Whether it's buying a house, discussing your phone bill, getting more frequent flyer miles, trading with China, or paying your credit card, the basic principles of trading are the same. Remember that even the most capable and experienced negotiator feels discomfort during a negotiation. The only difference is that a skilled negotiator has learned to recognize, and suppress the visible signs of this sensation.
Steps
Method 1 of 2: Preparation
Step 1. Decide your break-even point
In financial terms, this is the smallest amount or the lowest price you will accept in the deal. In non-financial terms, this is the worst case scenario you will accept before walking away from the negotiating table. Not knowing your break-even point could lead you to accept deals that are not in your best interests.
If you represent another person in the negotiation, request in advance and in writing an agreement with your client for a welcome resolution of the negotiation. Otherwise, when you negotiate, if the customer decides that the deal is not to their liking after all, your credibility will suffer. With the right preparation you can avoid this possibility
Step 2. Know the value of the cards you have to play
Is what you offer difficult to achieve, or is it something common? If what you have is rare or noteworthy, you will start trading in the best position. How much does the other party need you? If they need you more than you need them, you will be in the best position, and you can afford to ask for more. If, however, you are the one who most needs to find an agreement, what can you do to improve your position?
- A negotiator trying to free hostages, for example, offers nothing special, and needs the hostages more than the kidnapper. For this reason, this type of negotiation is very difficult. To compensate for this disadvantage, the negotiator will have to be good at making small concessions seem big, and at turning emotional promises into precious weapons.
- A rare gem seller, on the other hand, has something that is rarely found in the world. He doesn't need any particular person's money - just the largest amount of money, if he's a good negotiator - while people want his particular gem. This puts him in the excellent position of being able to extract more value from the people he negotiates with.
Step 3. Never get rushed
Never underestimate your ability to trade simply by persevering more than the other party. If you are patient, use that quality. If you lack patience, acquire it. Often in negotiations it happens that people get tired and accept conditions that they would not have accepted if the process had not tired them. If you can hold out more than someone by staying at the table for longer, you will likely get more than you want.
Step 4. Plan how to structure your proposal
Your proposals are the offers you make to the other party. A negotiation is a series of exchanges, where one person makes a proposal and the other a counter-proposal. The structure of your proposals will determine the success of your negotiation.
- If you are negotiating someone else's life, your proposals will need to be reasonable right away; you don't have to risk another person's life. The cons of starting aggressively are too bad.
- If, however, you are negotiating your starting salary, it will be helpful to ask for more than you expect to get. If your employer accepts your proposal, you will have gotten more than you hoped for; if your employer manages to snatch a lower salary from you, you will give the impression that you have made a sacrifice for the company, improving your chances of having a higher salary in the future.
Step 5. Prepare to leave the negotiating table
You know what your break-even point is, and you will know if the offer you have received is adequate. Be prepared to leave if that's the case. The other party may decide to call you back, but you should still be happy even if they don't.
Method 2 of 2: Negotiation
Step 1. Depending on the situation, open extreme
Open with the maximum sustainable position (the maximum you can ask for according to the logic). Ask for what you want, and something more. Starting from a high value is important, as you will likely close the deal at a lower value than the initial one. If your initial offer is too close to your breakpoint, you will not have enough trading range to concede to the counterparty.
- Don't be afraid to make an indecent request. You never know - it might be accepted! And what's the worst that can happen? They may think you are vain or crazy; but they will also know that you have guts, and that you value yourself, your time and your money.
- Are you worried about insulting them, especially if they have a very low bid to buy something? Remember this is business, and if they don't like your offer, they will make their counter offer. Be brave. If you don't take advantage of them, they will take advantage of you. To trade, you need to take advantage of your counterpart.
Step 2. Find out about prices, and take proofs with you
If you are buying a car and you know that another dealer will sell you the same car for € 500 less, say so. Say the name of the dealer and the seller. If you are negotiating a salary and have researched the salaries of people in positions equivalent to yours in your area, print those statistics and keep them handy. The threat of losing a job or an opportunity, even if it's not something important, can make people compromise.
