Knowing how to negotiate is one of those things I wish I’d known how to do much earlier in life. It would have saved me thousands of dollars, and hours of mental anguish. But I learned it the hard way, by making mistakes and wasting money and time that I could have put to better uses.
Examples of negotiations were all around me—on the global stage, between presidents; nationally, among union leaders and automakers; statewide, as congressional leaders battled to enact new laws; locally, with the Chamber of Commerce enticing businesses to relocate; and in my own home, with mom and dad negotiating who was going to take the kids where.
Today, the U.S. Congress is trying to negotiate a big spending bill. Just this morning, it was reported that President Biden, who was trying to take a tough stand to please the progressives in his party, is now implying that he’s willing to reduce some of his proposed expenditures to make a deal with the Republicans.
One of the funniest failed negotiations I ever heard of was when I worked for a small Florida bank back in the 1980s. One of the vice presidents told me that when Walt Disney was secretly buying up properties to build Disney World in Florida, he approached one of the bank’s board members about borrowing money for his project. The rumor mill said that this board member thought it was a ridiculous idea, and laughed Disney right out of his office. Fortunately, Sun Bank bought into the project, and that’s why there is a SunTrust on Main Street in Disney World today!
Every single day we all negotiate something, so it’s imperative that we learn how to do it to our advantage.
Over the years, I learned some negotiation techniques each time I bought a vehicle. I really didn’t think much about negotiation, other than to be mad if I didn’t feel like I had received a good deal on my cars. But I really got my negotiating feet wet when I entered the real estate business. There, I learned that the entire process of buying or selling a home is one long negotiation.
Yes, I was a slow learner. But I’m not kicking myself too much. When first discussing this topic, Cabot Wealth’s President, Ed Coburn, said this to me, “Effective negotiation is a life skill and many people don’t get any training, and women are particularly disadvantaged historically in our country. The end result is that whether buying houses and cars, buying or selling businesses, engaging with contractors and professional services, and many other areas, some people pay considerably more than others.”
Ed was exactly right. According to Lyons-Newman Consulting, “More than 40% of U.S. employees don’t feel confident in their negotiation skills. Especially women: In surveys, 2.5 times more women than men said they feel ‘a great deal of apprehension’ about negotiating.”
Let’s change that! The good news is that just about everyone can become a good negotiator. It took some work, lots of reading, and listening to others negotiate, but now, I feel I’m pretty good at it. And you can be, too.
Once I started on the path to becoming a good negotiator, I found out a couple of interesting things: 1) Negotiation is a lot of fun, and 2) You can negotiate just about anything!
Let’s start with a simple definition. In the Oxford dictionary, negotiation is defined as “a discussion aimed at reaching an agreement.” Sometimes, in negotiation, there is a clear winner. Other times, each side gives and takes a little, with each one winning and losing.
If you feel like you always come out on the losing side, or could have “won” more, keep reading for tips to improve your negotiation skills.
The 7 Elements of Negotiation
These points are from the Harvard Law School Negotiation Project and from Getting to Yes: Negotiating Agreement Without Giving In, by Roger Fisher, William Ury and Bruce Patton. This is a framework for the essential tools needed to “identify our goals, prepare effectively to minimize surprises, and take advantage of opportunities as they arise in negotiation.”
Interests. Interests are “the fundamental drivers of negotiation.” It’s critical that you understand the ultimate goal of your counterpart. Is it a higher salary, lower auto price, or a better deal on an appliance?
Legitimacy. Everyone wants a legitimate, or fair, deal. So, it’s important that your proposals come across as legitimate and fair. A successful negotiation is when both parties walk away believing that they “got something.”
Relationships. You may know your counterpart well, or this may be the only time you meet him or her. That doesn’t matter. What is crucial is that you try to manage the relationship. And you can begin by building rapport. I saw this firsthand as I monitored a deposition with two attorneys and a plaintiff. The defendant’s attorney began his question segment by discussing the plaintiff’s basketball career. That immediately softened the plaintiff’s attitude.
Alternatives and BATNA (Best Alternative to a Negotiated Agreement). First, figure out what your alternatives are to negotiation. The writers use the example of a job candidate who will apply for graduate school if she doesn’t get the job.
Options. What choices do you need to consider? Think about conditions, contingencies, and trades. Each party’s options can be similar or different, but if you know them, you can create value in the negotiation. For instance, a union may want higher salaries for its members, but the company they are negotiating with wants more productivity. Is there a meeting point?
