6 Essential Expert Tips To Help Better Your Negotiating Skills In Life And On The Road
“I can offer you $6,400 for the car” I said to the salesperson. He immediately laughed and said that it was less than he paid for it. “Less than you paid for it?” I asked.
He started to explain who he bought it from and what it cost him. “So give me another offer” I pressed. He started stuttering and said “I can sell it to you for $8,800”. The car originally cost $8,888. So I pushed again. “What is it that makes you value the car at $8,888?”
The man began explaining that he had just put new brakes on it, and it cost him $500. Any lower and he wouldn’t turn a profit. Before putting in my next offer, I asked him about the interior detailing he offered if we purchased it. He said the dealership would take care of it.
So I said “scrap the detailing, I can do that myself, how much can you discount it now”. Turns out the detailing didn’t matter. He wouldn’t budge. An $88 discount was all he was willing to give. He was fixed.
My dad and I walked away. We had valued the car at $7,500 and we stuck with our guns.
Even though we didn’t get what we wanted, we made a plan and followed a few simple rules. It exposed the real reason why the sales person wasn’t willing to negotiate. We didn’t get caught up in any arguments or overly long negotiations that lead to nowhere. In my negotiation, I used some tactics that I had learned from Author and former FBI negotiator, Chris Voss.
His book, Never Split the Difference, implies just that. Of course, there are certain scenarios and situations where you might have to make an exception, but it’s rare. Being a good negotiator involves being prepared and practiced.
Here is what I have learned from Mr. Voss that can help you in your negotiations in almost any situation, whether it is negotiating the price of a used motorcycle or a salary increase.
It never once occurred to me how much preparation should go into a negotiation. Sure, I had my target price in mind, but I didn’t realize that having a structured plan gives you a much higher chance of success.
In my story, my dad and I wanted the car for $7,500 — based on the year and mileage, our assessment was fair and a good deal for us. That being said, you would never open with what you want, it leaves you no room for negotiation. Here is a breakdown of how you should plan your offers for monetary negotiations.
Tier 1–65% of target
Tier 2–85% of target
Tier 3–95% of target
Final offer
Tier 1 is 65% of the price you are willing to pay. For $7,500, that’s $4,875 ($4,900 rounded). Now this might seem like a low ball offer — and it is — but it is necessary. It’s called an anchor. This is the price that we can now move up from. Trust me it’s not easy throwing out this number. You feel like you might offend and that the person might laugh, but it is necessary.
I didn’t offer my tier 1. I was too scared. I’m still practicing negotiation. I use any chance I get to use these tactics, but in the traditional sense of negotiating physical goods, it always seems more tense. I backed out of my tier 1 offer for fear of sounding like a nasty lowballer. So I offered my tier 2, knowing that I shouldn’t have.
Tier 2 is 85% of the price you want. 85% of $7,500 = $6,375 ($6,400). It is crucial that in between tiers, you wait and encourage the person you are negotiating with to put in an offer. You do that by asking calibrated questions, which we will get to later.
Tier 3 is 95% of your target. If the salesman put in another offer, I would have come back with Tier 3 or $7,125 ($7,100).
As a last resort, assuming you’ve been doing some hard bargaining and the person is adamant, you offer the final price you are willing to pay. But make sure the number is very specific.
We wanted to pay $7,500 max, so we would have offered $7,486. By using an exact number, it shows the person you are negotiating with that you are at your absolute limit. This will make them feel like they have gotten everything out of you.
Of course, any offer accepted before your final offer is a win, as you would be walking away with an even better deal that what you had hoped for.
Mirroring is perhaps one of the most important techniques. When you mirror someone, you repeat their last few words back to them, posed as a question. It gently nudges the person to explain what they mean, perhaps even exposing gaps in their own valuations and logic.
“I can offer you $6,400 for the car” I said to the salesperson. He immediately laughed and said that it was less than he paid for it. “Less than you paid for it?” I asked. He started to explain who he bought it from and gave us an idea of what it cost him.
Bingo, I had just found out a crucial piece of information. My mirror “Less than you paid for it?” had worked. I now knew where the car came from and I guessed it probably cost him around $7,500.
It became obvious that he was looking to make a quick buck. We knew that negotiations weren’t going anywhere.
