Watching a good negotiator in action, you’d think it’s a natural talent that only a lucky few are gifted with.
While that might be true of certain politicians and CEOs, it is possible for the rest of us who aren’t trying to solve international crises to make a good deal here and there.
Here is a basic guide to negotiation every man can follow.
- Set your final price and stick with it
Chances are you’ll know what the asking price is for whatever you’re going to haggle for. Before showing up, pick a price that’s within reasonable range of the asking price and what you’re willing to pay and stick with it.
Obviously, when you show up to negotiate the deal, your first offer will have to be lower that what you’re actually willing to pay. This will give both parties room to meet in the middle where they are both satisfied. If the guy wants $6,000 for the used car and you want to pay $4,500, start by offering $3,000 and chances are you’ll get what you’re after by working up in a few $500 increments.
Setting a final price ahead of time is especially important for novice negotiators because it inspires an air of confidence during the deal and makes sure you won’t get taken advantage of by someone more experienced.
- Research and bargaining power
Setting a price because that’s just what you want to pay for something is totally fine. But when it comes to actually making a deal, that alone might not get you very far.
Instead, you need to explain to the other party why that’s the amount you want to pay based on the product or service at stake. Usually, this can be taken care of through research. If you’ve spotted your perfect used car, on the Internet inspect the photos and description of the vehicle carefully, compare it to the same model being sold elsewhere and inspect the car carefully in person. The cost of any necessary repairs or better deals you can list off will serve as bargaining power to get you a better deal.
This strategy is also true when it comes to the other party. As California-based negotiation instructor Ed Brodow says, “You can’t make accurate decisions without understanding the other side’s situation.” If you can’t gather any information about the other party ahead of time, ask probing questions to find out what’s at stake for them during the bargaining process.
- Overcome your nervousness
In his book, Friendly Persuasion: My Life as a Negotiator, legendary sports attorney and negotiator Bob Woolf points out that, in the vast majority of cases, both parties in a negotiation are equally nervous. According to Woolf, as long as there is mutual kindness and respect in the negotiation process, no one should be scared.
- Establish mutual respect
One of the most important parts of making a good deal is establishing a certain amount of mutual respect between the two parties.
Part of that will come through in a reasonable asking price and a reasonable offer, but it’s also how you behave before, during, and after the negotiation.
In an article giving negotiation advice, Harvard Business School professor Deepak Malhotra writes, “Anything you do in a negotiation that makes you less likeable reduces the chances that the other side will work to get you a better offer.” Smile, introduce yourself, shake the guy’s hand. You know…just be civil as though you’re meeting any new person in a friendly context. You’re just there to negotiate, not fight the guy to the death.
Failing to do this will likely result in you not getting the deal you want, and if this is a person/place you’re planning on doing business with in the future, it’s really not in your best interest to harm that relationship.
- Let the other guy start things out
No matter what kind of negotiating situation you find yourself in, it’s usually better to let the other person name a price first. This will immediately tell you if you final price is attainable. If you were hoping to get that used car for $3,000 and the sells starts out at $12,000, you know you’re probably walking away from this one without having to waste you time or energy (unless you’re some sort of expert negotiator…which most of us aren’t).
- Do more listening than talking
Throughout the negotiation, follow what experts call the 70/30 Rule. This means you should be listening 70 per cent of the time and talking the other 30, encouraging the other party to keep talking by using open-ended questions and remarks.
From a psychological point of view, this puts you at an advantage because it establishes their role as the one asking something/a certain amount and you as the one who can fulfill that. Instinctively, the one who has the power to make or break the deal is more likely to get what he wants.
- Never give away something for nothing
Malhotra also says to make sure any concessions you make are reciprocal. This is achieved by first making your offer for a reciprocal concession clear and diplomatic and then planning these concessions ahead of time and breaking them up into sections during the negotiation.
- Walk away if you have to
For a lot of guys, not being able to close a deal is a big shot to their ego. But as long as you’ve asked for something reasonable and behaved appropriately during the negotiation, there is nothing to be ashamed of.
Sometimes it’s because the other person is too inflexible or not understanding. Sometimes it’s just that the two parties don’t quite click the way they’re supposed to for the deal to go down smoothly.
Whatever the case may be, follow Brodow’s Law, which is about always leaving yourself a way out of negotiations. You should set a boundary in your own mind about what you’re willing to give up. If it is crossed, you’re better off walking away.
Ultimately, the biggest mistake people make is that they think a negotiation is a competition in which one person wins and the other loses. It’s not about someone trying to gouge you or you getting away with lowballing.
Actually, negotiation is the art of finding a middle ground where both parties are happy. The buyer should be happy with the price he paid, and the seller should be satisfied with what he received. No matter how you go about negotiation, remember that those are the only good deals.