2013-04-17 11:00:22MoneyEnglishhttps://quickbooks.intuit.com/r/us_qrc/uploads/2014/07/iStock_000012107875XSmall-300x199.jpghttps://quickbooks.intuit.com/r/money/5-tips-for-improving-your-negotiations/5 Tips for Improving Your Negotiations

5 Tips for Improving Your Negotiations

3 min read

Negotiation is at the heart of doing business, yet the business world is full of people who are pitifully bad negotiators.

Fortunately, you don’t have to be one of them. Here are five tips for getting good results when you’re at the bargaining table.

1. Set your minimum before you begin. Negotiation entails a clash of wills, with each party focused on achieving their own goals. The negotiator with the weaker focus on the more ambiguous goals begins with a major disadvantage. Let that be the other guy.

Before you start any negotiation, make a detailed list of the minimum terms you’ll be satisfied with. Fix this “inner bottom line” firmly in your mind and don’t go below it.

2. Hold tightly to your initial negotiating position. In a clash of wills, there’s value in appearing more stubborn than you really are. So, when the other side rejects your initial offer, which it inevitably will, it’s better to hold firm than to yield immediately.

Think of negotiation as a dance in which it’s natural to repeat the same steps many times. To negotiate better, make the same offer more than once. The other party may be less stubborn than you are and concede to more than you expect.

After several repetitions of the same dance steps, you’ll normally conclude that — at least on this point — the other party is not going to give you something for nothing. Throw them a bone. Or, better yet, make your same offer again, but express it in different terms.

For example, suppose you’re negotiating on price. Your customer is holding firm on their demand for a 10 percent discount. After several rounds of discussion and no concessions, re-offer your original price with slightly new terms, for example: “Instead of $500 to cover shipment of 100 units, how about $250 to cover shipment of 50 units.”

If the other side agrees, you’ve won approval of your price, albeit at lower volume. But if you’re confident they’ll love your product, they’ll be back for more — at your price. If they still object, you’ve lost nothing, and you can move on to the next negotiating technique.

3. Listen carefully for the other side’s objections. In any negotiation, there are disparities between what the two sides want. In most cases, the other side will have at least one reasonable objection to the terms you’re demanding. Listen carefully to their argument, because that real objection may be masked entirely, or hidden between the lines of what they say.

Work hard to uncover their real objections. Ask questions. If necessary, pose hypotheticals (such as “Suppose we offered to… ?” or “What if you could have… ?”). Another good approach is to encourage them to put aside certain difficult considerations temporarily and focus more narrowly on the point of contention.

If they’re not open with you about their real objections, it’s often helpful to detail the differences between your position and theirs, and then stop talking. This creates psychological pressure for them to fill the silence, and one easy way for them to fill it is to voice their bedrock objection to your offer.

4. Concede something to meet that objection. With a valid objection on the table, it’s reasonable to move negotiations forward by making a concession. Here’s where you can get better negotiation results by changing your demands in ways the other side will appreciate.

With the right bargaining chips in your initial offer, you may be able to concede something that helps the other side more than it hurts you.

In our price negotiation example, this might be the time to agree to a lower price that still nets you a good profit, and to ask in return that the buyer agree to purchase from you over a longer term or at a higher volume.

5. Walk out. Should negotiations stall, there’s something undeniably dramatic and authoritative about bidding the other party “good day” and walking out the door. It conveys an unequivocal message and — if the other side has any negotiating room left above their “inner bottom line” — creates a powerful urge for them to soften a little more.

In many cases, the other side will call you back before you reach the door. But if they let you leave, there’s nothing to stop you from turning right around and walking back in if you wish to continue negotiating.

This technique is so effective that some negotiators never conclude a deal until they’ve used it.

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Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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