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three steps to mastering the art of negotiation on today's episode. Today's episode is brought to you by fresh books. Accounting and bookkeeping mistakes destroy thousands of small businesses every single day. Bookkeeping doesn't have to be hard turned to the number one invoicing software for small businesses. Start for free today at serve no master dot com Backslash Fresh books Are you tired of dealing with your boss? Do you feel underpaid and underappreciated? If you want to make it online, fire your boss and start living your retirement dreams now then you've come to the right place. Welcome to serve no master podcast where you learn how to open new revenue streams and make money while you sleep. Presented live from a tropical island in the South Pacific by best selling author Jonathan Green. Now here's your host. When I first started working online and working for myself and started my own business is, I really had no idea what my time was worth, what my Afro whores or had a price. My business and I made these mistakes that were so just so common for new business owners for new people in business that we don't know what our time is worth. And so we just guess at the pricing, and we end up charging way too little for what we start delivering my very first business when I was a Boca marketing consultant, when I would help people rank their business on Google and get traffic and start to grow organically, I would charge, You know what I thought was a fair rate started 255 $100 then I would end up working for that project 40 hours week. I had one client, paid me $1000 a month and fully expected me to be available to him a full 40 hours a week. When you're bringing in a consultant or an expert, there's two expectations. There's expectation from the owner, and there's expectation from the consultant. And throughout this journey, I some really bad project. It made a lot of mistakes. I've learned a lot of things since then. I really become a master of negotiation through a lot of trial and error and applying a lot of my networking and social engineering principles. The final negotiation I made when I was in the S e o business local consulting business and all the things I teach and look consulting Millionaire. When I was in that business from the final negotiation, I was at a car dealership and ask for $10,000 a month. At the time, my top client was $5 a month. So ask for 20 times my top client, and they negotiated me down to $2000. We both walked away happy. It's an amazing experience and a lot of where I learned that day. I was testing my new principles and pushing the limits, and I want to take you through each of the pieces so you could have your own negotiation where you can double or quadruple what you're making. It's important to understand where the price comes from. There are three ways we generate the price. When we say when someone says, with an hour of your time worth the first way weaken, generate that price, especially we were entering a new market or starting a new business is by looking at the competition. What do other people charge? What's the standard rate? What does a haircut costs? What does it cost for an hour of a time from a mechanic This is how most businesses start. They assess with the competition is charging, and then they adapt. Sometimes they charge more because they're a premium product, and sometimes they charge less because they're trying to reach a larger market. We would. The rest of the market charges allows you to establish a price that fits in the market. Unfortunately, most consultants, most look consultants, most people in the Internet marketing business, most people in our type of industries. We don't do that. We use one of those next two strategies with second charge you for choosing price comes from customer expectations. What does the customer think it's gonna cost now? I've been in meetings where customer thought $3000 of Seo Service's would cost $50 a month. I've been remained, for people thought that my time was worth eight or 12 cents an hour. Now I don't even pay the most outsourced of workers. Anything that low. That's insanity. When people are super low ball, you, when you're in a meeting and someone's lowball, you are offering a really low price. They don't offer that low price because they don't value you. The offer that price, because either they're pinging or they're negotiating now. Paying is where you offer a super low price just to see how the other person reacts and a negotiation. Sometimes I do that, but we're not trying to go into a harsh or war negotiation. We're just trying to big picture ideas right now. So you're in this meeting and you're trying to determine where the two people are coming from. And the other person, the person who wants to hire someone, often says with this, My idea comes from what I can afford to spend or what I think this seven service should cost. And you can tell who you're dealing with because people of the loan to the market will price way too low, but feel the high end of the market will often pay 45 times over. Other people paying because they've only looked at expectations. They don't know what the market charges because you're the first person I've talked to, and then the third way we generate our price. Third way we can decide what our time is worth. What our service or product is worth simply comes from within. This is what I feel like I'm worth I feel like my book is worth $20. I feel like an hour of my time is $500 it just comes from feel now. The problem with this is that it's so relative, and it can be way too low or way too high because it's not anchored. In reality, it's simply anchored in your sense of self confidence. Thank you and your self confidence. When your self confidence is low, your prices love. When your self confidence is high, your price is high and you're in a tough situation. Your clients are in tough situations, you know? I don't know. No, you're gonna charge, for example, you have a morning meeting. You really need that money. So you take a $500 month offer. Now you've got that $500 a month. You're the second yo know the price is $5000 a month. Your confidence, your financial