Negotiation is one of those things that crosses many different realms of efficiency. It is definitely a skill that you can acquire through practice. When it is done well you will see massive gains in both capital and time. Negotiating only takes a few minutes, but can make large percentages of cost go away.
Being a skilled negotiator requires two primary skills:
- Good Communication
- High Level of Awareness
Good communication is critical because it opens doors that weren’t always obvious. Good negotiators look for ways to create a win-win situation. They do this by understanding their counterpart and learning where they are deriving the most value from the transaction. There are often negotiations where two parties have interests that are not in direct in conflict with one another.
You might be asking how can that be? When negotiating you either pay more money or less right? Not quite. The biggest mistake in negotiating I see is that people assume they are fighting over a fixed piece amount. Instead you should always look for ways that you can make the total amount you are fighting over larger. This comes in many forms. Great communicators are able to find those points where everyone can win. Instead of focusing on the size of the piece of a hypothetical pie you are going to get try to focus on how you can add additional pie to the deal. It is always better to split two pies than one. This is how win-win negotiating should look.
Let me give you a fictitious example about how understanding value can create a win for everyone. Let’s say I have a pair of old couches that are sitting in my garage and my wife has said if they aren’t gone by the end of July she is going to hire someone to take them away. I really don’t want to pay anyone to come take the couches away because I think I could sell them for at least $400. Yea they are old, but they are very well built, real leather, and from a non-smoking home. Definitely not trash. The master negotiator comes over to look at the couches. He determines they are not worth $400 dollars to him, but he would be willing to pay up to $200 dollars. We continue to talk and he asks all kinds of questions and eventually learns of my predicament and how the couches are going to wind up trashed unless I sell them. This is when the master negotiator comes up with a win-win situation. If not sold, he would be to offer to buy the couches at a reduced rate at the end of the month, just before the moving guys show up to haul the couches to the dump. This gives me a chance to sell them at the value I think they are worth, but also prevents me from taking a loss on the couches should I not be able to find a buyer by the end of the month.
In my next post I’m going to talk about ways to raise your awareness when negotiating, including many of the ways you can get tripped up in the negotiation process.
I also happen to have two couches for sale. I may or may not have to sell them by the end of July. If you know someone in the market maybe we can work out a win-win-win deal where you paid a commission.