Negotiating with contractors is part of everyday life for many companies, especially in the construction, IT, event and service industries. Whether it's prices, deadlines, scope of services or liability – the foundation for a successful contract is not laid at the negotiating table, but in the preparation. Those who clearly define their own goals, collect information in a structured manner and identify potential risks increase their chances of achieving a result that works in the long term – for both sides. This first part of a two-part series focuses on the most important steps to take before the meeting: preparation, defining objectives and analysing the negotiation situation.
- Understand the starting point Before you negotiate, you should thoroughly analyse the overall situation. The following questions will help you do this: What exactly is to be delivered or provided?
What deadlines are realistic – and which ones must be met?
What legal, technical or financial conditions need to be taken into account?
The better you understand your own project or your needs, the more confidently you can enter into negotiations.
- Gather information about the contractor Research as much as possible about the potential contractor: References and previous projects: Has the contractor successfully completed similar tasks?
Market position: Are they a small provider or an established player?
Financial situation: Are there any signs of economic instability?
Negotiation style: Is the provider more willing to compromise or tough?
This information will help you formulate realistic expectations – and, ideally, better assess your counterpart's tactics.
- Clearly define your own goals One of the most important preparatory measures is to formulate your own goals – preferably in writing. You should distinguish between minimum goals, desired goals and compromise lines: Minimum goal: What is the absolute lower limit below which an order cannot be placed?
Desired goal: What would be the optimal outcome?
Compromise line: Where are you willing to be flexible – e.g. on payment terms or additional services?
This target matrix prevents emotional snap decisions during negotiations.
- Develop alternatives (BATNA) A proven concept in negotiation is the BATNA – Best Alternative to a Negotiated Agreement. Consider the following: What is my Plan B if the negotiation fails?
Are there other providers?
Can internal solutions be considered?
The better your alternatives, the stronger your negotiating position.
- Define leeway and no-gos Not everything is negotiable – this applies to both sides. Therefore, clarify the following in advance: Where is there room for manoeuvre? (e.g. start date or optional services)
What is an absolute no-go? (e.g. payment based on success with high upfront costs)
These points must be clarified and agreed upon internally before you even speak to the contractor.
- Prepare arguments Good arguments are the backbone of any negotiation. Prepare a list with: Facts (e.g. market prices, comparative offers)
Benefit arguments (What does the contractor gain from working with you?)
Risk assessments (what happens if certain conditions are not met?)
Avoid purely emotional arguments or vague statements. The more specific you are, the more credible you will appear.
- Define the team and roles If you are not negotiating alone but with a team, the following should be clarified in advance: Who will speak?
Who will observe (e.g. body language, reactions)?
Who will take on which topics?
It is also helpful to run through possible scenarios in advance – e.g. in an internal role play.
- Design a conversation structure Even though every negotiation is unique, a clear structure is helpful. For example, plan the following: Greeting and introduction
Clarification of a common understanding of the scope of the project
Presentation of your position and expectations
Discussion and questions
Summary and outlook on next steps
A structured process provides certainty – for both you and the contractor.
Conclusion: Preparation is negotiating power Negotiations often fail not because of the other party's attitude, but because of unclear goals or a lack of structure on your own side. If you take a close look at your own needs, the contractor and possible alternatives, you will not only enter the conversation with more confidence, but you will also be able to negotiate on an equal footing. In the next part of this series, we will show you how to conduct the conversation yourself and which tactics will help you achieve your goals.