The Art of Negotiation – Understanding Common Negotiation Tactics

Entrepreneurs know that understanding common negotiation tactics is good business. Having a good understanding of the strategies that can be used by you or on you is necessary to becoming a skilled negotiator.

Negotiation is usually a part of any deal or transaction and it must be a strong part of your game. In this article we present some ideas that will give you an opportunity to look at negotiation in an entirely new way and will give you a better basis for playing the negotiation game. It will help you work on your business psychology and to become a more skilled entrepreneur and negotiator.

Everything’s negotiable

The first tactic for successful negotiation is, always, “everything’s negotiable”. There are many negotiating strategies and tactics, but if you don’t get rule number one, those strategies won’t apply because you will not be doing much, if any, negotiating. You must believe that everything is negotiable. For example, I recently asked my phone company to throw in a couple of free months phone service because I had been a customer for a number of years. They said yes. Had I not asked, I would not have received the bonus months.

In most deals multiple items can and should be negotiated. In a purchase of a mid-size apartment building I negotiated several items before we would close the deal. The seller carried a large, unsecured note on the property, gave us a seller credit for repairs, which bought us a new roof, asphalt and sidewalks, and they accepted a significantly lower purchase price. Whether a deal is small or large, most people and companies are willing to negotiate.

Be willing to walk from the deal

The second tactic for successful negotiation is you must be willing to walk from the deal, and the other party must believe it. That means you need to believe it. If you’re buying a new house, for example, and you’ve completely fallen in love with it, you absolutely must have it, negotiations will not be as successful. If you must have the house or property, use a “partner” as the one who could do without. In this instance you could say, “I doubt my partner will agree to that. He doesn’t really want this particular house that bad. I’ll ask him.” In either case, the other party must know, without a doubt, that you are willing to walk from the deal with zero regrets.

Once you have these two rules down, it is pretty much smooth sailing from here. But, you’ve got to believe rule #1 and rule #2. This is non-negotiable (in spite of rule #1).

Be able to set aside a single issue as you work towards an agreement

Use your people skills, no need to be pushy. Negotiations can and should be about people. Take your time. Find out what motivates the other party through conversation, questions and listening. Ask yourself, “What does each party need to accomplish?” This will give you an opportunity to navigate towards a solution where each party realizes their desired goal (ideally). You might say, “Let’s sit down and talk and see if we can come to a mutually beneficial agreement.”

This is an important strategy to fully understand. Let’s say from our example above, that the seller of the house you looked at had already told you he would accept nothing less than a full price offer. Rather than let this kill the deal, your goal will be to say, “Let’s put that aside and see if we can agree on everything else.” There are still many scenarios where the seller could get his full price but not in the way he might be seeing right now. For example, you could end up negotiating a seller credit for repairs, or the seller could carry back a small second. In both cases, he could still get the full asking price, or close to it, but the actual dollar amounts would be categorized at closing as something other than the purchase price.

You’ll have to do better than that

This is a simple and effective strategy. When the offer is made, you simply reply, “You’ll have to do better than that.” This is particularly effective when the other party clearly realizes that you are not desperate to get the deal done and are, in fact, willing to walk. The key here is to make your statement and then stop talking! Give the other party an opportunity to negotiate against themselves and make a better offer.

The High Low Game

There are many negotiation strategies. Some, such as the High Low game, are old and frankly, unnecessarily confrontational. You start low, the other party starts high, and hopefully, you meet somewhere in the middle. This is generally not an effective strategy. It’s a game where the focus is solely on the money and all other elements of negotiation are set aside. It’s a game of chicken which is time consuming and can even damage the relations between the parties. There may be issues of more significant value to both parties when the simple dollar amounts are removed from the negotiations.

When to quit

If the other party refuses to negotiate further, and you have not reached an acceptable deal, always remember you can walk away and come back later. You could offer to resubmit an offer in a week, or a month. This accomplishes a number of things. It reinforces rule #2 (you are willing to walk from the deal), it provides a break from negotiations and gives both parties an opportunity to think about what they’ve brought to the table so far, and it allows for some distance, helping you to reevaluate your desire to see the deal through to completion.