Negotiation strategies that make money

If you avoid negotiating because you find it too uncomfortable, well then you not only miss out on many opportunities, you also lose a lot of money. If you don’t ask you don’t get.   If you don’t negotiate you will always pay the full price. If you don’t negotiate your salary you will never be able to get the pay rise that you deserve.   People don’t just hand something to you, you need to ask for it and then negotiate. If you have a fear of negotiating, chances are you try to avoid it. If you avoid negotiating, you will never lose your fear of it. What you need to do is expose yourself to negotiations; embrace it by practising to negotiate as often as possible. Fortunately, there are many opportunities where you can practice and improve your negotiation skills daily. Whether it is negotiating with your kids over bed time, your spouse over where to go for dinner, the bank over fees or at work over workload, there are opportunities everywhere to negotiate. Treat as

Negotiation is uncomfortable, it put us under pressure, and it is something most of us want to get over and done with as soon as possible. A negotiator who is not trained well is not able to think clearly under pressure and might make mistakes such as talking too much and sharing information that should have not been shared. Here are the 5 most common negotiation mistakes that people make; it is important to be aware of these and think of strategies overcome these mistakes and become a better negotiator. 1                 Being unprepared We are all time poor and rush to get things done. It is therefore even more important to set priorities and make time to prepare. When preparing you uncover important information and gain control and power. It is vital to understand what is important to the other party, how they will approach the negotiation and how they might react to your demands and proposals. It is important to also understand how much they need you. Do they have many

Social media has changed the way we interact; we are able to voice our opinion and with-it conflict has increased. With so many social media outlets we can discuss, voice our opinions and shout at each other. We tend to become more courageous and outrageous on social media whilst hiding behind our computers or mobile phones. With this barrier we feel empowered and entitled to speak out on social media, often without understanding the full impact of our actions. When we are enraged, we might type messages in the heat of the moment and post them on social media which we might later regret. Once it is out there it is hard to get back. Social media is certainly not the place to resolve conflict, it is unfortunately a place where conflict is created. Social media is a great platform to voice opinion and communicate instantly across the world it is however important to realise the traps that we can all fall into. Before you post something make sure it is respectful and

While Christmas is all about spending time with family it can also be hard work. Christmas time is where everyone has to be in a good mood and feels obliged to take part in the family festivities whether one likes it or not. In reality Christmas can be very stressful and draining. Christmas can be a minefield of disputes, from who is hosting it this year, to whether or not to do presents and to the overbearing grand parents who are competing over who has the best and most expensive presents for the grandchildren just to mention some. Here is some practical advice that might help navigate those minefields and get through Christmas without major injuries. Set your expectations early If you are dreading to go to the family Christmas lunch but you feel obliged to, then have another commitment on the day which means that you can only be there for 2 hours or so. Make sure you condition the family early on so it does not come as a surprise on the day. Be tolerant and pick your bat

Have you ever been in a difficult negotiation where you did something or reacted to something in the heat of the moment and regretted it not long after? Perhaps you overreacted and said something or did something that was absolutely irrational? Later on you and those around you wondered what had just happened. The consequences might have been terrible, a missed opportunity perhaps? You were hijacked by your emotions and reacted in an irrational outburst. Such outbursts can have substantial damage to your reputation, career and negotiation outcome. It is therefore important to understand what is occurring to our brains in these situations and how to be in charge of these amygdala hijacks. The term ‘amygdala hijack’ was created by Daniel Goleman who has written many books on emotional intelligence. The emotional part of our brain is the amygdala where our fight or flight response resides. When we are under threat our body is flooded with stress hormones and the amygdala reacts i

In 2015, Arnott’s biscuits, Australia’s largest biscuit manufacturer, owned by Campbell Soup Co., announced a 10% price increase of most of their products. Coles Supermarkets did not accept the price increase and labelled it as unjustified. Both parties were not willing to negotiate and consequently Arnott’s stopped supplying Coles with their products.  This standoff lasted for two weeks and Coles eventually accepted some price increases on some of the products but not on all of them. Coles and Arnott’s went from an initial ‘non-negotiable’ to a ‘negotiable’ position and the two parties continue to do business together. The two parties do need each other, Arnott’s is an iconic brand and their products can’t be missing in supermarket shelves; and Coles is one of Arnott’s major customers. Initially both parties displayed their egos which resulted in a standoff. When both parties use their ego in a negotiation it becomes counterproductive and sabotages the negotiation.