Commitments. This is an agreement, demand, offer, or promise made by one or more party. A commitment includes the little things, such as where you are meeting, or the big issues that will lead to a formal proposal or a signed contract.
Communication. Here, you also have choices that will determine the outcome of your negotiation. They include whether you threaten or acquiesce, brainstorm jointly or make firm demands, make silent assumptions about interests, or ask questions to probe them more deeply. The bottom line here is to be very clear in your communications.
What Can You Negotiate?
The answer is almost anything. Let’s first talk about a few very common negotiation targets.
Salary and Benefits. The best time to do this is before you begin a new job. But it’s also common to renegotiate these items yearly. But before you enter negotiations, it’s essential that you know your number. Go to Glassdoor.com, Salary.com or PayScale.com to research the average salaries in your line of work.
And if you can’t get a salary raise, consider other work-related items that are often negotiable, including: a larger office, remote working, flex time, extra vacation time, car allowances, expense accounts, and your job title. And don’t make it personal. Your boss may be great, but he doesn’t really care that you need extra money to put your folks in assisted living, or that your husband lost his job. Focus on the merits of your getting that raise—how you’ve earned it.
The price of a home. Here, your Realtor will be a big help. He or she knows the marketplace and can help you set your listing price if you are the seller or your offer price if you are the buyer. Sometimes it’s difficult for sellers, who want to recapture the money they’ve spent on their homes. Unfortunately, the market doesn’t care what your home has cost you; it sets prices based on what buyers will pay. And buyers who want to low-ball their offers need to be educated that those kinds of offers rarely work and can severely hamper the negotiation process.
Rent. Again, this is done at the beginning of a lease, and upon renewal. A reduction in rent is not always the goal here. Instead, you may ask the landlord to cover utilities or to reduce your security deposit. Your landlord may agree, but may also want you to sign a longer lease agreement.
Automobiles. Everyone knows you never pay sticker price. The important point here is to be prepared. If you have a trade-in, know what it’s worth. I love using Edmunds.com or Carvana.com to calculate trade-in values. Also, check new vehicle prices on these sites. Be knowledgeable about the options you have to have and know which ones you can live without.
I bought a new vehicle in April, trading in my 2012 SUV that had 187,000 miles on it. You wouldn’t think it was worth much, would you? But I was prepared. I knew what I wanted to get for it but wasn’t sure about the exact new vehicle I wanted. In other words, I was flexible, which really helps in negotiating. If you are stuck on one particular vehicle or option, you will have less negotiating room. Once I located the vehicle I wanted, I did some research on my phone right there in the showroom to see the range of prices available. After a few minutes, I asked to borrow the salesman’s pen and paper, and wrote down what I would accept for my used car and what I would pay for the new one.
Of course, I had to play the game. The dealer said no; we negotiated a little more; and I left without a vehicle. But 10 minutes later, the sales manager called me, and we negotiated again, and I got exactly what I asked for on my trade-in and almost what I wanted to pay on the new vehicle.
Event spaces. The first price the event manager gives you will undoubtedly cause you chest pains. Relax. Those prices are mostly for corporate clients. They are negotiable. I remember, about 30 years ago, I was helping to plan a wedding for 200 guests, with a buffet dinner. The first quote was $29 per person. After I recovered from sticker shock, the event planner and I started negotiating each food item. I was able to get the price down to $19 per person, and he even threw in a couple of ice sculptures for the tables!
Credit card or bank fees. If you inadvertently miss a payment or overdraw your bank account, you will be socked with a hefty fee—sometimes as much as $50. But if you have a record of paying on time or managing your bank account well, just call up your credit card company or bank, remind them of that fact, and they will most likely remove the fees.
Medical bills. If you have no insurance or not enough insurance, you’ll find that most providers will negotiate their fees. A friend of mine had a heart attack and had no insurance. Every provider—doctor, surgeon, anesthesiologist, radiologist, and hospital—with the exception of the ambulance company—reduced their fees. Additionally, they set up payment plans over a several year period. We are talking about tens of thousands of dollars here that were just erased.
Home services. Whether it’s painting, lawn mowing, roofing, or adding a room addition, most of the time, you won’t have to pay the estimated cost. But of course, that depends on the marketplace at the time you need the work done. Right now, it’s difficult to get a contractor for anything, so you may very well have to pay the estimated price.
