10 tips for successful contract negotiation

You have lots of requirements when it comes to job hunting. You want a position within a certain distance of your home. You want to be working in a field you’re passionate about that will lead to a job you love. In addition to finding career fulfillment, you want to be compensated fairly. But securing a new job is only half the battle – securing an appropriate compensation package is the other half.

Is there a secret to getting what you want from an employer or is it up to luck? When you understand the principles of contract negotiation how to negotiate a contract that meets your needs – you take the guesswork out of your next career move. How are contracts negotiated, and how can you apply this knowledge to your own career path? You’re already engaged in the learning process that will deliver the results you’re seeking. 

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What is contract negotiation?

Contract negotiation is a discussion two parties undertake in an effort to reach a resolution. When it comes to business and hiring, contract negotiation typically involves salary and benefits, such as paid time off, health insurance and flexible hours. 

After a company has reached out to offer you a position, you need to develop a strategy for how to negotiate a contract. Considering that you’ll probably remain in your new position for at least a few years, you must make sure that you’re getting everything you want from your employer from the get-go.

How are contracts negotiated?

Employment negotiations are like any other type of contract negotiation: they’re part conversation and part numbers. Much like a first date, you’re entering into a preliminary dialogue to evaluate your fit for the position and what you’ll get in return. Your potential employer is in the same position, evaluating how you will fit into their company culture, day-to-day operations and overall business strategy.

Thinking of negotiation not as a competition, but as your opportunity to search out a comfortable fit instead of forcing yourself into an employer’s “box” can help you feel more comfortable. 

You’ll also want to know what to expect during the process so you can be prepared. As Tony says, “The meeting of preparation with opportunity generates the offspring we call luck.” Whether you need to negotiate business contracts, employment contracts, a partnership or any other business agreement, there are typically four stages:

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1. Preparation. During the preparation stage, you’ll research the company and industry, gathering information on their needs as well as salaries, benefits and contract terms like non-disclosure agreements (NDAs). You’ll also pinpoint and prioritize both your larger goals and the smaller steps you need to take to get there so you know where you can be flexible.

2. Drafting. Now you’ll write it all down. Create your own draft of your contract, either with professional help or using a template. Make sure to be specific and define all terms – don’t leave anything up for interpretation.

3. Negotiation. In this stage, you’ll bring your contract to your potential employer, who will also have their own draft. You’ll each “redline” terms you don’t like or won’t agree to as well as make concessions on your own side, working to come to a mutually acceptable agreement.  

4. Conclusion. In the final stage, you’ve reached an agreement and you’re ready to sign. You’ll finalize your contract, ensure that both sides understand what they’re getting – and conceding – and make the contract legally binding.

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Contract negotiation skills

Another way to be prepared to seize opportunities and come to the best agreement in a contract negotiation is to develop the skills you’ll need to win.


Getting what you want out of a contract is all about communication. Contract negotiation is a conversation between you and another person as you attempt to come to a mutually beneficial agreement. Effective communication is the top skill you’ll need.


As you learn how to negotiate a contract, you must have your end goals in mind, but you must also know in advance what you’re willing to be flexible about. This is a give-and-take process, and you’re likely going to need to come to a compromise on some things.


Approach the conversation with grace and good humor. You don’t need to be hostile or view the person you’re negotiating with as an enemy, because they aren’t. They want to hire you, and you want to work for them. 

Emotional mastery

This is an essential skill for many areas of life, but especially contract negotiation. The opposing party may make you an offer you find insulting or frustrate you by refusing to concede. When you control your emotions you can move forward in a rational, level-headed way instead of exploding and making the situation worse.

Critical thinking and decision-making.

To negotiate business contracts, you’ll need to make decisions confidently. When the other party makes an offer or concession, you must evaluate the pros and cons so that you can quickly agree or make a counter-offer. This is a skill you can master with practice.

How to negotiate a contract

While you can adjust the minutiae of your contract negotiation strategy for each potential employer, there are 10 elements to build your expectations around.

1. Have your end goal in mind

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What’s your ideal salary, and how did you get that number? Examine your past experience and respective salaries before you begin contract negotiations. You’ll want to keep regional differences in mind; the job that pays $75,000 in one region might only pay $60,000 in another.

Then, look at your finances. How much money do you need to not only cover all of your expenses, but to start generating wealth and saving for retirement? When you’ve finally figured out your goal salary, know without question that you won’t accept anything less than this during a contract negotiation.

2. Be realistic

Understanding exactly what skills you bring to the table is a key point of contract negotiation. Author and entrepreneur Keith J. Cunningham suggests viewing contract negotiation as an agreement that will benefit both parties. This means that learning how to negotiate a contract entails leveraging your existing skills and achievements.

What can you do that makes you worth $80,000, $90,000 or $100,000 per year to this company? Are you an expert at workflow who will develop a new, more efficient process? Did a recent conference presentation leave you in a position to bring in a lot of new clients? 

You know your worth, but researching the company and its industry will help you determine how much to ask for in your contract negotiation.


3. Realize that everything is negotiable

how to negotiate a contract

How are contracts negotiated – are they set in stone or malleable? Jeff Cochran of Shapiro Negotiations is a master of contract negotiation skills and a frequent speaker at Business Mastery events, and he stresses that everything is negotiable.

