Negotiation

The price or value of anything is always and only determined by the level of demand or desire for that good. The value is determined by what a particular individual, at a particular time, under a particular set of circumstances, considers something to be worth. Since this type of value judgment is always subjective, there is never a right and final price or set of terms that can be decided in advance.

“EVERYTHING IS NEGOTIABLE” should be your attitude and your approach to life and business from now on.

Passive people merely accept the current state of affairs, and they usually feel helpless to change the situation. Proactive people, on the other hand, see opportunities and possibilities everywhere, and are always looking for ways to change the situation to their own advantage. This should be your strategy as well.

Your job is simply to find out where and how you can get a better deal than the one that you are being offered.

The fact is that all pricing is arbitrary.

Make it a habit to continually look for opportunities to improve the prices or terms in some way.

An agreement is merely the first step in the process.

THE KEY TO getting a better deal is simple. Ask. Ask for a lower price or for better terms and conditions.

Just as fear is a habit, courage is a habit as well. By forcing yourself to act courageously, especially in asking for better prices and terms in a negotiation, you actually build your own self-confidence and self-esteem.

Cold-Calling Builds Courage

“Rejection is not personal.”

When someone says “no” to your request in a negotiation, it is not a reflection on you or your personal value. It is not a statement about whether you are a good or a bad person. As far as the person saying no is concerned, it is merely a commercial response to an offer of some kind. It has nothing to do with you. Don’t take it personally.

Think of negotiating as a game. It is not a serious, do-or-die matter. It is merely a form of sport. In fact, it is one of the great games in life. Your job is to play the game as skillfully as you possibly can, and then to get better and better at it.

Top negotiators insist upon negotiating on almost every occasion. They haggle and bargain because, for them, it is a form of fun. When you begin to look upon negotiating as an enjoyable activity, and remain calm, confident, and cheerful, you will begin to see opportunities to negotiate on your behalf everywhere you go and in almost everything you do.

When you begin to look upon negotiating as an enjoyable activity, and remain calm, confident, and cheerful, you will begin to see opportunities to negotiate on your behalf everywhere you go and in almost everything you do.

Right at the beginning, I’ll state, “Let us create a Chinese contract between us. In this type of contract, you and I will agree on the basic terms and conditions of the business that we will do together. But I want us both to be happy. If at any time something happens that changes the situation around this contract, let us sit down together and renegotiate the terms and conditions so that both of us continue to be happy.”

the purpose of negotiation is “to reach an agreement such that all parties have their needs satisfied to the degree that they are internally motivated to fulfill their commitments and to enter into subsequent negotiations and transactions with the same party.”

But the harder you seem to be working to find a way to satisfy the other party (the indirect approach), the more open the other person will be to working to achieve an agreement that is satisfactory to you.

the harder you seem to be working to find a way to satisfy the other party (the indirect approach), the more open the other person will be to working to achieve an agreement that is satisfactory to you.

Ralph Waldo Emerson said, “To have a friend, you must first be a friend.”

This is why I always say, “Whatever we decide here today, I want you to be happy. I am open to any ideas

and suggestions you have that will ensure you are happy at the end of our discussions, and happy later on as well. Of course, I want to be happy also, but I find that if I focus on your being happy, it will usually work out satisfactorily for me.”

YOU ALMOST ALWAYS have more power in a negotiation than you think you have. Even when you feel that the other person has all the power, it may be that you have something that he wants, or you can find something that he wants that will swing the balance of power back in your favor.

There are several ways that you can increase your power in a negotiation, including through preparation, authority, knowledge of the other party, empathy, rewarding/punishing, and investment.

The Power of Preparation The more thoroughly prepared and knowledgeable you are when you go into a negotiation, the greater power you will have. Do your homework.

The Power of Authority Making it clear that you have the authority to buy or not buy—to make or not make a buying decision—gives you power. Also, when you make it clear that you are knowledgeable in this field, and that you are quite clear and experienced about exactly what the price, terms, and conditions should be, it often intimidates the other person into giving you a better deal.

The Power of Knowledge of the Needs of the Other Party The more you know about the situation of the other party, the greater strength you have in a negotiation. If you discover that the other person has a pressing need for a product or service that you can offer, or that the other company has serious financial problems and needs capital or credit, you are in a stronger position to negotiate an excellent deal.

The Power of Empathy or Identification This a power used by top negotiators in almost every

area. The more time you take to establish a warm relationship with the other person, the more likely your opponent will be relaxed and open to negotiating with you on better terms.