The price of a business. Just like with selling or buying a home, the price of a business can fluctuate, depending on the market. But for the most part, your due diligence should include getting the financial statements of the business for a few years, then calculating the cash flow, so that you will know how much money you can be expected to make over the next few periods. With that in hand, you can determine an offer price.
You probably already knew that all the above items could be negotiated. But here are a few more that you may not have expected:
Appliance Prices. Every time I think of this story, I have to laugh, but I really shouldn’t. The poor salesman looked exhausted by the time I finished buying my new cooktop and oven!
After months of research, and haunting Lowe’s, Home Depot, and Sears, I finally decided on the options I wanted. I waited until Sears had a sale and found the cooktop and oven I wanted. Now, here’s a hint for you. There are certain months when appliances go on sale—primarily September through December, when the new models come out. That’s when I opted to buy mine.
So, they were already on sale. I decided to buy the floor models, which had already been marked down by half. But … the oven had a small ding in the door, barely noticeable. I asked the salesperson to deduct something for that. And because the door had obviously been opened many times as the oven was on display, surely, he needed to knock something off for that?
Lastly, I must explain. I had recently bought a home that had to be almost totally (cosmetically) renovated. I charged everything, so I could get points and gift cards. Well, I had about $600 worth of gift cards that the poor salesperson then had to ring up. I really can’t remember how much I saved, but it was a bundle!
Also, don’t forget to compare store-to-store. Manufacturers try to avoid this by offering a line of model numbers for essentially the same appliance. But you may be able to find a match that you can negotiate for a better price.
Hotel Prices. What? It’s true; these can be negotiated, especially in the off season when there are lots of vacancies. Or, if the price isn’t negotiable, maybe the hotel will throw in a few meals or upgrade your room. The same goes for cruises, vacation rentals and travel packages. I once booked an 11-day Panama Canal cruise with an ocean view for $436, including the port charges and gratuities. You won’t know until you ask.
Furniture Prices. Like appliances, furniture has its best sales periods. For outdoor furniture, the best sales are between July 4 and Labor Day. For other furniture, you can get the best bargains in January and February, as stores try to unload their holiday inventory. Most people don’t realize that furniture, too, is negotiable—especially if the store is trying to unload a discontinued item, or if the piece of furniture has a mark, dent, or scratch. Try it! And even if the store won’t discount the item, ask for free shipping.
Grocery or department store prices. Here, it pays to comparison shop. If you find the item you are seeking at a lower price on sale or in a flyer, ask your store to match it. Or, if something isn’t to your liking, ask for a reduced price. Last week, I was looking for a big plastic box to put potato chips in for an office opening. I went to Dollar General, found one, but couldn’t find the lid. I really didn’t need the lid, so I asked the manager to discount the box. After he looked and couldn’t find the lid, he cut the price in half!
I’ve also had good luck at buying clothing at discounts—especially if a button is loose, or there’s a small stain I know I can get out, or a loose seam that I can repair. And ask the salesperson if that item is going on sale anytime soon. Maybe they can hold it for you, or go ahead and give you the coming sales price. And don’t neglect to find out if there are any coupons available. Today, many large department stores have apps which allow you to download a coupon on your phone. But they are not always advertised.
Jewelry prices. Believe me, these too are negotiable. And especially if you are cruising the Caribbean. No one pays sticker price, and the salespeople love to negotiate! One time, on a trip to St. Thomas, I was looking at rings when a nearby purse caught my eye. I had already negotiated the price of the ring, and the salesman wouldn’t go down any further. However, he was glad to throw the $400 purse into the deal!
Cable, internet, cell phone, and satellite bills. Most of the time, all you have to do is tell your provider you want to cancel your service, and they will immediately offer “stay with them” deals. Every year, when my Sirius radio subscription comes due, the company bills be for more than $200. And every year, I call to cancel, and they reduce it to around $85.
Art prices. Sure, if you’re trying to buy a masterpiece, there’s not much room for negotiation. In fact, you’ll probably buy it in an auction where it goes to the highest bidder. But if you are purchasing art from a gallery or the artist, you may be able to negotiate. If it’s an expensive piece, and they won’t reduce the price, ask to make payments.
Like I said earlier, there’s not much you can’t negotiate. You just never know until you try!
5 Negotiating Mistakes
You really have to watch what you say, how you say it, and watch your facial expressions when negotiating. I used to love to play cards with my family—my dad and me against my brother and mom. Boy, those two had what poker players called “tells,” whereas my dad had a “poker face.” Guess who won most of the time?