BATNA stands for Best Alternative to a Negotiated Agreement. A BATNA is your power and the more BATNAs you have the more power you have in the negotiation. When you are buying a car, you have hundreds of BATNAs. There are lots of car dealers out there all wanting to sell you a car. Since there are so many alternatives your bargaining power is high. You can play the car dealers off against each other and you can use time and geography to your advantage. Time: find out when is the best time to buy; is it end of month when the car dealer needs to meet their budget? Or maybe end of financial year or end of year is better. Geography: If you are living in a big city why not go out of the city and buy your car from a dealer in a small town; you might get a better deal there than what you would in the city. What about when you are buying a house; if you buy the house to live in chances are you start to get emotionally attached to it and really want this house.  Real Estate

Never underestimate the negotiation capabilities of children. Being a young parent, I have realised how good kids are at negotiating. My 4-year-old daughter is already a very skilful negotiator using a variety of tactics to her advantage providing her with a successful outcome most of the time. She knows when to approach me to ask for something. Usually it is when I am busy or when I am just about to go on a work trip or have just returned from a work trip, playing with my conscious and guilt that I had been away again for some time. It is also how she makes the request. She puts a lot of effort into this by using her cutest smile, playing with my emotions and making it almost impossible to say no. Charm and an emotional connection go a long way. Children know how hard it is for their parents to say no when they put on their cutest smiles. People are emotional and playing on these emotions gets you a better negotiation outcome. She knows who to ask and when to ask. She kno

When I speak with clients about upcoming negotiations at some point we talk about power and assess which party has more power and why. In most cases my clients believe that the other party has the power over them. They see their opponent as someone who is much bigger, has much more influence, is a tough negotiator and often gets the better deal. They feel powerless and are unsure on what to do to negotiate successfully. They look at the negotiation like a David versus Goliath. Only that David the courageous shepherd boy has been able to battle a giant that many have been so fearful of and demonstrated that size does not always matter. David won the battle as he was not scared, he was confident and prepared. He was in control of himself and did not let anyone influence him by their fears. He had a strategy and he stuck with it, he decided against heavy armour as he knew it would slow him down. By studying Goliath, David understood his strengths and weaknesses and could ther

When a buyer and a seller negotiate over a deal it is in the interest of each party to get the best deal possible. Here are the four most common tactics buyers use in a negotiation in order to get to the best deal possible. The Russian Front This is a tactic whereby the buyer presents the seller with only two options.   One is so terrible; it feels like being sent to the Russian Front which makes you agree to the other options. Compared to the first option the second option does not look that bad now. Don’t make the other party put you under pressure, don’t accept either option. Ask for an alternative or come up with a counter proposal. Good guy bad guy In this tactic you have one person making very high demands. This person is also often cold an unapproachable. The aim is to intimidate the selling party. The good guy on the other hand has a more reasonable approach and shows a willingness to concede and come to a deal. The purpose of this tactic is to set the expe

Funny Money is ‘Money whose value has been artificially increased, or money that is not worth as much as it appears to be:   The banks have used funny money generated by creative accountancy to deal with vast amounts of public debt’ (Cambridge Dictionary) In negotiation people use ‘funny money’ as a strategy to make money look insignificant. The aim is to put the other party under pressure and make them agree to a deal that is unfavourable to them. This tactic is used especially when dealing with big numbers. Let’s say two parties are negotiating over a $12.25 million contract. The buying party is asking for a 2.25% discount. They make it look like it is only a small ask, so not much to the overall price. What they don’t mention is the dollar amount for good reason. When the situation is already tense and the selling party is already under pressure to get the deal the selling party might agree to the deal without even having checked the actual number because it did not so

I recently had to get an arborist to do some tree pruning at our house. An arborist is not someone that I would call on very often hence I wondered how do I know that I got the best offer? Yes, you can get a comparison quote, which I did get, but then again was this the best offer I could get? Here are 5 steps that assist in determining if you got the best offer: 1)      Build rapport and sympathy People like to deal with people they like, so why burn your bridges and play hard ball.   People like to be of help so assume good intentions build rapport and trust. 2)      Reject the offer politely Tell the other party that their price is too high. While you would like to consider them for the job you would like them to review their offer. 3)      Think about their motivations Put yourself in their shoes. What motivates them to get this work? Is it money, is it the prospect of more work or are do they need the job because business is slow at the moment? Peop

The menu of a restaurant is not just a list of food and drinks, it serves as a clever marketing tool that guides its guests into ordering what the restaurant wants to sell and subsequently makes more money. The expensive entrée on the top of the list A high-priced entrée on the top of the list serves as an anchor point. The Restaurant does not intend to sell this entrée as it merely serves to create the impression that the subsequent entrees are not as expensive. This strategy tempts customers to order the second most expensive dish that could also be more profitable to the restaurant. A descriptive menu increases sales Research by Wansinkj et al (2001) found that the more vividly the dishes and drinks are described the more sales increase, up to 27%. Attributes like textures, flavours, the origin or quality all contribute to an increase in sales. Offering meals in two sizes Sometimes meals are offered in two sizes however the customer has no idea what the differ

