No matter how you price your work, if you fail to negotiate well with your clients, you won’t get the price you need for a fair profit, and you even risk losing a good sale. 

Effective negotiation often doesn’t come naturally to woodworkers, but it’s crucial to successful pricing and a viable business.

What is negotiating?
Negotiating is more than just dickering with a customer over the price of your work. It involves the entire communication stream between you and your customer. It’s about educating your customer, understanding what your client wants and needs, and setting honest expectations about the work.

Really, all communication with your clients relates to negotiating. Too many woodworkers relate negotiation to what happens after you give the customer a first proposal, but it really should begin much sooner.

Setting the stage
Often custom woodworking clients are more affluent than the owner of the woodworking business trying to sell them a project. I frequently hear shop owners resist higher pricing, saying something like, “I wouldn’t pay that price for that work.”
But you are not your customer! And it weakens your negotiating position if you let clients think of you as someone akin to hired help.

You are a highly skilled professional, and you need to earn your customer’s respect as such. 

Make sure all of your contacts are handled with the utmost in professionalism. Do you require scheduled appointments for any serious discussion of a project? Do you charge a design fee with payment up front? 

You have thousands of dollars invested in your business and have spent countless hours honing your craft. Your clients need to respect your time and your professionalism. Speaking of which, do you have professional branding such as logos and presentation materials? 

Qualifying the customer
In your earliest contacts with a potential customer, you need to assess if they and their project are a good fit for your business. 
Does the project fit with what you do? Are they knowledgeable about custom woodwork or do you need to invest in educating? Are they fishing, asking for free estimates, ballpark prices, or resistant to detailed questions?

Watch out for red flags that could stop the deal entirely or at least require a boost in price. A classic red flag is if the customer is an architect or engineer who wants to tell you in detail how to do your job.

Be warned that drastically raising the price to try to scare off a potentially difficult customer rarely works, and most likely you will work for every penny of the inflated price.

What’s the budget?
A tricky part of negotiations is in trying to establish what the customer’s budget is. Most will not volunteer an honest answer for fear that you will take advantage of them.

One of the best strategies I’ve heard of comes from Paul Mencel of the Philadelphia Table Co. He requires clients to fill out an online form in order to get their first appointment with him. The online form has a required question about budget with a dropdown menu of price ranges. The lowest range starts at $2,000, the least he will consider for a profitable project. If clients balk at the budget question, they don’t get an appointment.

Other shops use tactics and questions that assess the customer’s economic standing and/or relate to something other than the specific work. One shop owner I know asks if the job being considered is a “Lexus job or Hyundai job.” Another tells customers, “You can go to the opera in a Rolls Royce or a Honda. How would you like to arrive?”

What’s the time frame?
It’s always best to be transparent about how long the work will take. Explain how projects are processed in the shop, your workload, and the time required for design, engineering, production, and installation. Be upfront about any backlogs or potential delays.

You also need to ask lots of questions about the site. What’s the access? First floor or high rise? Is it new construction or a remodel? Is demolition involved? Are there other trades involved? What’s the customer’s timetable for completion? You might have to turn down a job or charge expediting fees to match a schedule. Smart shops always build extra time into their calculations. It’s better to be early than late.

Presenting the price
Once you have worked out the details and are ready to present the bid, make sure the presentation is as professional as possible. Lots of negotiations break down when a shop presents a big round number for a project, and the customer pushes back.

The best tactic I’ve found is to present the price as a detailed, itemized reckoning, with pricing to the penny on every line. In the first place, this shows attention to detail. In the second, it builds confidence in the customer that nothing has been left out. But most importantly, it changes the nature of the negotiation.

Compare it to a customer at a grocery check out line who doesn’t have enough cash to pay for all the groceries on the counter. Typically, they have to put something back. They don’t blame the checker. In your case, the clients see all the itemized things in your proposal are the things they did indeed order. They see they are all individually priced. The question is not about you trying to get too much; instead it’s about them ordering too much for their budget.

When you ask them what they would like to leave out of the job to better meet their budget, in my experience, most customers don’t want to leave anything out. Magically, they find the money.

During the job
Keep communication going throughout the job. Let the customer know when each new phase of the operation is going on. 
Some shops even share progress pictures. These are especially helpful if your contract requires progress payments at various intervals. But the pictures also keep the client excited about the project and reduce any buyer’s remorse.

If problems arise, make sure you deal with them with full transparency, including anything that requires adjusting the price. You don’t want any surprises at the end.

Getting paid
The final piece of the puzzle comes when it is time for the final payment. You should have set the stage for this moment at the beginning with clear and precise contract provisions delineating exactly when and how payments were to be made. But sometimes the final check is still troublesome. Is there a question about the work? Or is the client short of cash? Or just slow to pay?

You can’t afford to be your client’s bank, and collections are always tough and awkward. Besides your contract provisions, all of your efforts for communication during the project will be your best asset. 

Some shops have had success with early payment discount schemes that entice customers to pay sooner to pay less. Just make sure the discounted payment still returns you the full profit you need.

Better for whom?
A final note on negotiations. I often tell the story of a Long Island shop owner who did a quick estimate on a small bathroom vanity project for a couple. He came up with a bid of $4,000, but the couple returned with, “Can’t you do better than that?” The irritated shop owner replied, “Yes, I think I can. How about $5,000? You didn’t say better for whom.”

Remember in all of your negotiations, you need to protect not only your own interests but the interests of your family, your shop, your employees, and anyone else that relies on you for support. Don’t feel guilty about charging what you need to get. 

Pricing Help? Do you have a pricing headache you would like to have relieved? Have you dealt with a particularly challenging pricing project? Share your experience with the Pricing Workshop by emailing [email protected].