Whether you have a purchasing role at your job or not, everyone deal in the life. You negotiate when you buy a car or a house, you negotiate when you are offered a job, you negotiate with your employer for a raise, you negotiate with your spouse, and the list goes on and on.
Here are some tips I’ve learned along the way about negotiations:
You don’t get what you deserve in life; you get what you bargain for. Many people do not like to negotiate. They think it’s below them. Those people are taken advantage of in life.
Always do more “homework” than the person you will be negotiating with. It always surprises me when I enter into a negotiation and the other party hasn’t done their homework with me or my company or the transaction in question. If it’s worth negotiating, it’s worth preparing for. Try to find out as much as you can about the other party, their company, and what their goals are in the negotiation. This will allow you to work out a trading strategy to maximize the outcome for you.
Never let your opponent in a negotiation know any of your internal deadlines. If you do this, a skilled negotiator will drag out the negotiation until the deadline approaches and then agree to anything because they have to. On the other hand, if you can figure out the other person’s deadline, you can use this strategy to your advantage.
The one who seems to care less wins the negotiation. If the other party feels that they absolutely have to have the item they are trading, they have lost all leverage. For example, when I buy a house, I always find many things to criticize. This puts the other party on the defensive and gives you the advantage. This can be applied to many negotiations.
In a negotiation, never give something unless you get something in return. I learned this early in my career. Professional negotiators never give up on a point unless they get something in return. When I trade with someone who keeps giving me the things I ask for without asking for anything in return, I know I’m dealing with an amateur and I use that to my advantage.
When dealing with a commission salesperson, remember that they believe that “something always beats nothing.” Before most commissioned sellers walk out of a transaction and get nothing, they will give a lot of points, because if they walk out of the transaction, they will get nothing. If you are trading with someone who is paid on commission, keep this in mind.
Try to get the other party to go first. In other words, don’t be the first to name a price. In a negotiation, always try to get the other party to name the price and terms first. Usually, the one who sets the price first loses.
Always “thudder” when someone quotes you a price for the first time. Then remain silent. When the other party relents and names the price first, always back off by saying things like, “Are you crazy? I can get it for half that price elsewhere,” or “You’re awfully proud of that, aren’t you?” When you’re negotiating with an amateur, the flinch almost always causes them to immediately start negotiating against themselves and give you a lower price or better terms.
“You can name the price, if I can name the terms.” When negotiating with someone who is obsessed with getting a certain price for whatever it is they are selling, then negotiate the terms. Over the years, I have agreed to a lower price than I wanted to sell something, as long as I was paid in advance, the other party doesn’t get return rights, etc. The terms of the negotiations are just as valuable, if not more than the price.
Once the other party believes you have reached an agreement, keep “nibbling” for more. As soon as the other party thinks you have a deal, especially if, by doing your homework, they discovered that you are desperate to sell, start nibbling. Once the seller has emotionally made the transaction in his head, he doesn’t like to walk away from the deal. That’s when he can ask for many other things that will make the transaction better for you.
In a negotiation, never admit to having final authority. Always defend someone else. A board, an executive committee, a CFO, etc. Fans like to brag by telling you that they have full authority to negotiate. Even owning my own company, I say things like, “I need my banker to run this” or “I need my board of directors to run this.” Then I walk out of the room and call someone whose opinion I value and get their thoughts on the transaction, or sometimes just take the time to collect my thoughts. Amateurs admit to having full authority, professionals don’t.
jim sobeck is CEO of New South Construction Supply, a Greenville-based distributor of building products with 10 locations in the Carolinas, Georgia and Florida. He is the author of “The Real Business 101: Lessons From the trenches. newsouthsupply.com.