In Business As in Life, You Don’t Get What You Deserve, You Get What You NegotiateChester L. Karrass
A bad negotiation leads to anger, resentment, and poor relationships.
So it’s very important to study the negotiations you’ve done, and try to improve so you don’t experience the above.
My negotiation skills are nowhere near perfect, but over the years, I’ve been bookmarking a collection of practical tips to sharpen it — hopefully, they will help you as much as they have helped me.
The Essentials of Negotiation
Any method of negotiation may be fairly judged by three criteria:
- It should produce a wise agreement if an agreement is possible.
- It should be efficient.
- It should improve or at least not damage the relationship between the parties.
Negotiation Cheat Sheet
- Understand what are the starting positions of each party. For example, if you’re buying, determine the maximum you will pay. If you’re selling, determine the minimum you will accept.
- Develop options before you start a negotiation. Always be prepared that the negotiation outcome could be worst. Options make you powerful in negotiation.
- Ask what they need. Don’t use the word “negotiation” but ask “if this discussion works out perfectly, what would they like to happen?” Each party shares their ideal outcome, then you discuss in meeting a common ground.
- Each side asks “What are your major concerns,” “What are the issues to be resolved?” If one party controls the terms, the other side can set the price. A win-win. And sometimes terms are more important than the price.
- When you have a major issue and both parties can’t agree on (e.g., price), put it aside. Work on resolving other issues. You come back to this major issue later, and agree on the price but set the terms. A win-win.
- Give yourself time and be ready to walk out. Never negotiate when you want something badly or in time pressure. You will get emotional and reduce your power of negotiation. Ignore when people give you deadlines. Be patient. Don’t let people pressure you.
- Nibble: Just before you sign, ask for a last-minute deal, e.g., ask “this covers shipping or warranty right?” If they say no, then you say politely, let me think about it if I want to buy now. You will be surprised by the power of last-minute deals.
- Never agree to a term without a reciprocal term. If someone asks you for something, you say “ok, I will give you that” and then put something on the deal in return. Remember, win-win. They think they got what they wanted (win), and you got something as well. A Win-Win.
The man who controls his anger controls the world
Best negotiators are very friendly, calm, warm, genial. Unconsciously, your counterparty forgets about winning when you present yourself this way.
Say, things like “it seems”, “I understand”, etc.
Power of information
In a negotiation, information is power.
Take the time to properly research and ask the right questions before you reach the bargaining phase of the negotiation.
Here are some examples of information power in a negotiation:
- At the end of the year, all the bonuses are paid in the financial services industry especially mortgages. Use that to get better mortgage rates at the end of the year. The agent will also move quickly because they want to close before the year ends to hit their quota.
- The first three weeks of the month, car sales reps are strong negotiators, and last week they fight for their monthly quota. Do research for the first three weeks and buy the car last week.
- No one ever sells a profitable or successful business.
For example, buying a car:
Don’t give any facial expression, don’t respond to numbers.
Make a one-time offer with a fair price that you would like to buy it for. Make it a yes or no offer. If they can’t sell at that price or say no, then politely say thank you very much and walk out.
Every price is made up by someone. Every time you go up in the hierarchy, they have the ability to change the price. Try to go up, like sales manager, VP, C-level, etc.
If they feel outraged by your offer, tell them that they take this number to their manager, and give you a call if that works. You’ll be surprised by the results.
And don’t worry about rejection. Ask, ask politely, and don’t let rejection get your way.
Business negotiation is an ongoing negotiation with your clients, so the quality of negotiation (win-win) is important.
There are five types of business negotiations:
- Win-Lose, you win, they lose
- Lose-Win, you lose, they win
- Lose-Lose, no one is happy with the deal
- No deal, both parties walkout
You want both parties to leave happy because it builds the foundation for future business. What goes around, come around. You want long-term business.
People listen better if they feel that you have understood them. They tend to think that those who understand them are intelligent and sympathetic people whose own opinions may be worth listening to. So if you want the other side to appreciate your interests, begin by demonstrating that you appreciate theirs.Roger Fisher, Getting to Yes
Let the other side help you
You can say something like this “I’m new at this. You guys are the grandmasters of negotiation. So help me out, if you were me, what would you do?”.
You can build trust by recognizing that the counterparty is far more experienced than you and underplay yourself. Ask them (e.g., recruiter) if they were in my shoes, how much do they think, I should be making. This builds trust and empathy.
When they say a number, you can use another technique e.g., “how did you come up with that number?” and let them walk you through.
A side note: It’s harder to negotiate a salary if the person makes less than what you’re asking for. This is why athletes have middlemen doing the negotiation because athletes make more than a coach.
Have more items than they have
Before every negotiation, make a list. If your list is bigger than theirs then you can give up “the nickels for the dimes”.
If you’re negotiating on multiple terms: stocks, salary, perks, or flexibility, usually the side that has more items in their list does better in negotiation.
Don’t negotiation like a child
Don’t “meet in the middle”.
You offer $40, I offer $20, and we meet in the middle at $30.
Always be honest. Say what you want and why. The middle stuff never happens and start off negotiations with being inauthentic.
Negotiation equals Authenticity. Without authenticity, you lose the tires on your car. Then you end up going nowhere.James Altucher
Thanks for reading! I’d love to hear your thoughts and comments on negotiation.