We think of negotiation as a game for experienced professionals, but it's not hard to do in reality. From getting a salary increase to haggling a better deal on a car, even the shy amongst us can get what we want out of a negotiation. Here's how.
Whether you realise it or not, you negotiate all day long. It's not always about getting $2000 off a used car; it might be as simple as getting the lunch time you want or convincing your significant other to go to a party with you. That means you have practice, and even if you don't consider yourself an expert negotiator, you can still get what you want without being confrontational. Let's start with the basics of preparing yourself for a negotiation (when it's possible) before digging into some tips anyone can use.
Prepare Yourself for a Negotiation
Negotiation is as much about preparation as it is about making a deal. The more prepared you are, the better you will do. Here are the basics of how to prepare:
- Research as much as you can: Knowledge is power in a negotiation, and the more you know the better. For salaries, sites such as Glassdoor and the MyCareer Salary Centre can give you the average price people make in your position. Likewise, a quick search on Google can reveal the average cost of most things you would buy on eBay, realestate.com.au shows you the average price on homes in a given area, and redbook.com.au is an excellent resource for used car pricing. Regardless of what you're negotiating, the more you know, the more comfortable you will feel negotiating.
- Practise beforehand: If you get nervous about negotiating, then it's worth spending some time practising. Run through the reasons you think you deserve the price you want in front of a mirror or with another person who can give you feedback.
- Stay calm and don't argue: While it may seem like it, a negotiation is not a debate, so don't treat it like one. Arguing in a negotiation gets you nowhere, and if you let emotions get in the way, you're bound to lose the other party's attention. Keep it simple and stay calm. A negotiation isn't about "winning", it's about making a deal where everyone walks away with something of value.
A little preparation goes a long way, but the heart of your negotiation is the tactic you use. Here are some good examples. Picture: Julie Vazquez/Flickr.
Expand the Pie or "Find Something Negotiable"
Expanding the pie is a negotiation technique that is perfect for people who aren't interested in negotiations, because it results in a win-win situation. The term comes from the idea that negotiators are often negotiating about a single pie, where one person gets more than the other. However, if both parties work to make the pie bigger, everyone walks away happy.
The best example of this is a salary negotiation where your employer isn't able to give you more money. If you can't get more money, you need to "expand the pie" by offering up alternatives to a raise.
For example, let's say you walk into your manager's office because you feel you're underpaid. Your boss agrees with you, but he or she says that the company just doesn't have the money to give you a raise. Instead of walking out despondent, think of other perks you can ask for that don't require money. This might include working from home for a few days, extra annual leave, shorter hours or any other "free" perks you might want.
The main idea is simple: When something isn't negotiable, you need to find something else that is. So if you find yourself stuck in a negotiation that isn't going anywhere, ask the other person why. In the case of a salary negotiation, it might be the fact the company doesn't have the money. In other negotiations, the answer might reveal another way to solve the problem. Picture: Beth Punches/Flickr.
Use the 15-20% Rule
For many of us, the very thought of negotiating a deal is cause for anxiety. However, the 15-20% rule is one that all of us can use to our advantage.
Let's assume you're buying a used iMac off Gumtree. The seller has it listed for $1200. That seems like a lot to you, so you offer the seller $950 (about 20 per cent less than the asking price). From there, you might haggle up to $1000, but chances are the seller will take the $950. Why? Because many sellers list their items for around 15-20 per cent more than they would take for them.
The same rule of thumb can also be applied in reverse when you need to throw out the first number (if your limit for spending is $6000, offer $5100). This takes care of the nervous negotiators biggest fear: throwing out a number. Picture: Broad Bean Media/Flickr.
Keep Quiet and Listen for Clues
If you're not an expert negotiator, one of the best things you can do is let the other person talk and listen for clues on where they might bend. Inc suggests that silence is one of your best tools:
If you make an offer and the seller says, "That is way too low," don't respond right away. Sit tight. The seller will start talking in order to fill the silence. Maybe he'll list reasons why your offer is too low. Maybe he'll share why he needs to make a deal so quickly. Most of the time the seller will fill the silence with useful information -- information you would never have learned if you were speaking.
This is probably the easiest tactic to use when you're learning how to negotiate. The more you know about a situation, the better you understand it. This can work great for something like a used car -- if you're silent, the seller will start listing off everything that's great with the car. When the seller runs out of stuff to say, he or she might reveal what's wrong with it, such as, "That offer is too low. This car only has 80,000km on it. Sure, it needs a little work on the engine, and the rear window doesn't work, but it starts every time." That's all the information you need to make a counteroffer, "Well, how about you drop the price since I'll have to get the engine looked at and the rear window fixed, because my dog will freak out if I can't roll down the windows?"
If you're lucky, the person will talk enough to give you the information you need to swoop in and make an offer you're both comfortable with. Picture: Jennifer Moo/Flickr.
The Nibble, aka "One More Thing"
The nibble technique is a tried-and-true method of negotiation. Essentially, it's all about pushing for tiny improvements to a deal. In a recent episode of Planet Money, Columbia Business Professor, Adam Galinsky describes a negotiation with an airline looking to bump some people off an overbooked flight:
It started out at about $300 [voucher], and I didn't want to do that.... Eventually they're offering a voucher for $1000 for a flight I paid $180 for. So, I went up there I said, "If I get bumped off this flight will you put me in first class tomorrow?" [they say yes] Then he adds, "I need to stay somewhere tonight, will you put me in a hotel?" [they say yes] Then, "A boys got to eat, will you pay for my dinner tonight?" [they'll buy him dinner] and finally, someone's supposed to pick me up in a car tonight, can you have someone pick me up tomorrow?" [they get him a car service]
Galinsky was able to get a $1000 voucher for a future flight, a first-class ticket, a free hotel, a free meal and a free ride from the airport by simply asking for them using the "one more thing" technique. The lesson here? If you don't ask for something, you can't get it. When you're negotiating with a someone, especially a big company, see how much the other party is willing to give you for free. Picture: Quinn Dombrowski/Flickr.
Avoid Meeting Face to Face with a Letter or Phone Call
Without a doubt, the best way to negotiate is face to face. However, if you're simply not comfortable with that, a letter or phone call is effective in certain situations.
For example, if you want to negotiate a new price on your rent, a letter is more than enough to get you there. Likewise, a formal salary request letter is a great jumping off point to start the negotiations for a higher salary. Even a simple email to your new employer can get you an extra month of pay. Sure, you'll still likely need to meet face to face with your boss to discuss the raise, but at least you'll have the time to present your argument without feeling flustered.
Negotiation isn't just about the big ticket items either. Even >negotiating your monthly bills over the phone can save you a lot of money and works on the same basic premise. Negotiating something like your internet bill is also great practice for larger negotiations, such as a salary raise or a car purchase. Picture: Scott Raymond/Flickr.
In the end, negotiation is all about deciding what you want and figuring out a way to get there. It's not nearly as hard as it seems, and you'll often walk away with what you want because most people don't like negotiating. Of course, this is just the tip of the iceberg, we've highlighted plenty of advanced tips over the years. Once get through your first few deals, you'll be able to negotiate just about anything.