Ability to negotiate is one of the most important skills that you can possess, this skill can make all the difference as to whether you leave the room with your hands full or empty. A time will come when you will have to negotiate, it could be in a meeting room or over a phone so whenever it is you want to be prepared – this is a perfect opportunity to impress your superiors. This is an excellent skill to have and no matter what role you are in you will always have to use negotiation to get what you need!
Before you sit down at the table you need to ask yourself – How much am I willing to spend, meaning the most you can afford to spend or the lowest price you can accept to make the deal – this practice is also referred to as best alternative to a negotiated agreement, or BATNA and it was introduced by Roger Fisher and William Ury in the book Getting the Yes.
It is also wise to know the person you will be negotiating with. Sun Tzu, Chinese general, philosopher and strategist once said – “If you know the enemy and know yourself you need not fear the results of a hundred battles.” Once you know what your BATNA and what your counterpart wants to achieve, his strengths and weaknesses, it will be easier for you to lead the direction of the negotiation.
Always make the first bid!
This greatly depends on what you are negotiating. If you are there to sell something – you should make the first offer as whenever you sell anything you want to make as much profit as possible, therefore your first bid will naturally be higher. If you are a buyer, the same principle applies but reversed, this time you will offer a lower price so you can pay less. First bid is very important as it usually becomes a foundation of the negotiation and all the other bids will fluctuate around it, make sure you make the right bid!
If you haven’t made the first bid
If you failed to make the first bid, don’t worry, it should be expected for your counterpart to come prepared. Now what you should do is stick to what you know and the knowledge you have therefore the first point – Come prepared – is vital. Refer to the numbers you know, do not accept the foundation number, also referred to as an anchor, use the numbers you know, otherwise you will lose the negotiation.
When you negotiate make sure never to make a mistake of estimating, this applies both to the sellers and buyers. For example, if you are a seller and you mention that the service costs so much on average, then this will be foundation for the buyers next bid which will most likely will be lower. You are already planting an idea in the buyer’s head about the value of the service which will minimise your return on the sale. There is also a risk of unexpected costs regarding the service that might surface after the transaction, this could be anything from human resources to logistics which will greatly affect your previous estimate and will put additional strain on your finances.
Negotiations can be challenging, sometimes both sides will be hell-bent on standing their ground but there are always different ways of overcoming this problem and that is to compromise. Sometimes you will have to compromise but make sure whenever you do you always get something in return! If you are a buyer you can pay more but you need to receive something in return and the same goes if you are selling, you can sell the service/product for less but make sure you receive an additional concession; “I can do this for you if you do that” – always work on this basis.
There is no right negotiation technique as it is not an automated process, it will involve different parties and different personalities every time therefore experience is the key. These tips above will not make you a master negotiator but they will certainly give you a head start.