When talking numbers in a negotiation it is a good strategy to use odd numbers for many reasons. Firstly, an odd number signals the other party that you have thought long about your proposal and made many precise calculations. Secondly because it looks like that it took some effort to come up with this odd but precise number people tend to believe more this number is true. A round number on the other hand gives the impression that you are just giving a ballpark figure and that there might be still a lot of room to move. Thirdly, an odd number is less likely to be negotiated down due to it being perceived as being a true value with hardly any bargaining range. Two marketing professors from the University of Florida, Chris Janiszewski and Dan Uy looked at five years of data of real estate sales in Alacha County, Florida. They compared the list prices and the actual sales prices of the properties sold during that time.  They found that those who listed their homes a

It is 24 days till Christmas and if you are like me, then you probably haven’t started your Christmas shopping yet. 24 days is plenty of time, I hope! However, before you hit the shops, I want to give you some practical advice on how to negotiate when doing your Christmas shopping so your money will go further this year! While most people pay what the price tag says, savings can be made if you just ask. The reality is that most stores are willing and open to negotiate. As Herb Cohen, the author of ‘You can negotiate everything’, said ‘Our culture has programmed us to believe that the sticker price is what we are supposed to pay, but the reality is that almost no price is etched in stone’. 1)    Do your research Once you know the product that you want to buy, be it a camera, a phone, a fridge; be prepared. Research what the market price is and what the competitors are selling the same product for; then make your offer. 2)    Have a maximum acceptance point Set yourself a

All last week was hyped up by ‘Black Friday’ Sales. But what is it and why do we have it in Australia and is it worth it? Black Friday originates from the US and is the Friday after Thanksgiving which is the fourth Friday in November. Thanksgiving is a public holiday in the US. In the 1950s people used the Friday as a sick day and went shopping to get a head start in their Christmas shopping. Eventually in the 1960s this day turned into another paid leave day or shall we say into a paid ‘shopping day’. It has become a made-up event to drive consumerism. Many believe the term ‘Black Friday’ is used for profit making; black numbers in the ledger books; but that is not entirely correct. While this is the meaning today it meant something totally different in the 50s and 60s.  According to Bonnie Taylor Blake, a researcher at the University of North California, the term originated in Philadelphia by the Philadelphia police as they saw the day as a terrible day. The city was fil

In my recent post I spoke about why in a negotiation you should put your price on the table first. It is all about setting an expectation or an anchor. Once the anchor is set, the negotiation will revolve around the anchor point. Most of the time we already store an anchor of certain products in our head. You expect to pay $4.00 for a Sushi roll for lunch, or $3.50 for a regular size coffee from the coffee shop next to your office. But what happens with products that we don’t buy very often, and we are less familiar with? A few weeks ago, our washing machine blew up. During the spin cycle smoke came out of the back of the washing machine which was the end of it. The last time I bought a washing machine was probably 7 or 8 years ago, so I had no idea how much a front loader from a particular brand would cost now. What most of us do, and I did it too, is consult the internet and look at the next best website that sells washing machines. The first price we see for that prod

What should be your negotiation strategy when putting an offer on the table? This is a popular question that I get asked quite often. Opinions differ; I strongly believe that no matter whether you are buying or selling, you should put the offer on the table first. By putting the offer on the table first you are setting an expectation or an anchor point. It is important that your offer is ambitious. If you are the buyer your offer needs to be below you maximum acceptance point; if you are the seller then your offer needs to be below your minimum acceptance point. You open ambitiously so you have room to move in the negotiation, this shows the other party that there is willingness to come to a deal. At the same time it evokes reciprocity, a basic law of social psychology; when we get something we feel obliged to give something in return. Let's say you are looking to buy a house. The maximum you want to spend is $950,000; your maximum acceptance point is $950,000. You can

Do you really get the best interest rate from your bank? Have you thought about how you could negotiate your interest rate down? When interest rates go down the banks give you something to keep you happy, so you won’t ask for more.  But could you get more? Why not try. Review your interest rates and speak to your bank to get a better rate. Don’t let them shut you down with the excuse that they have already reduced the rates. The reality is that there is more room to move because if they can give away something without you asking then they can probably give you more. Do your research Research what the competitors are offering. Use comparison websites and then call the bank to make sure that you would get this rate. Find out what the rate for new customers is Banks often offer great promotions to lure in new clients which existing clients don’t get. This is something that I find annoying, why don’t they reward loyalty instead. Set yourself a target rate Set yoursel