Negotiate Your Dream RFP Contract

Grace Pinegar
Grace Pinegar  |  May 16, 2018

Negotiating is not a natural skill for many people, myself included.

Successful negotiators require a lot of the same characteristics as a successful salesperson: charisma, persuasion, and the ability to work toward a two- (or more) party agreement. While these are second nature to some, others are wildly uncomfortable at the thought.

Personally, I’m terrible at playing hardball, and I could care less whether someone goes through with a purchase. You like those shoes? Great, buy ‘em. You don’t like those shoes? Super, you just saved yourself some money. Luckily, I'm not in sales.

If you’ve distributed requests for proposals (RFPs) and are trying to sign with the best bidder at your ideal price, you have no choice but to saddle up and negotiate. But more important than the sale of a good, you’re trying to buy someone’s service and trust.

Appealing to people, over product requires a different approach, but should still be no cause for worry. We’ve done the research for you. Read on for some guidance in how to navigate the negotiations process of your RFP.

1. Be Prepared

I get it, this sounds like a super obvious step that you shouldn’t even have to read. But hear me out: One of the most important aspects of negotiation happens before you ever even sit down to talk with your desired bidder.

Preparation means talking to the members of your team and company, if applicable, to ensure you understand everyone’s expectations. Conversing with all internal parties that could be affected by the project at hand will make you aware of what aspects cannot be compromised. This ensures nothing vital is lost in negotiations, and keeps all affected parties feeling happy and heard.

One simple way you can ensure nothing goes awry is by asking all stakeholders to provide you with a checklist of non-negotiables. Whether that includes price from the accounting department, or your head graphic designer requires the bidder to use a particular software solution, a list will reduce stress and guarantee satisfaction.

2. Change Up Your RFP Timeline

One common frustration with negotiations is where they fall in the RFP timeline. Many professionals will negotiate at the very end of the process, after they’ve informed other bidders of their rejection. If you inform a bidder of their win before you’ve discussed specifics, it’s possible you’ve given them an advantage.

The vendor you’re seeking to hire now knows they’ve been chosen, and also can infer their competition has been rejected. The vendor may try to elongate the negotiation process, using up your time and decreasing the chances that you’ll turn around and pursue another bidder.

An easy way to avoid this issue is by including a draft contract in the RFP. This puts specifics on the table immediately so bidders have an idea of what you’re going for.

Another strategy is to negotiate before awarding a bidder with your business. You can reach out to your RFP shortlist – your narrowed down list of remaining candidates – to get a feel of what their terms would be. Although these aren’t your final negotiations, it offers you a chance to get some extra information on paper before awarding your winner.

3. Leverage Other Assets

It’s possible you’re stuck in the negotiation process because neither party wants to budge on a certain clause. This is where it may help you to leverage the other tangible benefits you could offer a certain bidder.

Would you consider your organization a leader in its industry? Would your professional network trust and act upon your referrals? If so, make it clear to a bidder that doing business with you would mean future business for them.

4. Compromise What Doesn't Matter

You are aware that there are clauses or wants listed in your contract that your organization can live without. Your negotiating partners may not know that, or at least they don’t know which particular asks are less vital. If it comes down to it, show a bidder your company is flexible and committed by compromising the little stuff, without letting on that it’s the little stuff.

Some organizations may go so far as to include extra throw-away clauses in the contract so there are superfluous demands that can be compromised out. While it may sound dishonest, it’s a form of insurance. It allows your team wiggle room while also ensuring you don’t lose out on the demands that really aren’t negotiable.

5. Consider a BAFO

A best and final offer, or BAFO, request is a simple strategy that lets bidders know there’s some stiff competition and the final decision is going to be difficult. A BAFO is a document sent out to the shortlisted bidders when offers are quite similar in price, or in other important factors. A BAFO gives bidders the opportunity to re-evaluate their offers and decide if they can become any more competitive.

A BAFO tells a bidder that while their proposal is attractive, it’s not the only one. If a bidder really wants your attention, they’ll seriously consider whether they can make any changes. Some quality organizations genuinely won’t be able to budge on price but may move things around in other areas of their proposal. Be sure to consider flexibility wherever a company can give it.

Bidders return their best and final offer by the deadline communicated, and stakeholders can continue with their decision-making process. Again, a BAFO is enacted before the actual negotiation process, and is sometimes labeled as a pre-negotiation step.

6. Be Nimble, Be Quick

As we mentioned earlier, negotiations can become a huge time commitment. The longer you spend with one bidder negotiating the contract and sorting out price, the less likely it is that you’ll walk away and pursue business with your second or third choice. Bidders know this. They understand that if they can keep you on the line, they’re decreasing the chance that you’ll elongate the process by starting over with someone new.

Keep things quick. Come out of negotiation meetings with clear action-items and agreed-upon deadlines. Don’t let time slip away, and voice to a bidder that you have other options if they can’t adhere to your pace. While you want to maintain a respectful and professional relationship, you’re also negotiating for a purpose. It’s important you retain control and don’t feel as if you’ve been trapped into a decision because of procrastination.

7. Understand the Basics of RFP Negotiating

Negotiating is a necessary skill for professionals in a plethora of industries. Understanding these basic principles will make you feel more confident when sitting across from your desired or chosen bidder:

  • Listen: Listening is a general sign of respect. Your contact should have your full attention during negotiations. Additionally, you should be taking in everything they say to avoid unknowingly agreeing to the wrong terms.  

  • Have a Strategy: Go in knowing what you want, and what you’re able to offer for it. Don’t feel like you have to give your highest offer first, but rather build up to it. This makes your negotiating partner feel like they negotiated higher, when in reality they negotiated up to your desired price. Starting high may mean going higher than you would like. 

  • Use Silence: Keeping quiet is a simple way to get people to say more. Silence often makes others uncomfortable, which leads them to drive conversation. Staying silent could cause the other party to offer more information, or concede to previously discussed items. 

  • Compromise: Something’s gotta give. Two parties sitting in a room saying no to each other’s every request will not lead to a solution. Know what you can compromise on, and be willing to make that sacrifice if it comes down to it.  

  • Ultimatums: In a dire situation, don’t be afraid to lay an ultimatum on the table. It displays power as well as your ability to walk out if you can’t reach an agreement. 

  • Stall: If you need more time to make a decision, ask for it. Say something like, “This is a decision our executive team will have to discuss,” and plan a meeting for the following week. Although this will elongate the process, it may also give you time to strategize and counter-offer. 

  • Disclose Discontent: Sometimes, simply voicing that something is not okay will change the direction of the conversation. It leaves it up to the other party to recommend an acceptable solution, or come up with an alternative.  

  • Make the Offer: Give the receiving party all the details of what you’re willing to offer. Make sure you have all details in return. This varies depending on what you’re negotiating, but hours worked and measurable output are a few examples. 

Negotiating seems scary, but you’ve been doing it since infancy. Remember at age six when you told mom you’d eat your vegetables in return for a few nighttime episodes of your favorite TV show? It’s just like that, except for there are more adults, and (usually) no vegetables.

Take a deep breath, put your shoulders back, and keep your chin up. This is your time.

For those preparing to go through their first RFP process, be sure to check out the best proposal software from real-user reviews. 

Grace Pinegar

Grace Pinegar

Grace Pinegar is a lifelong storyteller with an extensive background in various forms such as acting, journalism, improv, research, and now content marketing. She was raised in Texas, educated in Missouri, and has come to tolerate, if not enjoy, the opposition of Chicago's seasons.