Negotiate

CA Dhiraj Ramchandani (CA, M. com) (10823 Points)

23 January 2010

Hi,

Here are some useful steps, tips and warnings on how to negotiate like a pro! Whether it's buying a house, getting the best business deal, disputing your cell phone bill, haggling in a shop, or paying off your credit card, the basic principles of negotiation are the same.

Read it here - https://karmicmantra .com/finance- family/how- to-negotiate- like-a-pro/

Very useful and very practical,

Must Read !

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Steps

Decide on your breakpoint (the lowest amount or cheapest price you will accept in the deal, the “worst-case scenario”).

If you are representing someone else in a negotiation, get your client’s agreement in writing to a target deal before hand. Otherwise, when you get them a great deal, they may decide they don’t like it after all. Your credibility is the one that takes the hit.

Know what you’re worth. How much does the other party need you? Is what you’re offering hard to come by, or a dime a dozen? How desperate are they? Who needs who more? And if you need them more than they need you, how can you give yourself an edge?

Plan how you will move in your proposals. Your moves should be in ever-decreasing steps, which will give the impression that you are being “bled” and there is increasingly less bargaining range to be had.

Open extreme. Open at your maximum sustainable position (the most you can logically argue for). Ask for what you want, and then some. When starting off a negotiation, don’t be scared to make an outrageous request. You never know–you might get it! And what’s the worst that could happen? They might think you’re vain, or delusional; but they’ll also know you have guts, and you value yourself, your time, and your money. Are you worried about insulting them, especially if making a very low offer to buy something? Remember that this is business, and if they don’t like your offer, then can always counter-offer. Just be bold. If your opening offer is too close to your breakpoint, then you will not have enough bargaining range to concede to the other party as a way of giving satisfaction.

Offer or request extras. What else can they give you that is of low value to them, and high value to you? Or what can you offer that is of low value to you, and high value to them? This is why retail stores offer employee discounts. Think along the lines of bartering, andbe creative . What do you have a lot of, or what can you offer with ease, that they would find valuable? Make a list of your skills and your stuff. Calculate how much they cost you, then find out how much they sell for.

Research their costs (retail versus wholesale). Let’s say you’re doing business with a winery, for instance, and they want to pay you 5000 to perform there. You want 7500. Why not suggest that they pay you 5000 and give you a 3500 bottle of wine? It’s worth 3500 bucks to you because that’s how much you’d have to pay to buy it, but it costs them much less to produce that bottle. (This is, of course, assuming you like their wine!) Or, you can ask them for a 5% or 10% discount on all their wine. Presuming you buy wine regularly anyway, you’ll save money, and they’ll still make money from your purchases (just not as much).

Offer to pay up front. An up front payment is always desirable to a seller, especially in situations where most people do not pay up front (such as car dealerships). As the buyer, you can also offer to buy in bulk, paying in advance for a certain number of products or services, in exchange for a discount. One tactic is to come into the negotiation with a pre-written check; ask to buy the product or service for that amount, and tell them that’s your final offer. They may accept it, since the lure of an immediate payment is hard to resist. Finally, paying in cash rather than with a check or credit card, can be a useful negotiation tool because it reduces risk & transaction cost to the seller.

Shop around, and bring proof. If you are buying a car and you know the other dealer will sell you the same car for $200 less, tell them so. Tell them the name of the dealer and salesman. If you’renegotiating a salary and you’ve researched how much people in equivalent positions get paid in your area, print out those statistics and have them handy.

Always hold back a closer or two: One or two facts or arguments you can use when you sense the other side is close to a deal but needs that final push. If you are a broker and your client is going to buy this week whether this seller is willing or not, that is a great deal closer.

Be ready to walk away. You know what your breakpoint is, and you know if that’s not what you’re getting. Be willing to walk out the door if that’s the case. You might find that the other party will call you back, but you should feel happy with your efforts if they don’t.

Tips

If they surprise you with a very appealing offer, don’t let on that you expected something less favorable.

Preparation is 90% of negotiation. Gather as much information about the deal as you possibly can, evaluate all the key variables, and understand which concessions you can trade.

Even when you are unsure, speak with authority, speaking louder than usual and giving the impression that you have done this many times before will close deals with people who are not experienced.

Avoid soft exposing language when making your proposal. E.g. “the price is -about- £100″ or “I’m looking for £100″. Be firm in your proposals – “the price is £100″ or “I’ll give you £100″

Warnings

Never talk about their figure or price, as this subconsciously validates it- always talk about your figure instead.

Acrimony is a deal killer. People will refuse deals just because they are pissed. This is why divorces drag on for years. Avoid hostility at all costs. Even if there has been hostility in the past, start each contact upbeat, positive, don’t hold a grudge.

Watch your body language – a skilled negotiator will pick up on non-verbal signals which may give away your true feelings.

Never negotiate after receiving an unscheduled phone call. They’re ready but you are not. State that you are not currently able to talk and ask to reschedule. This will give you time to plan ahead about responses to questions and to perform simple research.

If someone is totally unreasonable, don’t negotiate. Tell them to keep you in mind if they come down in price (or whatever). Negotiating when they are way out of line starts you out at way too weak a position.