position really changes the price because it's based on how you're feeling and how your business stuff is going. And that's really important to understand. So these air kind of our baselines why price comes from now? There's some common mistakes that could come from pricing and we price are mar pricing model. We don't have a really fix structure. The first mistake we make is that when we don't have enough confidence or or a tough financial situation, we price too low. I really need this job and this bill chasing me, I gotta pay my bills when that affects your pricing, your price yourself too low and will happen iss you. I have a client who now assumes that's your price and that'll be what you're locked out forever with that client Number two. They won't respect you as much when you price yourself too low and you put yourself in this bit of a bind. And if you accept that price, you kind of negotiate and agree to that price to them that the price is the price. You pay an agreement for you, you suddenly realize, OK, I got past that one bill. But now it's not really enough time putting in you realize over the course of the next month, you sold your time for $2 an hour and you're stuck and you don't know what to do with. The only way to make more money is to fire that client and move on up because it's very, very hard to re negotiate. It's hard to re negotiate. Say I meant double what I said Believe me, when a client comes to me or when ah vendor comes to me and says, Oh, actually, I underbid myself. I said, That's no way I'm paying double. Just not how it works is we create expectation. The second mistake is more common, I find surprisingly common, which is very price too high with so much pride. And you say this is what my time is worth and I've seen people in markets who are entering the market. They say I want to sell coaching for $700 an hour and I go well, The top business, the top competitors, who has respect and testing, has been in business for years. Only charges $200 now and they go well. My time is worth three times more than that, and that's where pride and kind of yourself perception will destroy you. You price yourself out of the market and you become someone who will always struggle. I know people that they've set a price for something they won't change it, no matter what, and they go out of business. I was actually watching someone do this on television last week when I got the idea for this episode was watching this TV show about a billionaire who buy stuff from small businesses to help them grow, and he went to an art gallery, and the art gallery had actually never sold a piece. One person had bought a piece from the gallery for I think, something crazy like 120 or $200,000 or something and then said, Just keep it here. I wanna donate this to the arts to keep this art studio your gallery, open your gallery running And that was more than two years ago. And in that time the guy has never sold a piece that a single piece. And every time someone comes in, they say, What's the price? He says, the price of different things and they're always about four times what you can find any other gallery. And his worry is that if he lowers the price, it will devalue the art piece that someone else bought. Now they're a couple of problems with this. The first is that he's basing his Priceline, his entire pricing on a donation. The person wasn't a real customer, were they? They bought the product and said, Keep it here. This is a donation. This is me doing something charitable for the arts. That's not someone who is think about the long term investment. The second thing is, what good is a piece of art? You say? Oh, this is a famous artist. Really? What else you make? All those is the only painting ever made. No one thinks that's gonna have value the price. The value will only go down. It will never go up because the artist's name has no worth. Artiste hasn't done enough or hasn't sold any other pieces. This guy's only made of this particular type of Artie made five pieces. He has made a peace in years because he has no money to do more art. But he's so caught up in I can't hurt the value of this other piece, and I bet if you actually ask the person who bought it, they wouldn't care, because the value of your art goes up when you sold a lot of pieces. Selling art increases value far more than simply pricing it with the most art. The artist isn't one. It makes all the money, their initial buyers who pay 5 10 or $20. I'm sure there are people who paid $20 for a Picasso for when his first paintings, so that he could make his bills and then that painting after he died was worth millions. It takes a long time for pangs to really shoot up in value. You very rarely hear about a painting by a living artist being worth hundreds. Thousands or millions of dollars are over time goes up in value. It's one of those things that especially when the artist dies, because then you okay, now we know that I could make in your paintings. We know the number of paying that exist by this artist or the number sculptures, Whatever you could put in a situation where you decide that your value, your self perception is so high, and I see this in other markets. I see this in house pricing where I live. People will have a piece of land or a house, and they'll set a price on it, and they'll wait, however long it takes to get that price in the house. Of course, over time, no one's living in it. They built this house on speculation the House is getting destroyed by being empty. It's out in the weather, there's no one in it. And over time the house is going down in value up. See a lot of the value of a house or a new houses, you know, the fixtures and the wiring and all those things. But the way we do that stuff changes. When I was in high school, we saw this house that was built and it had network cables in every wall. So next every outlet there was Cat five cable, which is the old Campbell. You would plug into a router, plug in the back, your PlayStation or plug in the back of your computer. But now, having that isn't that much of a future because they're one's house, the more built their own WiFi. So people are more interested in smart house cabling. So some of the features you do