Step 3. Offer to pay on signature
A signature payment is always a seller's favorite, especially in situations where most people don't pay right away (used car sales). As a buyer, you can also offer to buy in bulk and pay upfront for a number of products or services, in exchange for a discount.
- One possible tactic is to show up for the negotiation with a written check; ask to buy the product or service in question for that quantity, and tell the other party that this is your last offer. He might accept it, because the allure of instant payment is hard to resist.
- Finally, paying in cash instead of credit cards or checks can be a useful negotiation tool, because it reduces risks for the seller (ex: overdraft checks, invalid credit cards).
Step 4. Never give anything without getting anything in return
If you give something for free, you are implicitly telling the other person that you think your position is weak. Skilled negotiators will smell the blood and throw themselves at you like sharks.
Step 5. Ask for something that is valuable to you, but doesn't cost them a lot
Making the other party believe that the negotiation is winning is a good thing. Contrary to popular belief, trading doesn't have to be zero-sum. If you are smart, you can be creative in your requests.
- Let's take as an example a negotiation with a company that produces wines, and they want to pay you € 100 for your performance. You want € 150. Why not suggest they pay you € 100 and a € 75 bottle of wine? It is worth 75 € for you, because it is the retail price, but it costs a lot less for them to produce it.
- You could ask for a 5-10% discount on all of their wines instead. If you are a regular wine consumer, you will save, and they will still earn on your purchases, even if a lower amount.
Step 6. Offer or ask for extras
Can you improve the deal in some way, or ask for something that improves the deal? The extras and bonuses can have a relatively low cost, but push the deal to the side that is most favorable to you.
In some cases, but not always, offering many small incentives, instead of one big incentive, can give the impression that you are giving more, when in fact you are not. Keep this in mind, both when you need to give incentives and when you need to receive them
Step 7. Always keep a few tricks up your sleeve
An ace in the hole is a fact or argument that you can use when you feel that the other party is close to accepting a deal but needs that extra push. If you're a broker, and your client is going to buy this week, whether the seller is willing or not, that's a great ace up his sleeve: your client has a deadline he'll want to meet, and you can convince him why that deadline matters.
Step 8. Don't let personal problems influence the negotiation
Too often, negotiations take a different path than desired because one party takes a problem personally and does not take a step back, ruining all the progress made in the initial stages of the negotiation. Try not to take the negotiation process personally, and don't feel offended or belittled. If the person you are negotiating with is rude, too aggressive, or tends to abuse you, remember that you can walk away at any time.
Advice
- Even when unsure, speak with authority, using a higher volume than usual and giving the impression that you are an experienced negotiator.
- Preparation accounts for 90% of the negotiation. Collect as much information as possible about the agreement, evaluate all the variables involved and try to understand what concessions you can make.
- If the other party surprises you with a very tempting offer, don't make it clear that you expected to get less.
- Avoid using soft language when making your proposal. Eg: "The price is around € 100" or "I would like € 100 for this service". Be firm in your proposals - "The price is 100 €". or "I'll give you € 100".
- If someone is completely unreasonable, don't negotiate. Reply by saying that you keep in mind if you lower the price. Negotiating when the counterparty is unreasonable puts you in a position of excessive weakness.
- Never negotiate after receiving an unscheduled phone call. Your counterpart is ready but you are not. Say you can't speak and ask to resume negotiations later. This will give you time to plan the answers to the questions and perform some simple research.
- Pay attention to your body language - a skilled negotiator will be able to read non-verbal cues that can reveal your true intentions.
Warnings
- Hatred prevents agreements. People refuse agreements if they are in a bad mood. This is why divorces drag on for years. Avoid hostilities at any cost. Even if hostilities have occurred in the past, start each contact with a positive and optimistic attitude, without holding a grudge.
- Never talk about the counterpart's proposed figure, as you would give it subconscious validity - always talk about your figure instead.
- If you have to negotiate for a job, don't be too greedy, or you could get fired.