Keep in mind that the reason you’re negotiating is because there are so many variables in play, so don’t think of anything as final until you’ve signed an agreement. Has the company you’re interviewing with said that there’s a set cap on your position’s salary? Take this as a jumping-off point for conversation instead of a barrier set in stone. 

Jeff also recommends that, rather than making big leaps in your asking price during contract negotiation, you move your number up incrementally. Big jumps in numbers risk alienating your future employer; instead, move upward in small, strategic sums until you find a salary that makes both parties happy.

4. Think beyond your salary

We often think of contracts purely as documents that establish how much we’re paid, but there are many other things to consider. When determining how to negotiate a contract, don’t forget to factor in perks like bonuses, benefits or flexibility to your new position to enhance your salary. 

Consider your lifestyle. How many vacation days is your prospective employer offering you? Can you negotiate a more powerful title for your résumé? Have you been offered stock options that work for you and your goals? Are you aligned with the company’s core values? Consider all these factors during contract negotiation and don’t make the mistake of focusing solely on the numbers.

5. Be prepared to walk away

There will be times when even your contract negotiation skills can’t produce the desired result and you need to walk away. What does that look like? It’s entirely up to you, but planning ahead will help you decide what you will and will not accept. If an organization is not meeting your needs financially or otherwise, and shows no signs of budging on the elements that are most important to you, then it’s time to thank them for their time and move on to a better opportunity.

This is the part of contract negotiation that is hardest to reach, and the back and forth can waste your time and the company’s. To prevent that waste, have a clear vision of your goals, your contract needs and where you need the two to align for ultimate career fulfillment.

6. Know how to present yourself

Learning how to negotiate a contract is about more than just numbers. Your self-esteem also comes into play, since it forms the basis of how you view yourself, what you’re worth and what you’re willing to accept from an employer. 

Whether you’re negotiating a new contract or revising your current one during an annual review, be conscious of how you’re presenting yourself. Dress appropriately in an outfit you feel powerful in. Approach this contract negotiation with confidence: Sit up straight with your shoulders squared, keep your hands and feet still and make eye contact. You’re here to obtain the salary you want, but remember that you are attempting to give both parties what they want during contract negotiation.

Observe the posture of the person you’re negotiating with as well as how they are responding to your discussion. Doing this helps you build rapport, and when the person sees you as organized, professional and self-assured, they’re more likely to trust your worth and give you exactly what you want.

7. Get it in writing

What can a contract accomplish if it’s not enforceable? To get what you want out of an employment relationship, you need to dig deeper than asking “How are contracts negotiated?” and get everything in writing. No matter how strong an instant connection you believe you’ve made with your future employer during contract negotiation, nothing is reliable if it’s not set in ink.

In some cases, an employer will tell potential hires they will revisit certain requests 60 or 90 days after they’ve been hired or will promise certain perks that aren’t in the contract. Do not accept this at face value. Protecting yourself is one of the most important contract negotiation skills you’ll ever learn, and the best way to do that is to make sure everything you discuss is guaranteed in writing before you accept the job offer.

8. Make sure everything is fully explained

As you get deeper into contract negotiation and are presented with an offer, make sure you fully understand it. It’s easy to get excited about your new position, especially if you really get along with your new bosses and are receiving the salary and perks you want. But if anything is unclear or not present in your contract, this could lead to big problems down the road. Mitigating your risks is a key component of mastering how to negotiate a contract. Point out areas of ambiguity in the contract or address the fact that your job title or right to work from home two days a week is not spelled out. While you may need to allow your new employer to make some adjustments to the contract after you’re hired, you need to know exactly what the parameters are and approve them.


successful contract negotiation

9. Clarify your scope of employment

Learning how to negotiate a contract means making sure you’re adequately compensated. Part of that equation is defining the nature of your role. Even with your dream salary in place, if you end up overworked from taking on too many responsibilities, you’re being underpaid. 

As you engage in contract negotiation with a potential employer, make sure to clarify your scope of employment, including your job title, duties, whether and how your responsibilities will evolve, requirements for a promotion, your work location and reasons for termination. Being clear on these details upfront is likely to save you a headache – and the potential loss of a beneficial working relationship – down the road. 

10. Dig deep into the details

How are contracts negotiated to prevent misunderstandings down the road? An employment contract contains details that might seem like minutiae to the naked eye. But it’s these details that can make or break your employment relationship if one or both parties are not clear on them. As you engage in the process of contract negotiation, get clear on:

Reimbursement of expenses

Will your employer reimburse you for relocation? Does your employer provide a vehicle or vehicle allowance for work-related travel? Asking questions like these prevent you from inadvertently taking on your employer’s costs of doing business.  

Liability protection

Does your potential employer provide indemnification protection for its employees? In the event of a legal claim against you as your employer’s licensee, does the employer’s corporate charter limit your liability? You don’t want to end up in legal hot water because of unclear contract negotiation.  

Non-salary forms of payment

If your potential employer offers equity grants, stock options or other payments in lieu of salary or benefits, comb through their terms. Are these benefits tax-advantaged? What is the exercise price of any stock options you’re offered? Is there a vesting period that restricts the timeframe in which you may claim stock ownership? Answers to questions like these allow you to craft your financial strategy with full information.

Use contract negotiation to achieve success

Tony Robbins’ complimentary 7 Forces content series uncovers the negotiation skills and tactics necessary to achieve your ultimate business goals.