How to Negotiate Like a Pro
Some people are scared to death when confronted with the need to negotiate with others. They'd rather pay more or do whatever they have to - anything - in order to avoid this process.
I completely understand the sentiment. The only problem is, if this describes you, you might end up paying too much for your mortgage, credit cards, etc. You'll also pay too much for insurance and almost everything else.The good news is that you can overcome your fear of negotiating. Indeed, I believe that you can actually learn to love it. As a bonus, you can save yourself a great deal of money and time by learning some basic negotiating techniques.
Here are a few that have helped me tremendously:
1. Ask questions
The more you understand the other party, the better off you'll be. Find out what's important to the other person and why. Show some interest. I don't care what you are negotiating for, you need to understand the person on the other side of the table and what her motivation is. It's rarely just money.
Once you get a few answers, don't stop. Ask if there is anything else that is important to them. Keep asking until your negotiating partner doesn't have any more issues to explain.
What good does this do?
First, it shows that you're empathetic. That helps your negotiating partner relax. If you demonstrate friendly behavior, the other party will be more apt to reciprocate. That could translate into better terms for you.
Also, by understanding the other person, you might learn that the things they want most, are least important to you. As a result, you can concede on some points that don't really cost you much even though those concessions are worth a lot to the other person. As a result, you can trade your concession for something you need.
On the other hand, if you start the conversation by making demands and being aggressive, you actually give the other party a tool to use against you. At that point, they already know what's important to you and (possibly) why.
You need to get that advantage and you can achieve that by simply asking questions.
The more you understand your partner, the better. If you have to use the internet or other sources to learn about your partner, do so.
Why is this refrigerator being offered at a special price? Does the store get a special incentive for selling this brand? Is this person trying to build her business? What kind of clients is she looking for? Does the salesperson earn more commission by selling this or the other machine?
You may not always get answers, but you should ask anyway. You never know what you'll learn.
2. Know what you need
You should always know what you need before you start negotiating. Have a clear idea of what you need, how much you can pay, and when you need it. Do the leg work and know what other vendors are selling the same product for. Bring proof with you.
You should also be comfortable walking away from any deal if it's not the one you need.
Let's say you're looking for a credit card alternative. There are plenty of them such as Lending Club which can reduce your high interest credit card rate by up to 50%. If your credit card company won't play ball, let them know you'll be transferring the debt to a lower cost provider. That should wake them up. Don't ever think you have no alternatives.
The same goes for business. You might need working capital for your small business, but you are not (I repeat) NOT desperate. There are plenty of alternatives to help fund your business too.
Other than paying for health care, there are very few transactions that are life-or-death. You'll survive if you don't get the deal and have to drive home in your old car. There is always tomorrow. There is always another seller.
3. Use time to your advantage
Get them to give you a price and respond immediately... With silence.
Let it sink in. Let the seller wonder what you're thinking. This puts them on the defensive. They'll start worrying about losing the sale. As a result, they'll be more interested in negotiating further.
You can use time to your advantage in another way, too. Let the seller know you aren't going to buy anything until next week. You're planning on shopping all over town and you actually enjoy the process. The only way you'll buy now is if the seller gives you an amazing deal. This will light a fire under them.
Finally, never go shopping when you are hungry, rushed, or tired. These are poor conditions to negotiate under. In essence, time is against you because a part of you wants to end the process quickly so you can rest or eat. The best time to negotiate is in the morning after breakfast. :)
4. Become valuable
Explain to the seller why you are a good customer. Talk about how you'll make other purchases in the future and that you're an influential member of a large community. Tell them how you'd love to share good deals with others but you need something worth sharing.
Get the salesperson to see you as a long-term customer rather than as a transaction.
This is similar to the tactic of being quiet and it's my favorite technique.
When the salesperson gives you a price, don't say anything.
This works on a few different levels.
First, when you smile at someone, you disarm them and (often) they can't help but like you. When you smile at someone, you telegraph friendship. And most folks want to do favors for their friends.
But it goes beyond that.
When you smile at the salesperson, while they like you more, they have no idea what you're thinking. They don't really know why you're smiling even though they feel better about you.
So on the one hand, when you smile, the salesperson will feel more inclined to want to work with you. On the other hand, the salesperson will be concerned that you aren't happy with the terms.
These five techniques have saved me a small fortune over the past several decades. In addition, I actually enjoy a process that I used to abhor.
The bottom line is to remember that you have power and you deserve to get the best terms possible. Don't ever think you have to make a deal with someone. By simply taking back your power, you'll see how much you really have.
Your thoughts on negotiation
What are your favorite negotiating techniques? Have you ever used those I describe above? What was the result?
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