Many prices in business are not fixed, either for buying or selling. There are also countless arrangements, terms and conditions that are negotiable, which might benefit your business if you can negotiate effectively. Fortunately, this is a skill you can learn easily and improve with practice.
Note, however, that persuasion (selling) and negotiation are different but interrelated things. Though they may merge, people do not waste time negotiating about something that they have no interest in. So selling comes first.
Traits of the best negotiators
In negotiations, two things are important:
Most people imagine that the best negotiators are the hardest ones. Quite the reverse is true, since this type of negotiation results in submission by the weaker party or breakdown, rather than in a mutually satisfactory conclusion. The victory may be short-lived for two reasons. The loser may seek revenge – or they may go bust because there is too little profit to survive. The best negotiators:
Simple tools
Some negotiating techniques are simple. For example, don’t avoid the obvious. Just ask for what you want. After all, your outrageous demand may be less than your opposite number was anticipating. Many people are too shy or afraid to aim high, yet it costs nothing to try.
Silence is another powerful tool to make a point or force a response, because many people find silence embarrassing. For example, too often someone will ask: 'How much is this worth to you?’ and then wait barely a moment before continuing: ‘Well, I’m sure it must be an important factor, now let’s...’ This produces no real impact and, more important, no information. Instead, learn to really use silence. Ask your questions and then wait… and wait. Eventually you will get an answer.
These kinds of technique can enhance the process, turning a routine discussion into one that moves purposefully towards achieving your objectives.
Preparation is the key to success
Good negotiation is not something you can make up as you go along. It needs preparation. This may mean only a few minutes’ thought, or it could involve detailed discussions with colleagues. But always do it.
You must set yourself clear objectives. There is all the difference in the world between vaguely saying, ‘Let’s see if the buyer will pay me more’, and setting out to obtain a 10 per cent increase in the price. So always set four levels for yourself:
Be careful of suggesting a complete package that may remove the opportunity to negotiate details in your favour.
Then plan the stages of the discussion. You cannot anticipate everything, but you need a mental plan to help shape the meeting – there is nothing worse than being caught on the hop and having to risk a rash move or reveal your hand. Preparation is the foundation of success and insurance against being outclassed.
It is easy to think you are in the weaker position when dealing with a bigger business. However, remember that the other party is always under pressure too – they have their own anxieties weighing them down, such as their boss, their bonus, promotion, or year-end targets.
The power of variables
Negotiation revolves around variables: that is, those factors that can be varied and arranged in different ways to create different potential deals. In many negotiations, the price itself is clearly a variable, but discussion may also include payment terms and timing. For instance, would you be prepared to offer a discount for cash on delivery? How would payment terms of 90 days affect you?
Your appreciation of the variables increases your negotiating power. You can use them to reward (something you are prepared to give) or threaten (by flagging your intention to withhold something).
Professional negotiators always:
Handling variables
It is important never to give anything away. Always trade a concession: ‘If you do that… we will do this.’ Start with a small concession and get smaller.
Remember that some things that are important to you may be inconsequential to the other party and vice versa. You may give away something at no real cost to you in order to gain a big benefit. For example, it may be much more convenient for you if they will deliver, but any day in the week will do. Yet for them, rather than making a special journey, choosing the day means that they can fit you in with other deliveries at little extra cost.
Essential negotiating techniques
With clear objectives and an overall plan in mind, you can begin discussions. An agenda is necessary for any complex meeting. If you suggest one, describe it as something helpful e.g. ‘We might all find it useful to proceed along these lines…’ This can create a good impression at the start, perhaps allowing the meeting to proceed the way you want.
None of the following negotiating techniques is a magic formula, but together they can give you an edge.
Aim to run the kind of meeting you want, yet create an atmosphere that the other party will see as businesslike and reasonable.
Interpersonal behaviour
There are also many behavioural factors involved in negotiation. Here are some common issues.
Some points need to be powerfully, unequivocally made, but it is important not to put people’s backs up. You might politely say, for example: ‘Look, I’m sorry to insist but this really is something I must handle carefully.’ However there will be times when you must be more direct: ‘It is impossible for me to go that far.’ Full stop. Do not explain or say another word. At this point, you use silence to understand the finality of your point and to make your opposite number consider conceding something.
Top tips for successful negotiating
Good negotiating can powerfully assist your business but it requires planning, and practice makes perfect!
