Understanding your customer’s needs

From What I learned from negotiating with Steve Jobs by Heidi Roizen:

Steve [Jobs] took the contract from me and scanned down to the key term, the royalty rate. I had pitched 15%, our standard. Steve pointed at it and said, “15%? That is ridiculous. I want 50%.” I was stunned. There was no way I could run my business giving him 50% of my product revenues.

I slogged down to my car feeling like I had just blown the biggest deal of my life. Lucky for me, someone had followed me out. Dan’l Lewin, one of the NeXT co-founders, said one sentence, which I will never forget. “Make it look like fifty percent,” he said.

[Steve Jobs] had promised the developers 50%, he had said the number within earshot of everyone, and he wanted to be able to tell everyone he got what he wanted.

Heidi hit 50% by deducting various costs before calculating the percentage, leaving her actual profit margin unchanged. She concludes:

In business school, I learned that negotiation is “the process of finding the maximal intersection of mutual need.” People are not often as clear as Steve was — it sometimes takes extra work and lots of iterative communications to find out what the other person truly wants, but the process creates better, more sustainable deals.

One thought on “Understanding your customer’s needs

  1. Pingback: Overcoming the biggest barrier with a first-time buyer | A Founder's Notebook

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