How to Negotiate Payment Terms with a Big Firm
Ally was out of college nine months when she got her first opportunity to design a brand program. It was through a connection she’d made with Tom, a creative director at the city’s largest design firm.
She’d showed him her book several times and he’d retained her to provide alternative designs for a large client. He liked her approach and thought of her for this new assignment, which his firm was too busy to take on without assistance.
Ally had only eight weeks to create and produce the visuals. She knew, from friends at the firm, that if they did the work the fee would be $150,000. Ally calculated that working on the project full-time for eight weeks at a $150 an hour, her fee would be $42,000, maybe even $60,000 with the extra effort.
Tom didn’t ask Ally for a budget. He just sent her the files with a note, “get going, and remember, you’ll need to present at 10:30 a.m., January 30. Oh, please check in with me in a week.”
Ally thought, “no budget required? This is dangerous, I’ll get started and I’ll send a budget.” Thinking she’d need some help on the project Ally called Beth, one of her former classmates and engaged her at $30 an hour.
The Budget
Ally thought, “$60,000 plus, say $10,000 for Beth, that makes it a $70,000 project. That leaves the agency room for margin. They’ll be able to double my fees.” (Ally got her business insights from an uncle who’d worked in the business for years.) She sent her budget to Tom. Just to be safe, she copied Anne, the account manager.
Over the next week Ally’s studio felt like it had graduated to the majors with sketches and roughs pinned to all the walls. She and Beth were totally into it. And at week’s end she gathered up their thinking and bussed down to see Tom. He loved it.
When Tom had completed his review, Ally asked him if he’d had a chance to approve her budget. He said, “oh, that’s right, Anne wanted to talk with you. Could you stick around for a minute?” And off he went searching for Anne.
“She’s off to a meeting, but she’ll call into this conference room in a minute.” They stepped into the room just as the phone rang. Tom answered, “Hi Anne, Ally is here with me.”
Never Negotiate When Your Emotions Are in Control
Anne responded with “Hi. Sorry I had to rush out, but with all these product launches I’m always on the run. We’re launching on four continents and in over 50 countries just now. Ally, we love your work and know that you’re just perfect for this new brand. But our client is in severe belt tightening mode so I must inform you of the terms our client requires. We’ll write you a check for five grand today; I know you’ll need it for expenses. We’ll cut a check for the balance ninety days after you’ve completed work.”
Ally needed that money: her stomach did a sickening flip, her knees felt weak, her vision narrowed. Then, she remembered something her uncle said, “Ally, never negotiate when your emotions are in control.” He also said, “take the time you need. You have all the time in the world.”
Back to the call, Ally said, “Anne, this is too important to talk about on the phone. We need to talk in person. What’s your time like Monday?” Anne agreed to meet.
Shaken to the core, Ally called her uncle and arranged to meet. After she told him her story he said, “Ally, the tight schedule gives you leverage. They must have your work on the 30th for that presentation. It’s too late for them to get anyone else, and they know it. I’d assume that Anne has some problems with billings on the account and that she thought that you, being young, would just roll over.”
Questions, Questions
Ally’s uncle went on to advise her:
On Monday Ally, start by asking her to help you understand why such a fine firm, like hers, and such a great client would have such a slow pay policy. Then wait for her to respond.
Then change the subject to other issues. Ask follow-up questions about the client, their branding programs or market position. Something like, Aren’t they growing and gaining a significant market share? Why are they launching this new product now? Has there been significant market changes affecting the company? Have there been management changes?
Get Anne to talk as much as possible. Listen for the issues that could have led to her demands. You want her to see you as someone who is interested in the big picture, as someone she needs to keep happy because of your ability to contribute to her success.
No matter what she says, she will be more agreeable and more comfortable after she’s had a chance to talk about the account and the issues, in person.
Ally felt well prepared when she walked into the meeting with Anne on Monday. They talked for more than an hour and uncovered a series of issues that Ally could help with. The breakthrough moment came when Ally suggested that they go together to meet with the client’s marketing team and show them the preliminary designs.
After that client meeting, Ally raised the question of payment. Before she could even state her case Anne said, “don’t worry about it Ally, bill us for half now and half at the end of the project and I’ll see that you get paid quickly. I’ll find other places to save.”
What We Can Learn from Ally
- Ally wisely didn’t attempt to defend her position, but she did ask for clarification.
- She developed a relationship with Anne by joining with her in uncovering the issues.
- She took the time she needed to gather her thoughts and respond.
- Used her advisor.
- Changed the context from payment to helping the client.
- Ally was clearly focused on helping Anne and her client. She put them first without needing to give up anything.
- She didn’t let Anne’s condescending manner frighten her.
Remember, the tight schedule gave Ally the leverage she needed.
This article originally appeared at BizCommunity.
