4 negotiation tips you’ll want to remember
Updated: Dec 1, 2020
One of the first hard lessons we all have to learn is sharing. My mom probably guilted me into doing it or spanked me if I didn’t, but I handled it with my children by letting one child divide the favorite food or candy into two piles, and then letting the other child have first choice of which pile to claim.
If only life-altering, adult negotiations were handled so easily, right? During a long tenure as a radio talk show host, I interviewed many law professors, M&A experts, and other professional negotiators for advice on complex types of negotiations – and guess what? Negotiating isn’t rocket science. In fact, from all those interviews, I identified four simple principles to help you with life’s harder negotiations. I’ve since tested them in my laboratory (other businesses who needed help with negotiations) and these strategies work every time.
#1: Successful Negotiation = Conversation. You know what you want and you have determined a fair price or cost for that. Ready to fight for it? Instead of arriving in a combative spirit, take a chill pill before taking a seat at the bargaining table. The potential for conflict is high, yes, but if you can respectfully listen to others’ opinions and acknowledge their right to value a product or service differently than you do, you’ll be more centered in your expectations, remarks, and observations. Contribute to, and insist upon, a respectful atmosphere and you’ll make real progress much more quickly and easily. If you can’t personally handle it due to high emotionality or a personal sentiment toward the other party, you’ll have a better outcome if you send in an agent – an attorney or a professional negotiator – to represent your interests.
#2: First + Firm = Best Outcome. As seller, you throw out “a ballpark range” of $1,000-$3,000. Guess what? Your buyer begins negotiations under $1,000 because you’ve signaled you want at least $1,000. By definition, a negotiation is about forfeiting a “wanted” price for the “must have” price. Had you suggested a set amount instead ($3,000), you would have anchored the discussion, and the result would have favored you. The range between a “good” price and a “must have” price is your legitimate playing field. Begin with a slightly inflated good price and offer a clear explanation of why that is fair; then be prepared to negotiate all the way down to your “must have” price -- but no further. If a concession is required and remotely possible, make it, but retain something in return: “I can deliver ‘X’ for that price, but unfortunately would have to take ‘Y’ off the table, if that’s your best offer.”
#3: The one who cares the least = the most powerful negotiator. Personal power is a relatively fluid two-way circuit in any healthy relationship. But when it comes to negotiation, the one who can walk away from the situation with the least emotional and/or financial fallout has the greatest personal power. How much skin do you (versus your opponent) have in the game? If you are the more invested party, again consider hiring a third-party negotiator on your behalf to better level the negotiating field. If you can’t afford that, develop a realistic “Plan B” before you sit down at the table so you have a back door.
#4: “Winning” = Losing. Frame a negotiated settlement with the expectation of arriving at a fair transaction – not the best or the worst outcome, but an acceptable/fair transfer of property, power, wealth, or influence. Avoid being time-pressured into a decision that leaves you feeling like a “loser,” and also reconsider one that leaves you the obvious winner. An opponent who resents price or concession may search out a different way to “even things”; the cost of “winning” can be high.
In any negotiation, “win-win” is too often a fairy-tale expectation, but an outcome that both parties can live with, while maintaining professional respect for one another and preserving a long-term business or personal relationship, is a more pragmatic goal.