Mirrors work magic, and since I’ve started deploying them, they always get people talking. Just remember, after you mirror, shut up. Let the other person think and talk. It doesn’t work if you pop the question and just keep yammering away.
This is an excellent tool to use when building rapport and defusing tensions. Labeling someone’s emotions will get them talking and help them to relax. By labeling their emotions, you are allowing them to explore what they are feeling so that it is not building up behind the scenes.
It shows them that you care and gives them the opportunity to talk about their emotions. For example, when someone doesn’t like an offer you have just given, or winces at a point that you made, you can throw out a label like so:
It feels like you don’t like the price I’ve offered
It seems like you think it should be worth more
It looks like you have another offer in mind
Chris Voss writes about the importance of avoiding “I” and statements like these:
I think you don’t like my offer
I feel that you have a different number in mind
I think you are being unreasonable
He makes the point of saying:
Should negotiations ever escalate into anger, labeling is an effective way of de-escalating that anger by putting it on the table and addressing it, rather than allowing it to fester.
We need to calibrate the questions in between offers to find out more about what going on in our counterparts mind. “What” and “how” are good ways to calibrate questions. “What is it that makes you value the car at $8,888?” is a calibrated question I asked which gave me a lot of information about the car. The salesperson immediately told me he did the brakes, that the last owner only put highway miles on it etc.
These questions delve deeper into the true value of the vehicle and not just what was posted on the website.
There is, however, one important thing to be careful of…
We want to avoid why questions. Why questions make people feel as though we are attacking them, forcing them to explain themselves and justify their thinking.
Building a clear picture of what the other person really wants can help you determine if it is a win win situation or if the negotiation is over and doesn’t benefit anyone.
For example, you might discover that the car you are buying didn’t come from a good owner. It has a high risk of having unexpected problems that the dealership isn’t willingly advertising or cannot foresee. At that point you wouldn’t need to negotiate further, you could leave and look for something else.
Most people think that acting assertive and direct is a good way to display confidence. That might be true when making a point or giving a presentation, but that will hurt you in a negotiation.
It will make the person feel like you are imposing your will, and can make them dislike or distrust you. If this happens, you are looking at a negative halo effect. The person will start to close themselves off and your chances of getting a good deal will quickly evaporate.
When negotiating, put a smile on your face, and speak in a playful tone. If you need to be more direct, use a calm, low tone, like a late night radio host. Keeping your emotions in check is extremely important. It shows the other person that you have self control and can be reasoned with.
Drive a hard bargain, and don’t settle for a penny less than what you are after. It takes time and skill to guide a negotiation to success. Knowing when to deploy the right tools and tactics is very important in making progress.
Sometimes negotiations won’t work out. It could be your fault, or it could be a stubborn negotiator. Learning to walk away will teach you to stick to a plan and work out how to improve it later.
It is important to listen and figure out what it is that the other person really wants. In our case, we were looking for a good deal. For the dealer, it was a quick flip. His lot was filled with Maseratis and BMWs. It became evident that our interests didn’t align. Without a plan we might have bought the car without knowing any better.
Your first few negotiations will suck. Look how mine turned out. I was too scared to offer my lowest anchor, and we couldn’t get the guy to budge on the price, but we walked out of there with the money we had when we came in and a lesson learnt. I quit too early because I was nervous, next time I will not make that mistake, and maybe there will be more progress.
We negotiate for things everyday. Who will take out the trash, how much time we give someone to complete a project, and what kind of salary you want at a new job. Bad negotiators end up offering more than what they intended. Good negotiators walk out with a win win for both parties or nothing at all. Great negotiators know how to get the win win 99% of the time.
It’s important to know what and/or who you’re up against, and making sure they feel heard. When people feel that you’ve listened, they will be far more likely to listen, and that will increase your chances of a successful negotiation.
So every chance you get, practice, and see how this skill can spill over onto other aspects of your life. You’ll become a better listener, a better speaker, you’ll be calmer in tense situations, and you’ll know when to walk away.
P.S. I checked on that car today while writing this, and it still hasn’t sold.
6 Essential Expert Tips To Help Better Your Negotiating Skills In Life And On The Road
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