Archive for the ‘negotiating’ Category

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Top 10 Secrets To Make A Negotiation Work Out For You!

Thursday, November 20th, 2008
Master Negotiators Use These 10 Secrets To Be Successful In Negotiations

Master Negotiators Use These 10 Secrets To Be Successful In Negotiations

Often times the thought of having to negotiate with someone for something can be quite intimidating. I mean, we live in the world of Amazon’s one-click purchasing, no haggle car buying, and we visit the home of low-low prices, we don’t HAVE to negotiate for most of the things that we want. However, if you take just a moment to think about it, when it comes down to the things that we REALLY, REALLY want in this life, we almost always seem to end up negotiating for them. Case in point: a house, a nice car, your next job, etc. If it’s valuable, then it sure seems like some sort of negotiation is called for.

All this being said, if negotiating is so important to getting what we want, then why do we get so nervous when we are facing a negotiating situation? It’s my belief that one of the key reasons that nobody seems to really look forward to to a negotiation is because we don’t believe that we know how to negotiate. With so many other things in life, there are some basic rules, some things to practice, and then poof – you can determine how good you are at doing it. Things that fall into this category are playing tennis, running a marathon, playing golf, baking a cake, etc. Negotiating is not nearly so nice & neat.

The challenge to becoming a good negotiator is to first realize that there is no magic “silver bullet” skill that you need to learn in order to become an accomplished negotiator. Instead, there are a whole bunch of “little” skills that when put together can make you a negotiating force. In order to help you get started on your path to becoming the negotiator that you always wanted to be, here are 10 secrets that all the great negotiators use:

  1. Remember that a negotiation is NOT a contest. There is not a winner & a loser, rather a better deal can always be found for both parties.
  2. Surprisingly enough, you really do have more power than you may think that you do. Be sure to always be looking for ways in which the other side of the table’s power may be more limited than you originally thought.
  3. Always write down your negotiating plan BEFORE you start to negotiate. Make sure that during the negotiations you never decide an issue unless you have had a chance to prepare for it. Make sure that you follow your negotiating plan that you made before you started.
  4. Don’t be afraid to negotiate no matter how much you might think that the other side has an overwhelming position. Just remember – they might be feeling exactly the same way!
  5. Get the best – don’t enter into a negotiation with an inferior team.
  6. Get your shots before you negotiate! Make sure that you (and your team) have prepared your immune system to defend your positions before you start to negotiate.
  7. Talk less – listen more. Oh, and don’t be critical when you are listening.
  8. Ignore title – don’t let the other side of the table intimidate you with their titles or status. Do your homework and then be willing to confront them.
  9. Facts can be bent. Make sure that you are not intimidated by facts, averages, or even statistics that are presented by the other side of the table.
  10. If a deadlock occurs, don’t spend time talking about all of your problems – the other side has their own and it’s not helpful to spend time talking about yours.

What’s missing from my list? Are any of these 10 tips ones that you live & die by when negotiating? If you had to pick one as being the most important, which one would it be? Leave me a comment and let me know what you are thinking.

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Funny Money Ain’t So Funny When It’s YOUR Money

Wednesday, July 23rd, 2008

Be careful when you negotiate about funny money

In the world of negotiating we spend a lot of time talking about “funny money” and so you should know what it is because it can end up costing you a lot of real money even if you don’t think that you made any concessions during the negotiation! We all know what “real” money is – we can touch it, we can spend it, and we know how much of it we have. Funny money is exactly the opposite of this: taxes, credit cards, monthly payments, and interest rates all fall into this category of money.

Watch any car commercial on TV and you’ll see that car dealers learned a long time ago that it is much easier to sell a car as “$300 a month” instead of a very scary $40,000. The current subprime mortgage mess is yet another example of the same thing: even if you really can’t afford a $200,000 house, maybe you can afford $500 a month until interest rates go up.

A few examples of how funny money sneaks its way into negotiations include:

  • Dollars per hour
  • A five year warranty
  • “Points” (percentage points on a deal, often found in real estate deals)
  • Price w/o delivery
  • A 5% fee.
  • Monthly payments

In the end, the key thing to remember about funny money when you are negotiating is that you should never negotiate for or about funny money unless you have spent the time BEFORE negotiating to think things through completely. Funny money may not really exist; however, you know what real money is and you can lose a lot of that if you don’t watch what is happening with the funny money!