The Power of Rewarding and Punishing This is an essential power that you can and should develop in a negotiation. When you have the ability to confer rewards or benefits on someone, or to withhold rewards and benefits, they are far more likely to do business with you. They will want to negotiate with you.

The Power of Investment This refers to the amount of time and effort that you or the other person has spent in this negotiation. If you have only spent five minutes, then there is little investment on your part. But if you have spent five days, weeks, or months over time working toward an agreement, you have made a substantial investment, and it makes a definite impression on the other party. The greater the investment of the other party, or yourself, the greater power you have in the negotiation.

POWER IS ALL about perception. It is not the power you have but the power the other person thinks you have that counts.

Perception is everything.

The Power of Scarcity Often people don’t know how much they want to acquire a product or service until it appears that they won’t be able to get it at all. The perception that you have something scarce that other people need, and that other people want and are prepared to buy immediately, gives you excellent bargaining power in a negotiation.

Often people don’t know how much they want to acquire a product or service until it appears that they won’t be able to get it at all.

If the other party sees that you are totally committed to concluding the transaction and making the deal, and that you will do whatever is necessary to achieve it, you develop the perception of power.

How Badly Do You Want It? The most powerful emotion in negotiating is desire. The more you want to purchase or acquire a particular product or service, or to sell something, the less power you will have in negotiating.

The most powerful emotion in negotiating is desire. The more you want to purchase or acquire a particular product or service, or to sell something, the less power you will have in negotiating.

Perhaps the most important factor in timing has to do with a sense of urgency.

Good salespeople and negotiators use every device to create a sense of urgency to weaken their customers’ ability to negotiate effectively on their behalf.

Set and Avoid Deadlines Another helpful device with regard to time and timing is deadlines. Wherever possible, give the other party a set deadline for decision making. Tell the other party that if you do not have a decision by a specific time or date, all bets are off. The price, terms, and conditions will change. You

Another helpful device with regard to time and timing is deadlines.

IT IS AMAZING how many people enter into a negotiation without knowing precisely what they want to achieve, and so they make up their goals and desires as they go along. They are easily influenced, persuaded, and manipulated to buy or sell at higher or lower prices. The solution for this predicament is for you to think through your ideal desired outcomes in advance. Ask yourself the question, “If this negotiation worked out perfectly for me, what result would I achieve?” Think on paper. Write out and describe everything that you want, in advance. People who know exactly what they want, and have written it down, have a distinct advantage over those who are vague or unsure.

People who know exactly what they want, and have written it down, have a distinct advantage over those who are vague or unsure.

Best, Medium, and Worst Outcomes Think in terms of three levels of possible outcomes: best, medium, and worst. When you go into a bargaining session, you should have these three outcomes in mind and aim for the best possible price and terms from the beginning. You will often be amazed at what happens when you start with the highest possible price for selling and the lowest possible price for buying. Sometimes, due to factors over which you have no control, the other party will agree with you immediately, and no further bargaining is necessary.

Think in terms of three levels of possible outcomes: best, medium, and worst. When you go into a bargaining session, you should have these three outcomes in mind and aim for the best possible price and terms from the beginning.

PREPARATION IS THE true mark of the professional. Eighty percent of all negotiating success, if not more, is based on thorough preparation on your part before the first conversation takes place. Begin by considering the subject matter: What are you going to talk about? What is the purpose of this negotiation? Define clearly what you want to achieve and what issues are on the table. What are your objectives or goals for this negotiation? What do you want to accomplish when you go into this discussion? The greater clarity you have about your goals, the faster you will achieve them, and the easier it is to convey them to the other party.

One of the best ways to improve the results of any negotiation is for you to argue the case of your opponent before you begin preparing your own case.

In law school, students are taught to take the case of the opposing party and put together a complete argument based on the facts of the case as if they were acting for the other party. Only after they have prepared the case for the other party do they prepare their own case.

The best type of personality in a negotiation is empathetic, warm, and friendly

Empathy has been identified as the number-one psychological quality of top salespeople.

IN HIS BOOK , Influence, Robert Cialdini lists the factors that have the greatest impact on the way people think and respond to you. The most powerful of all influences, in his estimation, is the power of reciprocity. Extensive research shows that reciprocity—giving and receiving—is the most powerful way to gain agreement and commitment. Human beings tend to be fair in their interactions with others. This means that when you do something for me, I feel obligated to reciprocate, to do something for you of equal or greater value. This is a natural and normal human instinct. It is the basis of civilization, and the foundation of the Law of Contract, which makes all business possible.

