Negotiating is an important life skill, if you are not negotiating the bigger purchases in life you are going to spend at least 10% more over your lifetime. For most people, 10% of their wages is enough to afford a nice vacation every year.
Many people avoid negotiating because they don’t like to play the back-and-forth game, or they simply feel cheap by asking for a discount. Most of the anxiety inexperienced negotiators feel comes from not knowing the fundamentals of how to deal.
Basic Steps to Negotiating
Keeping to these basic steps will keep it from becoming an emotional or personal experience.
The Strategy: “He who speaks first LOSES”
Negotiating is all about coming to a middle ground between the seller’s “high” and your “low”. So the lower the starting price of the item you’re trying to buy is, the lower the median price will be when the negotiations are finished. If you speak first with an offer, it makes it the sellers goal to raise you up off of that price versus you working them down off of their price. This gives you the control in the negotiation.
The one advantage car buyers always have over dealers is that they already know the highest price they will be paying. It’s just a matter of working the salesman down from there. Car salesman are trained to get you to respond with a number, that number then becomes the focus of the negotiation. The salesman and sales manager will work hard to get you off of this number. The negotiation will then have an upward trend, since the price will be rising as the negotiation progresses. (what I call Upward Trending Negotiation)
To keep the opposition on their heals, start by asking for an additional discount off of their already stated price. Experienced negotiators, like car salesman for example, will patiently wait for you to speak first by wasting time with small talk or by asking you what “kind of number” you had in mind. Stay disciplined by insisting on a better price or discount before the negotiations start. By working the opposition down from their number the negotiation will have a favorable trend. (Downward Trending Negotiation)
This step is only the first step, but just this step alone will put you in a good position and more than likely gain you a solid discount even if your negotiations stopped there. By establishing the oppositions “high” and knowing your “low” you can confidently proceed knowing where each party stands. This allows you to gameplan and know the gap you’re trying to close. Firing off low-ball offers will only lead to a series of no’s which will deflate any momentum you have in your negotiation.
Keep posted and subscribe to my blog for upcoming additions to this series of posts. Next steps: Knowing Where to Set Your “Low” and Overcoming Objection.