they're cutting edge. That kind of push up the value the house a little bit make it seem cutting edge and cool. After two or three years they don't seem that way. And I see these houses and you know you approach The owners say, Hey, I'm actually just looking to rent a house for six months and this person new house has been empty for you and have to go. There's no way I would rent it. I'm here to sell the house and I see you have a house, Every loses your money. But you have this perception that Oh no, I only want the big score and they have massive financial problems. They end up losing the house a lot, or you have Children who are very sick and they can't afford for their medical bills. They have all these problems of the I'm not, Lord. I'll do anything to help my kid. Except for lower the price of this house and one of the neighborhoods where I saw this was a development. In probably 2/3 of the house, houses were empty, so living there would be kind of like you're living in the Old West ghost town, all these empty houses, and it's crazy because you walk into every single house and every single one of them is priced 20 to 30% over the market because they think this neighborhood's gonna be amazing. They're ignoring what the market says. If no one's willing to pay the price, you might need to change it. Now the danger again is to go. Oh, no, my prices. So I got to go super low. You have to find something in between. The third mistake that causes us to price poorly is desperation, right? Like I really need that money. My price is built upon what my next bill's gonna be. What's your price? Same of my mortgage. And the other direction, of course, is pride. What's your price? Well, I think I'm the best. You can work your way up. My prices are very, very high. To hire me to work on a project with someone is very expensive. Now, different clients pay different amounts of money. My very first clients who worked me 345 years ago for a ghost writing project what they get. They have a much lower rate than people that I start work with now because the price has gone up over time. Now. My price with them since we started this doubled over the course of about a dozen or 15 projects. But for new clients, I've no established a price in the market, and I can raise it a little bit a little bit. So how can you raise the price? How can you get that higher price once you started entered a market? And when your negotiation, we kind of have some ideas, you're talking some negativity. So let's talk about some positivity, and the first thing is replenishing the power of silence. Every time I enter a negotiation, I used my love doubling and then I enter the use. The power of silence I love doubling is that I always ask for double what I asked for the last negotiation, or at least ask for double what another client is paying me now. It's very important to understand why this is happening. The first is that of someone completely box at double your normal price or double other people paying That means it down the line. There's never gonna be room for growth, or they could barely afford you. Most people who enter negotiation with me are able to push the price down or to negotiate some things down, and that's where the silences see when you're in that moment of silence, when you say all the price is $10,000 a month, you're gonna wait for their reaction and you enter this game and talks about it extensively. In the seven habits of highly effective people, there's a lot of talk in there about other power silence and out. The best salesman you could hire is one who can sit there on the phone and absolute silence, waiting for the person to speak. Because in most negotiations back in nearly all of them, whoever speaks first loses. And this is why, when someone says a price to you when you think it's too high, just sit there silently and eventually little negotiating in themselves. And when the negotiations themselves, you don't do anything to lower the price, and I negotiate gets myself before in the past, I'm not perfect. I have certainly done certain things, but you want to create a price that's higher than you normally charge. If you just ask the lowest rate you have or the lowest rate you can afford to take. What you've done is taken the negotiation and flushed down the toilet. You said, Hey, you thought you were a negotiation. Guess what? My first offer is? One where there's no wiggle room. No, I'm CarMax. It's no haggle. I'm sure when you're buying a car and you know it's I still the price is the price. That's actually last place about a car from Carly, like 10 years ago, almost now. But when you have no wiggle room, you're in real trouble. The reason I ask for double is so that if they push me down and cut my price in half, which is often people's open negotiating position, I'm still OK. When those people cut down my price with $10,000 a month to $2000 a month, they cut 80% off the price. What they thought it was my price. But I'm getting a price that was 400% more than I was already a quadruped with my normal rate, the win for both of us, and it came about by sitting there silently for several minutes. You want to give people wiggle room when you're negotiating. That's why I have to price high so that they can push it down and you could have a couple of different elements when you're doing a negotiation with its for service is or coaching or for software. When you're first starting out our products and things like that and some of the tools you can have our number one, you're flat feet so you can either charge a deposit, though this is what it costs to get started with me. I was talking to someone the other day who runs a really interesting outsourcing business, and I thought it was very interesting and probably going to start working with them extensively. He might become the show's primary sponsor, and he charges a flat fee of 3 99 to get started with him. It's where they assess your business, decide what you need that kind of stuff and prepare. There's a phase when you hired Outsource, where there's the training period in this cover stat. And I thought that was very interesting because that's an area where you can negotiate. In fact, its price is probably gonna change