Marketing & Sales

Renegotiating: When It Needs To Be Done And What To Avoid

Renegotiations are a part of a business. But how do you know when it’s time and how to renegotiate successfully? Read on to find out.

Renegotiation takes place when a contract is unclear, out-of-date, or a circumstance has changed. As a business owner, there are several instances in which you might have to renegotiate, such as:

  • Vendors
  • Tech/service suppliers
  • Employee pay

No matter the situation, we are here to prepare you to renegotiate like a pro.

How Do You Know When It’s Time To Renegotiate?

Part of business owners is staying on top of current trends and understanding the economy as it ebbs and flows. In the past few years, the world has seen unique changes. As the market fluctuates, knowledge is power. 

Just as the market changes, you can also expect contracts to change. Understand that it is time to renegotiate when:

  • Your employee comes to you asking for a raise
  • The cost of goods and services rises
  • Inflation affects your profit margin
  • Miscellaneous circumstances have changed
  • You’ve identified a contract flaw

Renegotiations can happen at any time, depending on the onset of employment and the economy. This is why you should always be prepared with concrete strategies.

Strategies of Renegotiatiation

  • Be open to the conversation
  • Do your research
  • Evaluate pros and cons
  • Offer solutions

As a business owner, you have several business tools at your fingertips. However, renegotiation is a skill itself. The process will look slightly different, depending on what side of the conversation you are on, but read on for strategies to renegotiate. 

Be Open To The Conversation

Whether you are starting the conversation or the one bringing it up, you should go in with an open mind. 

When an employee comes to you wanting to renegotiate their salary, be open to hearing them out. It is vital that your employees feel valued, so if you brush them off, they might start looking for work elsewhere. 

If you want to renegotiate with a client or supplier, approach the situation peacefully. If you begin the conversation with an accusatory attitude, you are far less likely to achieve your goal.

Remember that the people you are renegotiating with are people. It’s okay to be firm but approach the conversation on a human level to come to the best agreement. 

Do Your Research

Research can be one of your most excellent tools because it lets you stay informed. 

Consider this: One of your suppliers comes to you to let you know they’ll raise the price of a particular good. When you receive this notification, you should:

  • Ask follow-up questions
  • Research industry trends to see if other suppliers are doing the same

You need to make sure that this price increase is justified, as it will affect your business just as much as theirs. 

If you aren’t sure that the price increase is something your business can handle, it will benefit you to do your research, reach out to other suppliers, and find alternative options. 

If you are hoping to keep working with the same supplier, your research findings can help you negotiate the price. Suppliers need you as much as you need them, so use the information to your advantage and always bring the facts to a renegotiation.

Again, when an employee comes to you looking for a raise, you should be open to it. But keep in mind that the employee needs to have done their research and provide evidence. Raises are earned, not given. 

Therefore, an employee should bring to the conversation:

  • Performance history
  • Customer feedback
  • Work samples 
  • Productivity

Just like you should come prepared for any renegotiation, you should hold your employees to the same standard. 

Evaluate Pros And Cons

When renegotiating salary with an employee, it is critical to understand the pros and cons of the situation and evaluate accordingly.

Some pros of renegotiations are:

  • Potentially increased employee morale
  • Option to increase employee responsibility

Some cons of renegotiations are:

  • Financial burden 
  • Precedent
  • Relationship at risk

As an employer, you want to see your employees happy and prosperous. However, you need to ensure that your business can handle the increase in cost. 

When renegotiating with a supplier, it is essential to understand the pros and cons of the situation and evaluate accordingly. 

If a supplier is renegotiating their prices, some pros to consider are:

  • Quality assurance
  • Increased value

If a supplier is renegotiating their prices, some cons to consider are:

  • Uncomfortable communication
  • Loss of relationship
  • Financial burden

No matter the situation, it is always wise to evaluate the topic and offer a solution.

Offer Solutions

One of the marks of a great leader is the ability to problem-solve. When you are a leader who problem-solves, you set an example for your employees to take the same approach. Creating a problem-solving culture in the workplace promotes:

  • Transparent communication
  • Open-mindedness
  • Growth mindset, growth culture

Renegotiating can often require many back and forth conversations. It’s crucial to bring solutions to the conversation to avoid talking in circles.

If an employee requests a raise that you cannot accommodate, don’t just give up entirely. Instead, offer solution options, such as:

  • Increased PTO
  • Flex days
  • Benefits package
  • Professional development
  • Stipends for technology, childcare, etc.

The goal of offering solutions like this is to show employees that you are willing to work with them. Keeping positive employee morale is important, so show them that you care enough to offer an alternative. 

What To Avoid When Renegotiating

  • Do not assume
  • Do not accept a bad deal
  • Do not succumb to emotions

Just like there are strategies to promote good renegotiation, there are also mistakes to avoid. Read on to find out more. 

Do Not Assume

You know what they say when you assume — and it’s true. Never assume you know what the other party is going to say.

Let’s say an employee calls a meeting with you to renegotiate their salary. You open the conversation with, “I assume you’re here for a 10% raise.” Your employee tilts their head to the side, furrows their brow, and replies, “Well, I was here for 5%, but let’s talk 10%.”

You’ve already lost the power. Rather than assuming what an employee has in mind, let them articulate it — waiting has the potential to save you many headaches. 

Do Not Accept A Bad Deal

This might seem like common sense. However, renegotiations can often be lengthy processes. Depending on who you are negotiating with, one of their strategies might be to wear you down. 


  • Take your time. 
  • Do your research. 
  • Consider the pros and cons of the deal. 
  • Know your worth. 

Do not agree to anything in a renegotiation until you are sure it will promote the success of your business. 

Do Not Succumb To Emotions

This is, perhaps, the hardest ideal to remember. As a business owner, your business is undoubtedly important to you. There is nothing wrong with having emotions, but being overly emotional can often cause your passion for outweighing your logic.

When entering into a renegotiation, prepare yourself. 


  • When you feel yourself getting wound up, take a deep breath
  • You are talking to a person, so connect with them on a human level
  • Rash decisions are often wrong decisions
  • It’s okay to ask for a break
  • If you feel the other person getting under your skin, take the high road


Renegotiations are part of the business. It is a skill that is necessary to hone as a business owner. 


  • Be open to renegotiations
  • Come prepared
  • Weigh your pros and cons
  • Be resilient

If you want to know more about renegotiating, or any essential business skills you need to succeed, Hoist can help. For more information, check out our website.


Tips For Achieving Clarity In Contract Drafting | Georgetown Law

A Business Guide to the US Economy | US Chamber of Commerce

15 Rules for Negotiating a Job Offer ⎸ Harvard Business Review

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