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Posted in funny money, negotiating, points, real money | 4 Comments »

Deals That Make Money: How To Plan Your Concession

Friday, July 18th, 2008

Concessions are a powerful negotiating tool

When negotiating deals with someone, you realize that they aren’t just going to roll over and give you everything that you ask for. Instead, they are going to expect you to participate in a back-and-forth, give-and-take discussion in which both sides are expected to both concede as well as gain issues. This means that you need to have a strategy for each concession that you plan on offering to the other side. Looks like this calls for some serious planning!

First, let’s make sure that we all understand why we are willing to make a concession. There are two reasons that you’d make a concession during a negotiation. First, to persuade the other side to move us close to a deal or to avoid a deadlock. Secondly, to increase the other side’s satisfaction. Both of these reasons provide a powerful motivation to make concessions when it makes sense.

There are actually a great number of nuances to the best management of concessions; however, here are the four most important approaches that you should start to use immediately:

  1. Leave Yourself Lots Of Room (to Negotiate): Remember that a concession is a tool that is designed to help you move the negotiation along. If you leave yourself a great deal of “wiggle room” then you find that you’ll have more room in which to use your concession tools.

  2. A Concession Should Be Given Slowly — Be Stingy!: So much of the process of managing a concession has to do with managing the psychology of the other side. If you are too quick to offer a concession, then the other side will give it little value. If instead, they feel that they they had to work hard to get you to offer the concession, then they will highly value this hard won success.
  3. A.I.R.: Ask for something In Return.: This is a subtle one, but you need to make sure that you clearly communicate that during the negotiation, nothing is for free. This means that every time you make a concession, you need to ask the other side for something in return. The challenge comes because you don’t want to be seen as conducting a 1-for-1 negotiation. Instead, you’d like to be seen as more casual and carefree. However, deep down inside you need to be tracking all concessions and making sure that you’ve gotten something in return for everything that you’ve given up.
  4. Watch Your Rate Of Concessions: Yes you will end up making several concessions during a normal negotiation. However, you need to make sure that you space these concessions out and don’t bunch them together. Otherwise it will look like you are willing to give up more than you are. Especially be careful about what happens as you approach the end of the negotiation. Studies have shown that 80% of the concessions that are made, are made in the last 20% of the negotiation time. Don’t let deadlines cause you to make too many concessions!

There you have it. Using these four guidelines, you can turn a concession from an admission of negotiating weakness into a powerful tool.

Tags: deals, concession, money, negotiate

Posted in concession, manage, negotiating, tool | No Comments »

The Seven Deadly Sins Of Preparing To Negotiate

Tuesday, June 17th, 2008

The Seven Deadly Sins of Preparing to Negotiate
You wouldn’t show up for a job interview naked (well, let’s say that you wouldn’t show up naked for MOST job interviews). You wouldn’t sit down to gamble in Las Vegas unless you knew the rules of the game. You wouldn’t start to run a marathon while wearing snow boots. So why would you ever even dream about starting a negotiation with a bunch of wrong assumptions?

You would be amazed at how many people actually do this. Somehow we have all talked ourselves into believing a lot of stuff about how negotiating is done and just who has the negotiating power that are flat out wrong. We seem to get ourselves offtrack even before we start to negotiate. How about if we spend some time now and identify these Seven Deadly Sins so that we can stop doing them!

  1. We assume that the other party is all-powerful and is holding all the cards.
    Fact: In truth, the other side rarely, if ever, is , or does. Instead at the start of a negotiation, power is shared by both sides. Perhaps not equally, but you always do have some power.

  2. The other side has a clear idea of exactly he wants.
    Fact: Sometimes he does, sometimes he doesn’t, no matter how detailed he may have been in describing what he is looking for before the negotiations begin. Often times, the other side has a lot of details about something that won’t fix their problems. It’s your job as a part of the negotiation process to listen and discover their true issues.
  3. The other side is only concerned about price.
    Fact: price is the most overrated word in negotiation. It is an important part of the whole negotiation; however, it’s not nearly as big of a deal as most people make it out to be. There are lots of other issues that need to be discussed and these issues will diminish the importance of price in the final agreement.
  4. There are other people / companies / products that have a better solution to offer the other side than you do.
    Fact: This is almost always never the case. Of course there are other options for the other side no matter if you are talking about going on a date or buying an airplane. However, every single other option has an up side and a down side associated with it. What you bring the table has an up side and a down side also. Now the only thing to negotiate about is how valuable your up side it to the other side.
  5. You’d be in a better position to negotiate if only you had more authority.
    Fact: In most negotiations, you’d be better off with less authority. Less authority means that you can build better relationships with the other side because you are NOT the decision maker, instead you are both in this together trying to come up with an agreement that “they” will accept.
  6. Your only real weapon is the ability to ask for less.
    Fact: Asking for less is only one of the literally dozens of negotiation tools at your command, and, oh by the way, many are much more effective than asking for less.
  7. You treat negotiating like just another meeting.
    Fact: failing to get enough sleep, do your homework, or wear comfortable clothing all provide the other side with power over you. Why would you ever put yourself at a disadvantage just because you didn’t take the time to prepare?

