When outsourcing, it’s important to know how to set a price, both the hiring company and the provider, as well as how to negotiate for a better deal. The main thing to remember when you are dealing with the issue of cost is that you want to make sure that both sides are getting a fair deal.
A deal in which one side is getting a far better value is going to be doomed from the beginning. If the provider thinks that he or she is not getting paid enough, they will not give their best effort. And if a hiring company feels that they are paying a provider too much, they will not stop at anything in order to ensure that every last detail is in place. Finding a happy medium that both sides can agree on is the best way to ensure a successful project for everybody that is involved.
The tricky thing about cost is that each side will have their own guidelines and rates that they are trying to follow. The tips below are meant to help you deal with prices discrepancies:
1. The first thing that both sides need to do is communicate on the budget for the project. In most cases the provider will issue a proposal to the hiring company that outlines the total cost of the project. This will allow the provider to start off within his or her price range, and determine whether or not this will work for the company that is making the hiring decision.
2. After the provider sends a proposal to the other party, the proposal will either be accepted or rejected. If the hiring company agrees to the terms that the provider outlines in the proposal everything is good to go. On the other hand, if the provider’s price is higher than the budget will allow, the hiring company will many times send back a counter offer.
3. If it comes to the point where the provider receives a counter offer, it will be up to him or her to decide if they can complete the project for that amount of money. It is not uncommon for the provider to send over another counter offer as a way to tie the final knot in the deal.
4. It is important for both sides to understand the position of the other party. If you are a company looking to outsource a project you must realize that the contractors you are contacting are professionals, and take on these projects to make a living. Generally speaking, providers have a rate sheet that they follow in order to give accurate quotes to all of their prospective clients.
But on the other end of the spectrum, providers must realize that hiring companies do not have endless pockets. They too have a budget that they must stay within, and they are going to be looking for the best quality work, for the lowest amount of money. Outside of the basic pricing structure and techniques that differ from person to person, anybody that is involved in outsourcing must be a good negotiator. By knowing what you are worth, what you want, and how to get it, you will be able to be much more successful in the business world.
When you are negotiating, keep these tips in mind:
1. Keep an open mind. Even though you are going to be trying to get the most money possible from the other party, you need to keep an open mind and make reasonable requests. Nobody is going to take you serious if you make pricing requests that are extremely high and non-competitive.
2. If you are very close to striking a deal, the best thing to do during the negotiating process is to exercise a little bit of give and take. This goes for both parties involved. For example, if a provider is quoting a price of $3,000 for a ghostwritten business brochure, but the company’s budget only allows for $2,500, both sides will need to compromise a bit. A fair price in a situation like this would be $2,750. This means that each party is stretching themselves in an extra $250. Even though it is not the ideal situation for either party, it is probably the fair thing to do.
3. Always stay professional during the negotiation process. If you feel that you are being insulted by the other party because their prices or budget do not fit your needs, there is no reason to get hostile. You will simply want to explain your situation, and see if there is a compromise that will make both parties happy. And if nothing works out, there is no shame in walking away from the deal. Remember, this is a business for both parties involved. Each side needs to do what is best for them.
Olivier Glaudy is a specialist of small business outsourcing whose articles has helped thousands of business owners and online marketers. His complete guide for outsourcing is available available @ http://www.getinfoproduct.com/outsourcingsqueeze.html
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