5 Steps to Master the Art of the Everyday Deal

May 30, 2016

When you ask most people what was the last deal they negotiated, they’ll probably tell you it was buying a car.  And certainly there will be a horror story to go along with it.  No doubt, it involved some extended back-and-forth with the salesman and sales manager ending in an outcome.

But when you think about it most of us negotiate every day.  Each of us negotiates in business and in life.  You negotiate when asking for a raise, when purchasing a home or car, when hiring a new employee or when dealing with a supplier. So it couldn’t hurt to get few more ideas on how to master the art of the everyday deal.

1. Define Your Goals – Not every deal is about money, although money may be a component.  If your sole purpose of negotiation is to get the lowest price, then you should have a price in mind before negotiations begins (See #2).  Are you willing to walk away from the deal? Try to understand the other party’s goals, and leave emotion out of it. It might serve you well if you see a negotiation as a friendly competition… like a game of chess.
2. Knowledge – Before negotiating, you should know the territory. When buying a car, it smart to know its value before you step into the showroom. When talking your boss into a raise, you need to know your market value.  If you don’t get it what are your options?  One of the basic principles of negotiation is the logic principle.  It says that people are persuaded by sound logic.  Build your arguments on a foundation of a thorough understanding of the market, the competition and industry standards.  Knowledge of the market and sound negotiation tactics are often your primary power in a negotiation. If you can’t bring in an expert for negotiation, then you need to be the expert.
3. Strategy – It’s important to control as much of the negotiation as you can, including the environment. When negotiating with a car dealer, always give yourself the option for a quick escape.  Dealers have been known to get you in a small room with no easy way out, or they’ll hang on to your car keys under the premise of appraising your trade-in.  It’s a tactic where they control the environment.  Give yourself a home-field advantage if you can.  It’s up to you whether you strike fast with your first, best offer, or wear them down with protracted negotiations.
4. Identify Your Negotiating Style – What kind of negotiator are you?  Competitive, Collaborative, and Compliant?  Some see themselves as a warrior, while others as a consensus builder. A good option may be to create a situation where the outcome is a win-win. Some negotiators are satisfied only if the other party walks way with as little as possible. Competitive negotiators usually have no interest in building a relationship – although, they may tell you otherwise.)  They can be abusive and often withhold information. They will use every hard bargaining tactic they know.  When confronted with a competitive negotiator don’t try to match their aggression, use your information. Defend your position with logic and data. Collaborative negotiators are willing to explore alternatives. They work to build trust and they’ll share information.
5. Be Principled – Consider some basic principles of negotiation. Bundling small items to create a larger, more valuable package. Build a connection with the person you’re negotiating with. Be fair with your offers.  A low-ball offer often just galvanizes the parties to their own position creating a difficult situation.  Use all of your communication skills, including body language, tone of voice, and even silence.

Whether negotiating something big like the end of major league baseball strike or simply trying to get your kids to take out the trash, mastering negotiation skills is pretty valuable.  Nelson Mandela was famous for patience, tenacity, pragmatism, and strategic thinking.  On the other hand, Vladimir Putin has a reputation for not wanting to show weakness and always trying to negotiate from the point of strength.  Whatever your style, these negotiation skills, along with a little practice and confidence, will help you close deals in your favor.

Steve White is a writer and entrepreneur living in Denver.