There you go — now you know the 7 deadly sins that can diminish your negotiating power even before you start to negotiate. Overcoming these 7 can be challenging; however, learning to do so will start paying you back right off the bat.

Posted in authority, mental preparation, negotiating, power, price, wrong assumptions | No Comments »

How To Buy A Car

Tuesday, June 10th, 2008

Used Car Salesman
So let’s spend some time talking about something that we can all relate to: buying a car. It’s all good and fine to talk about negotiating concepts, but buying a car is when the (pardon the pun) rubber really hits the road. Nobody that I know ever looks forward to the whole process of buying a car. Although they want a car, they don’t want the hassle that they have to go through to get one. For the purposes of this discussion, we won’t care if you are looking for a new or a used car — the process is basically the same. Let’s see if we can make things just a bit easier for you the next time you need to go car shopping:

  1. Determine Your Schedule: This will set the tone for the whole car buying process: how much time do you have before you need to have a car? The more time that you have before you need to make a decision, the more power you have. If you currently have a car to drive or if you walk/bike/run everywhere and can keep doing so, then you are (another pun) in the driver’s seat. You can take your time in selecting the brand, model, and sales location that you want to buy from. If things aren’t going your way at any time, you can just stop the process and restart it whenever it suits you. On the other hand, if your clunker just gave up the ghost and you really need a new set of wheels, like yesterday, then you have less negotiating power, but you can maximize what power you do have. You do this by spending more time on the car search right now and doing your research throughly and moving quickly. If you spend more time now, then you’ll have all of the information that you need and you can lead the negotiations.

  2. Find Out What You Want: Negotiations can’t start until you decide exactly what you want. If you already know, then great move on to the next step. If you don’t know, then this is the time to do some off-line research and then go do some test driving. No matter what the “helpful” salesperson says, keep in mind that you are not a car buyer right now — you are a car researcher and so your one and only job is to decide what make and model you want. Don’t sweat options and maintenance packages right now — just pick a car!
  3. Research How Much This Car Should Cost: Ah, isn’t living in the 21st Century grand? Thanks to the power of the Internet you can go online and quickly find out how much your dealer paid for. A great place to start is Edmunds.com. If you need to understand the difference between Manufacturer’s Suggested Retail Price, Dealer Invoice price, etc., then checkout an excellent overview at WikiAnswers. Once you know what a reasonable price is, then you are ready to negotiate.
  4. Own The Stage: When you go to a car dealer to start negotiating, it is as though you are walking onto a stage. This is one of the reasons that so many people fear buying a car — they’ve got stage fright. Ideally you want the salesperson to be eager to talk to you so you should do you best to set things up in your favor. We all know that car dealers want to move as much inventory as possible before the end of the month/year. If you can wait until that time is drawing close, then you’ll improve your position. No matter what, make sure that you have all the time in the world to talk to the car dealer because that will put you in control of the discussion. The salesperson won’t have the same amount of time and so you’ll be in control.
  5. The Last Word Said Is The Most Important: Realize that even after you’ve reached a fair price for your car, the salesperson is still participating in the negotiating game — it’s not over yet. You need to stay awake and engaged because this is where the money can slip out of your wallet / purse. Taxes, documentation, dealer prep are all negotiable items and the salesperson is going to want to present them to you as fixed items. Don’t give up now!

No matter what information I can pass on to you, buying a car will always be an experience that causes emotions to run high simply due to the amount of money that is involved. If you follow these simple steps, you can at least be more calm and focus on achieving the outcome that will make you a happy driver for years to come.

Posted in Edmunds, MSRP, car buying, negotiating, profit, schedules | No Comments »

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