Negotiating a Contract Renewal: Everything You Need to Know
Negotiating a contract renewal can be a difficult and you need to make sure all involved parties get what they need out of the contractual relationship.3 min read
Negotiating a contract renewal can be a difficult and lengthy process. However, it's important to go through it to make sure all involved parties get what they need out of the contractual relationship.
Negotiating Employment Agreements
Since the process of negotiating the terms of a contract can be so complex, high-level executives often rely on experienced employment lawyers to handle the task.
Tips for Negotiating a Contract Like a Pro
The first tip is to have the courage to negotiate. People who aren't willing to take this risk and negotiate their salaries could lose up to $500,000 in income by the age of 60. No one wants to throw away that kind of money, but failing to negotiate your contracted salary is practically tossing that potential in the garbage. In just about every position, there is room for an increased salary. However, to succeed and get a higher rate of pay, you'll have to prove why you're worth it.
As you create your plan of attack for negotiating a higher salary, it's important to know what to base the negotiations on during the process. The details of your value are your bargaining chips, so have them available to bring to the table. You should also identify the points you're willing to compromise on and those that you're not, well before you start the negotiation process.
For example, if you are negotiating for higher compensation, you may want to consider:
- Working hours
- Benefit specifications
- Sick leave and vacation time
- Location of the job
- Potential for bonuses based on performance
- Compensation increases at each contract renewal
- Availability of equity grants.
With so many details to cover, there are certainly options when it comes to negotiating for better benefits and compensation package.
Do Your Homework
The next tip is to start digging around for information on previous contracts. This will give you insight into what the company previously offered, which gives you more bargaining power. Additionally, you can look at the outcome of that contractual relationship and use the details as reasoning for that outcome. When you're negotiating, you need to be able to back up the claims you make. It's important to convince those who will ultimately make the decision about modifying or renewing your contract. In order to convince them, you need to explain the motivation behind your request.
Take Notes and Ask Questions
The process of contract negotiation can be stressful, causing you to forget your main points. You'll look more professional and put-together if you have your arguments written down. Bring your notes and refer to them as needed. Doing so will help you avoid forgetting any of the most critical points.
As you go through the negotiation, don't hesitate to ask clarifying questions. People will commonly get wrapped up in their arguments, which causes them to fail to understand that they are being offered what they want. If you're not sure what the other party is offering, ask for further clarification. When you have all the information, you will be more likely to succeed in the situation.
You also need to know the company with whom you are negotiating inside and out. Understand the history of the company and its important players. This gives you the upper hand because you can gain insight and ask more questions that will give you better insights.
As you negotiate, make sure to keep the situation professional. Remain calm and maintain a civil tone when communicating with others. Avoid raising your voice or leaving the room. Make sure to consider the responses you receive, rather than arguing your points repeatedly. Acknowledge what the other party presents and politely respond with why you may not choose to accept that specific term in your contract. By remaining calm and speaking nicely to others, you will seem more professional and less dramatic.
Present Your Value
The final tip for negotiating a contract renewal or adjustment is presenting your value as clearly as possible. Men often expect to earn salaries that are much higher than what women expect to earn. Don't let any unrelated factor determine your worth, such as your gender or race. If you're struggling with your self-worth, take steps to improve how you feel about yourself. You are valuable and you should receive fair compensation for what you bring to the table.
If you need help negotiating a contract renewal, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Stripe, and Twilio.