Negotiation tips

Any negotiation situation is unique, but in this article we will take a look at some general negotiation tips that you might want to keep in mind when trying to buy or sell any kind of product. It doesn’t really matter if you are buying a car, a fridge, a mobile phone or an apartment, the ways in which you can create leverage are pretty much the same. If you are a seller, this tips can help you keep your guard up and protect yourself against simple but effective persuasion techniques.

Before we begin just remember that it is always a good idea to know beforehand the exact thing that you want to acquire and keep in mind an approximation about the amount of money you are willing to spend.

1. Create competition

This may be the most important part of preparing a negotiation. Always remember: you are not trying to buy something, you are trying to SELL your money! And there are plenty of other shops/sellers that want your money as well. You can inform the seller about that and maybe even show him some better options other stores have in place for a similar product. You can then ask what would be the advantage of you buying from him. This may give you some precious information or even a discount.

So, if you’re on the selling side, you should always be informed about what direct competitors are offering and already have an answer to the question “why is your offer better than others”?

2. The product must satisfy your needs

When looking at a prospect, you must first observe if it has all the options you want, or if some existing features are not needed. Take a fridge for example: maybe the color that you want is not in the offer, or maybe you don’t need all the freezer functions. Any missing feature that you need can give you leverage to negotiate. The same thing applies if you discover any imperfection or anything out of the ordinary – a scratch on the surface, a fading color, everything can be pointed out and used as leverage.

3. Promotions

If you buy something from a store, you can always ask : “In what period of time were the last promotions?” or “when will be the next promotions?” Nobody can blame you that you arrived a little to early or to late, a new offer may be just around the corner.

4. What if?

One thing many people don’t realize is that in many situations the price of the product is not the only thing that you can negotiate. For example, what if you decide to buy 4 fridges instead of one? Can you get a discount? What if, after a few days, your neighbours will come and buy a few fridges as well? What if you decide you don’t need transportation and installation? What if you decide to buy two toasters too? If the seller gets the idea that he or she can profit by selling multiple products, chances are you can get a better overall price. Studies show that in 9 out of 10 such situations the seller will either accept your offer or make you a counteroffer you can benefit from.

Trading is also a possibility. In some negotiation cases, a trade can supplement or even replace the money. For example, if you already own a car but you want to buy another second hand car, you can propose to simply switch cars and maybe supplement with a bit of money. Is the owner of the car selling a mobile phone that you want also? Make an offer that comprises both products so that both parties can profit. Even with new cars, the dealers will accept buying your old car if you decide to buy a new one from them.

So you can confidently use the ‘what-if’ method because thinking outside the box may sometimes pave the way to a win-win situation.

5. Time and energy investment

Entering a store and just offering a fixed price as an ultimatum will rarely work. Why? Because the store employee did not invest any time or energy in a possible transaction with you. But if he did, it will be really hard for him to refuse some money he really worked for. This method works best when negotiating with someone with authority. For example, let us suppose someone wants to buy a second-hand car: he asks the owner a lot of questions: how much does it consume, pollution indexes, improvements made through the years, and then he takes it for a test drive. Because he is undecided, he asks to come again the next day so that his wife can see the car too. Next day, the same thing happens again, the buyer and his wife seem undecided and ask to come again and have a mechanic friend look at it. In the third day he finally makes a proposal, which will have now a greater chance to be accepted, because the owner does not want to feel he wasted all the time with a possible buyer for nothing.

The same technique is applied successfully by some clothing-store customers who try out for hours on end every kind of suit in the store to see how it fits, and after they finally decide which one they want to buy they ask for a free tie to go with the suit. Again, hard to refuse after all the energy invested.

But if you are in the seller’s shoes, what can you do to defend yourself against such tactics: simply observe the behavior and try to impose some restrictions. Creating a competition for your own time can usually help, since the buyer realizes he is not the only one who can make an offer, and delaying the transaction may not work in his advantage.

6. The ‘help me’ attitude

You can get pretty far in a negotiation if you do not act like a know-it-all. Of course, like we previously discussed, it is very important to be informed about the goods you want to exchange, but showing that bluntly to your competitor may not always be the best idea. Sometimes, being the quiet guy who only speaks when he has to, has its own benefits. By having an attitude of someone who needs help, you can ask a lot more questions that can bring you more information. Also, if you seem like a guy who does not quickly understand all the aspects, you oblige the other party to go into more thorough detail that can help you expose your arguments and open more negotiation windows.

Recognizing that you do not have all the answers will make you look more human in the other person’s eyes, they can relate to you and become more open to suggestions. Letting your negotiation adversary explain more things will also make them invest more time in the negotiation with you, and we just learned previously that this is another advantage for the buyer.

But what can you do if you want to sell something to a buyer that seems to stay quiet and let you speak all the time? The answer is simple: make sure the conversation is not one-sided. Use the help-me attitude and ask the buyer for feedback while you’re making your presentation. Make sure he understands your message and learn how to ask questions, even if you think you know the answer. Find out as soon as possible what the customer really wants and what is his experience in the field.

Never wait for the end of your sales presentation to ask for feedback, because doing so you will give the buyer the opportunity to say he didn’t understand much and ask you to repeat everything all over again, which will be hard to do with the same enthusiasm knowing you fell in the trap of investing time and energy for nothing. Herb Cohen describes exactly one such case in his book “You can negotiate anything”.

7. The Efficient Ultimatum

The ultimatums are used frequently but rarely effectively. Some years ago, I needed to make some adjustments to my house in order to reduce energy consumption. After a quick negotiation, the first company I approached (let’s call it company A)  agreed to reduce the price but threw in a “harsh” ultimatum too quickly. They tried to justify it by creating a competition, stating that many clients are in the waiting list and if I do not accept their price right now and let them begin the work the next day, they will leave to work on other houses. I did not accept their offer because they also had competition (they were not the only ones who competed for my money) and I obtained a better price and service from another company (let’s call it company B) who did not even use an ultimatum. The very next day, company A called again and again, matching and eventually even offering a slightly better price than company B, but my trust in their services was shattered and I turned down their offers.

So, what are the criterias that make a good ultimatum proposal:

A. Choosing the right time. An ultimatum must always come at the end of a negotiation, never in the beginning. That was the first mistake company A made;

B. Finding an adequate way to put it. Harsh ultimatums like the one company A gave me “This is my final offer. Take it or leave it!” are autodestructive. A softer approach like “I understand your situation, but this is all I can offer right now, please help me out” has way more chances of succeeding.

C. Legitimize you final position with justifiable documents: “I wish I could offer you what you want but the allocated budget does not allow me that”. In this case, showing the document with the budget can make one understand there are some limits for their request.

D. Never cut out all other options!  Offer your opponent a choice from which he can choose the one that seems more advantageous. As an example, if an employee asks for a raise of 1000 dollars and the boss responds that due to the current budget (which lies on a document on the desk) he can only make a raise between 600 and 800 dollars, the employee is more inclined to take the 800 raise and remain in the company because he feels he was given a choice that he could make so that he can obtain an advantage.

On the same note, I have better understood this principle after I played a military strategy game and the tutorial told me “when surrounding the enemy, always leave them the opportunity to flee or surrender. Otherwise, they may fight to the death which can bring unnecessary casualties”.

Having all the above points in mind when going into a simple trade negotiation will certainly help you get a better price. If you want to learn more about negotiation techniques, I highly recommend reading Herb Cohen’s book “You can negotiate everything” on which this article was based.

Also, if you want to become a better negotiator, do not miss the next post in which  we will go more in depth with the illusion of power in a negotiation.