in the next year or the next month. Actually, when the New year starts and we were talking about that and so that's the first thing have, then you have your recurring fee or your percentage depending upon targeting us, and this is what I got cost to start. This would cost month in this would've cost hourly. Or you could get a flat feel. I'm $7 an hour. I'm $38 an hour or it's a percentage to have a couple of pieces. I like to have several pieces to project. Say, oh, here's what it costs to start working with me And here's what I asked for us far as a percentage, and they often ask for numbers that are way higher than I normally do. And the reason I have two numbers, especially the reason I do a lot of percentages and my deals is because some people can afford me, and some can't people that can afford by higher number. We'll get a higher pay higher deposit, have a lower percentage. They're gonna pay more now so that they make more later. But if someone else is like, I can't really afford your rate. So they do a much lower percentage than were much lower flat fee, and often their percentage will be much higher. So, for example, you might do a deal where it's a $500 deposit and then 50 per cent of profit you get or in the other way, you might get a $5000 deposit and only 10 15 or 20 per cent of profit. When you're doing a six or seven figure deal, that's a huge difference down the line. So you have to factor in what people can afford now versus what you think it's gonna make later. The more room you have to negotiate, where you can push one number down to push the other one up. Having two numbers is very effective. That way. You can also ask them to put in place reward bonuses like Okay, I understand that you have a limited budget right now, but when I hit certain targets, I want to get rewarded in certain ways. Sometimes another thing that I use is the idea of recalling your investment, which comes from I learned this from the music business, which is where you make an album. They'll give you like $100,000 but then the 1st $100,000 of profits from that that album you don't get. That's where the record company that keep that to cover the cost of creating album. So people that they think I got too much money make him you didn't. It comes out of your own sales, but they don't see that. That's unfortunate, but that's that's how that type of deal works. So sometimes to renegotiate, I'll say, OK, it's a big deposit, but then you get to recruit out of initial profits. So if I say it's a five star deposit, the 1st $500 in profits, we don't split, you keep, and then you start to pay me. I don't often do that. That's usually something you could do that to tool you can use when you have a flat fee on a percentage and use that tool when you can tell the person can't really afford you're you're a little bit above what they can do now. I used to not charge a flat feet for a lot of my product creation deals and a lot of other things. I used to just be percentage and what I learned when you're getting a percentage, is it? Sometimes you'll do all this work will make the product to write the copy, to do everything, and then the person sides not to do anything with it. One of the people that I used to work with, I mean I spent a year. I built several really high ticket, very valuable, really high quality products for them. And then they decided they didn't want to release them. I put in all this effort and over time I ventured, sold you jealous rocks to other people. But it's a huge loss. So I learned my lesson. Then someone else. I did a negotiation. What they said, Well, Thio put me on retainer to have me on your team to having make products when you need them, you have to pay me a large five figure flat feet. And this person sent me a huge amount of money with largest PayPal transactions I've ever done. And I said, that's to make sure that when you actually are motivated to release the products, he could make back your investment. That person then proceeded to never speak to me again. It's been about 3.5 years every six months in the messaging. Hey, you paid for first rights to anything. I'm making this niche. I have heard from you in several years, let me know if you want any other products. I've made you anything in the space of anything new in that space where the person paid for first rights to anything I make in that particular niche, and I honor that. But it's amazing to me someone will pay huge metal and then disappear. But that's why I do that. I've learned that you kind of have to have a mix or people won't do anything with it. You need to create enough pressure that they're motivated. Thio make their money back to make back their investment. And sometimes I use the recruit thing mostly because either they're never gonna release the product and they're totally gonna screw up. Or they'll do well enough that they'll recoup the original cost of my deposit very quickly and I'll make a ton more money. So it's really kind of way of hedging your bet, because it's not a huge thing. Deposit is really a way of saying you've got to release this or you're gonna take a loss. It's kind of like a punishment clause. It's one of the reasons I have that there. We also it's because of my initial time investment, So I wear it first when I make a product or I read the copy for someone. I'm doing that before they start their work. These are just some of the things to think about when you're working on your Nate negotiations and these air three critical steps you can use to massively raise what people pay you every time you step into the negotiation chamber. Thank you for listening to this week's episode of Serve No Master. Make sure you subscribe, so you never miss another episode. We'll be back next Tuesday with more tips and tactics on how to escape that rat race. Head over to serve no master dot com forward slash podcasts Now for your chance to win a free copy of Jonathan's bestseller Serve No master. All you have to do is leave a five star review of this podcast. See you Tuesday. Thank you for listening to this episode of the serve. No master podcast to find out how I can get a free copy of my new book, Head Over to serve no master dot com back slash podcasts right now