The most powerful of all influences, in his estimation, is the power of reciprocity. Extensive research shows that reciprocity—giving and receiving—is the most powerful way to gain agreement and commitment.

Use the Socratic Method To trigger reciprocity, use the Socratic method of negotiation. Socrates said, “First, decide upon all the areas where you agree before moving on to more controversial areas where you have differences of opinion.”

To trigger reciprocity, use the Socratic method of negotiation. Socrates said, “First, decide upon all the areas where you agree before moving on to more controversial areas where you have differences of opinion.”

At the beginning of a negotiation, be a “go-giver” rather than a go-getter. Look for every way that you can possibly agree with the other person. This way you’ll build a greater and greater propensity for the other person to want to agree with you.

Push the Fairness Button One of the most important emotional principles in human relationships and negotiating is the principle of fairness. Use the word fair as often as you can because it triggers within the mind of the other person a desire to reciprocate in a positive way. Make statements such as, “I think the fair thing to do here would be this,” or “That doesn’t really seem fair to me in this situation.” Or, “I just want to be fair to both of us.” No one will ever argue with you about your desire to be fair.

Use the word fair as often as you can because it triggers within the mind of the other person a desire to reciprocate in a positive way. Make statements such as, “I think the fair thing to do here would be this,” or “That doesn’t really seem fair to me in this situation.” Or, “I just want to be fair to both of us.” No one will ever argue with you about your desire to be fair.

We are greatly influenced by what other people have done or purchased, especially people we feel are similar to us in interests, occupation, income, or even religious or political

Gather Social Proof Use facts, statistics, names, numbers, evidence, and proof from people known to the other party. When you use social proof, referring to others who have made the same decision, this implies that the terms and conditions you are asking for are reasonable.

Use facts, statistics, names, numbers, evidence, and proof from people known to the other party. When you use social proof, referring to others who have made the same decision, this implies that the terms and conditions you are asking for are reasonable.

People in the Same Occupation Let’s say you are negotiating with a doctor to purchase a new computer and operating system to manage his practice. When you say that several other doctors in his specialty have already purchased this system, his resistance to purchasing almost disappears.

Use Testimonials of All Kinds One of the most powerful demonstrations of social proof is when you give written testimonials, letters, or lists of other people who have entered into an agreement on the same terms and conditions that you are suggesting.

Tactic 1: The Flinch No matter what price the other person offers, flinch as

No matter what price the other person offers, flinch as if you just heard something disappointing. Put a sad or pained look on your face. Roll your eyes upward and back as though you were experiencing great pain. Say something like, “Gee! That’s an awful lot of money!” Surprisingly, sometimes just flinching will cause the other person to alter the price immediately. And if the first flinch gets you a lower price when you are buying, or a higher offer if you are selling, be prepared to use the flinch again and again throughout the negotiation.

if you just heard something disappointing. Put a sad or pained look on your face. Roll your eyes upward and back as though you were experiencing great pain. Say something like, “Gee! That’s an awful lot of money!” Surprisingly, sometimes just flinching will cause the other person to alter the price immediately. And if the first flinch gets you a lower price when you are buying, or a higher offer if you are selling, be prepared to use the flinch again and again throughout the negotiation.

Ask, “Is that the best you can do? Can’t you do any better than that?”

You can also ask, “What is the best you can do if I make a decision today?”

Nobody has ever bought it for less than that price?”

A nibble is an add-on. You say something like, “Okay, I’ll agree to this price if you will throw in free delivery.”

you should never enter into a serious negotiation unless you are prepared to walk away if you do not achieve your most important goals in a transaction.

In a negotiation, I will often say, “Just tell me your very best price, one time, and I will tell you yes or no, whether I will buy it or not.”

Good negotiators are flexible and quick to identify mutual goals in the negotiation. They are willing to change or drop a position if new information suggests that it would be a good idea.

Successful negotiators are cooperative, not combative. They don’t look upon negotiating as a fight or view themselves in an adversarial relationship.

Excellent negotiators are creative rather than competitive. Rather than just trying to win, they seek to find a solution that both parties will be happy with.

Finally, and most important, they aren’t manipulative. They do not use tricks or deceit to maneuver the other party into a win-lose situation, where they win and the other person loses.