Negotiation is a critical skill for any business owner. Those who negotiate well find themselves with the best business relationships, prices, and fewest headaches. It is both an art and a science that requires intentionality and thought.
Start by Feeling Out the Other Party
Start the conversation by keeping the attention on the other party. Ask questions, don’t reveal too much about yourself, your goals, your budget, your acceptable price range, what features you want, or your objectives. State the highest-level facts- “we are interested in adding ____________ and we wanted to explore our options by learning what you have to offer”. See if you can get a better idea for what they want and get them to reveal their areas of vulnerability. Also, make sure you’re speaking to someone who can make deals. If they can’t, you need to speak with someone who can. Say, “great, well I’d love to continue the conversation and speak about this further with you and your manager. Let’s schedule a follow up meeting”.
Get them Emotionally Connected
People are more likely to want to do business with people they know, like and trust. The same is true for getting better deals. You want the other negotiator to have an emotional stake in you and your business’ success. If you don’t think they understand that, tell them. Then the negotiation goes from being simply transactional to relationship based. At the same time, don’t get emotionally attached to them.
Make the First Offer
After getting enough information, make the first offer. Explain why what you’ve heard has made you interested enough to do business. Let them know you’re serious in building a long-term partnership to mutual benefit. Make sure your offer is big, bold and strong (this is your unicorn offer you had previously decided on).
Their asking price is just that, an asking price that includes a margin that they expect to give away during the negotiations. Make sure to include all the relevant details in your initial offer, don’t leave anything out so they can’t minimize the effectiveness of your offer by sliding around on smaller details later. Make sure your initial offer includes elements you’d be willing to give away in the counter offer.
Also, stress your leverage in the first offer. Will their reputation benefit by being associated with you? Do you have other benefits they’ll receive in the form of referrals, press, notoriety, or exposure by working with you? Do you expect to be buying more from them in the future?
Don’t Let Them Ask You to Make a Better Offer
They aren’t allowed to reject your offer. You’re not there to accept the boiler plate “that’s what everyone else gets”. You’re there to build a relationship with a business partner. Don’t let them trick you into negotiating with yourself. It’s their turn to counter your offer.
Use Silence to Your Advantage
If after you make an offer the seller says, “that’s too low”, don’t respond right away. The other person will start talking to fill the silence and what they say could give you useful information you wouldn’t have otherwise learned. If you haven’t already identified it, their talking could identify what’s most important to them which can be your key to getting the best deal possible.
Ignore Bold Emotional Comments
Don’t play that game. Emotions can reveal things about us and cause us to make worse, less calculated, decisions. Keep moving forward, redirect, and ignore the comments.
Use Time to Your Advantage
You might be surprised to see how long some people are willing to negotiate but the longer they negotiate, the more anxious they’ll become about making a deal and the more concessions they may provide. People don’t like to waste their time, even if you’re making slow progress.
Move Your 2nd Counter Offer Towards your 2nd Best Offer (Previously Identified)
Ideally by this point you’ve very clearly identified what would make the other party happy in the end. Ideally that would be in your 2nd offer. Pitch it as though you’ve won and will both be very happy with the result. Make it appear as if you’ve made a lot of concessions to get to this point and you’re almost doing them a favor by proposing this counter offer. It might be time to say, “let’s celebrate with a drink” or “I’m really looking forward to working together.
If They Don’t Accept Your 2nd Best Offer, Act Like You’re Willing to Walk
If they aren’t willing to go with it and counter again, say “I think I might need some time to think about this”. Then reveal to them why their counter isn’t good enough for you. Don’t tell them they’re out of the running, or that you’re going to talk to their competitors. Say, “I would really like to work together but I just think I need some time to consider my options”. Pulling it away from them might make them think you just gave your third best option even though you haven’t.
Only Pull Out Your Third Offer If You Think It’s Worth It
If you think it’s worth it, and they haven’t bitten on your “pull away” technique, you could offer your final counter and say, “this is the absolute best I can do” but I’m also going to need ___________ (name some throw in you would appreciate and know they don’t care too much about).
What if There are Set Prices?
Especially if you’ll be spending thousands, tens of thousands or hundreds of thousands of dollars, everything is negotiable. Don’t accept boiler plate prices- ever. There’s always something you can ask for. It never hurts to ask, even for something that seems set. Everything is negotiable. Express your leverage as the reason for the special treatment.
Honing your skills in negotiation can have a profound impact on your business. Rather than turning people off, using good negotiation skills can cause people you work with to appreciate you even more because they see how passionate you are about the success of your business.
