What is Negotiation? Successful price negotiation depends a sophisticated skill set that saves money.
Arguing about price causes a distinct feeling of discomfort for many people. It seems to be a cultural thing. Americans and Australians don’t seem bothered by it so this reticence to negotiate can’t be attributed to English speaking peoples.
Haggling over payment appears to be thoroughly enjoyed in many other countries. The English seem to have made discussing price with a vendor almost a taboo subject. It would seem silly to ask for a special reduction at the supermarket checkout but if you visit a street market, even the fruit and vegetable vendors will barter.
The fact that most shop assistants do have latitude to change prices must be unknown or ignored by the majority. It may be only five or ten percent but wouldn't the money be put to better use in your pocket?
Just ask yourself how much you spend a year in shops where the person who serves you could have a degree of discretion over price?
For an average family it may well be more than £10,000. Suppose you got an envelope through your door with £1000 in it. Imagine 100 crisp £10 notes in your hand that are not already consigned to pay a bill. Would you get a little excited?
You may be thinking it’s not worth the hassle of collecting it in small chunks. It’s embarrassing to be seen bargaining with shopkeepers and uncomfortable to have others think you can’t afford something. Well it is your money and I will not be the one to tell you what to do with it but what if there is a simple and polite way to ask?
There are two simple phrases that I have used to great effect in price negotiations:
"Are you open to negotiation?"
"Is that the best you can do?"
To make these questions work you will need the magic ingredients. As you speak the question you must be certain in your mind that you are making a reasonable request to discuss price or to request a price reduction.
At the same time you must have a definite expectation of a positive response. You wouldn't believe me if I said it always works, but it does work more often than you expect. Next time you want to buy something significant, perhaps over £50 or £100, try it. Ask, "Are you open to negotiation?" If you get a ‘yes’ you make an offer.
Don’t be afraid to be extreme. The further away your offer is from the asking price, the more you effect another person’s perception of what is reasonable.
Even experienced negotiators struggle to be unaffected by this ploy. What have you got to lose?
You may feel that you are insulting the other person or manipulating them. Well they decided on the price and offered the item for sale. They have the power to say no and it is still your money.
You will need to be talking to the person who has the latitude to change the price for true negotiation to take place. Shop assistants usually do have a degree of price flexibility so the simpler form, "Is that the best you can do?" is normally sufficient to obtain whatever reduction is within their remit.
Being combative about price negotiation may make you feel underhand and deceitful. Beware because many people believe this is the only way to negotiate and that to win you must take a chunk out of another’s hide.
The truth is you can adopt the opposite premise or anything in between. Those negotiating in a combative manner are likely to have adopted a win/lose attitude ‘I am going to win and they are going to lose’ or ‘I am going to win and I don’t care if they lose or not’.
Could you take this attitude in discussing where to take the family holiday? How about if you had to arrange the use of shared parking space with your neighbour?
In these situations you need to take account of your longer-term interests. You have to live with the result.
If you force a painter and decorator to take on the job of painting your house for less than he is satisfied with; he may not do his best work or use the best paint. In any circumstance where an on going relationship with a supplier is important to you, adopting a collaborative negotiation stance serves the exchange better.
Taking some responsibility for the bargain being profitable for both you and the other party takes a high degree of resolution and steadfastness. The classic Win/Win position is not about pandering to the wishes of the other party or about both of you giving up something. Being equally dissatisfied with a transaction may be fair but it will not serve either of you.
If you expect anything less than a satisfactory outcome you will have adopted a Lose/Win position.
Going after an outcome that satisfies both parties in a negotiation is the most challenging thing to do. Failure is a very real possibility. Failure must be an option. If you enter into any dialogue about price without allowing yourself the freedom to walk away, you are likely to lose out big time. It is better to accept that the deal won't be done than to agree terms that are unpalatable to both parties.
Consider a business to business situation where both sides have given up more than they had intended. The seller may not feel obliged to provide the best possible service or to deliver on time. The buyer will be less willing to recommend the seller to others and may feel less obliged to pay promptly. Any future transactions will be tainted by the memory of past dissatisfaction.
Business success depends heavily on regular customers so the seller cannot afford to go for anything other than Win/Win. Getting value from a purchase or even making it work as intended often depends on the good will of the supplier. Prompt and unquestioning replacement or service in the event of any problems allows the buyer to get on with their business. The buyer cannot afford to go for anything other than Win/Win either.
The truth of a negotiator's circumstances may have no influence on his or her determination to win. Adopting a Win/Win approach is the most challenging and difficult objective to adopt, particularly when the other party doesn’t. What is negotiation? "Doing unto others, as you would have them do unto you", as it is written in that very old book.
Article by Clive Miller
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