember when I was working for that Transylvanian barnacle removal company? Boy was that a dogâ€¦ Anyway, Iâ€™m working for a ferret de-scenting operation in Yemen now. And we need widgets! How about 4% of $X?