There are lots of other mistakes that can derail a negotiation. These are cited in the Harvard report that I referred to earlier.
Not being prepared. Know what you want to gain, what you are willing to give up, and at what point you will walk away.
Competing rather than collaborating. Because we don’t want anyone to “get the best of us,” we can make some very big negotiating errors, such as unreasonable demands, threats, or coercions. Instead, try to create value, build rapport and trust, so that you can figure out what can be traded in order to effectively negotiate.
Falling back on cognitive shortcuts, especially when time is limited, or we are unprepared. Sometimes, we are overconfident or pay attention to the biggest fruit like a salary raise, and don’t pay enough attention to the details, such as longer working hours, a different manager, etc.
Letting our emotions get the best of us. Strong emotions, such as anger and sadness, can lead to irrational decisions and negotiation mistakes. If emotions get the best of you, take a break.
Taking ethical shortcuts. While you may think you are highly ethical, research by Harvard Business School professor Francesca Gino and others shows that “most people are willing to cheat now and then in negotiation when they have a financial incentive to do so and believe they won’t be caught. We find ways to justify such behavior, whether by telling ourselves that the other party won’t feel the loss or by denying that we’ve done anything wrong.” Pay attention to your ethical boundaries.
The 7 Rules for Negotiation
Negotiation is, well, negotiable. There is no one right way to do it, but there are some rules that will make the process go more smoothly. These rules are from financial guru Dave Ramsey. And I have used them all successfully.
Rule #1. Always tell the truth.
Rule #2. Use cash when making purchases. This often works well when buying autos and houses.
Rule #3. Use walk-away power. Don’t get emotionally attached to the item.
Rule #4. Shut up. In negotiation, the person who speaks first often loses.
Rule #5. Use the phrase: “That isn’t good enough”
Rule #6. Go to the authority. Ask to talk with the manager.
Rule #7. Use the “If I were to” technique. “If I were to … then I would need to …”
And there are a few other rules that Dave didn’t mention:
Don’t take the negotiation personally. We women don’t do very well with this. I’ve seen men in the office yell and scream at each other during negotiations, then go out and have a beer together. That usually doesn’t happen with women. We just automatically take any disagreement—real or imagined—as a personal affront. Get over it!
Never make assumptions, and do not rush. Just the facts, ma’am.
Don’t over-negotiate or accept a bad deal just to make a sale. In most cases, your gut will tell you if you’ve gone too far.
7 Things You Should Never Say in a Negotiation
Oftentimes, people want to ad-lib a negotiation, but that is rarely a good decision because things may come out of your mouth that will drastically reduce the effectiveness of your negotiations. These are some of those phrases:
1) “This call should be pretty quick.” This is sure to put your counterpart on guard, making him or her tense and less willing to negotiate. He or she wants to know that you are willing to address his or her concerns, giving him or her ample time to discuss them.
2) “Between.” For goodness sakes, don’t give your opposite party a range! They’ll always go for the extremes, higher or lower.
3) “What about a lower price?” If you are going to give away money, make sure you get something in return.
4) “I have the final say.” No, no, no. You have just put yourself into a corner. You may want to buy time somewhere in the negotiations, and you can do that by saying you have to consult another party before making a decision.
5) “Let’s work out the details later.” You do not want to give them time to change their minds! Instead, you want to make sure all the details are in writing right when you agree to them; that way there’s no room for misunderstanding down the road.
6) “I really need to get this done.” You’re giving away your power and showing desperation.
7) “Let’s split the difference.” Sometimes, you do have to do this, but never early in the negotiations. Try to give a little and get a little in each step.
25 Good Negotiation Phrases
When negotiating, you want to make sure you are communicating clearly and concisely, by using words and phrases that are easy to receive and understand. These phrases cover all aspects of a negotiation and are courtesy of cudoo.com:
Making a Proposal
- We would like to outline our aims and objectives.
- We propose that…
- Our position is…
- Would your team consider…?
Accepting a Proposal
- We are ready to sign.
- Let’s wrap this up.
- We can move forward and let the lawyers look at the fine print.
Rejecting Proposals
- I’m afraid we can’t agree to…
- No, those terms are unacceptable to us.
- We are not interested.
Making a Compromise
- How flexible are you on…?
- We could sign if you…
- We may accept your offer on the condition that…
Making an Objection
- We understand your position, however…
- From our perspective…
- I’m afraid we find those terms unfavorable.
Responding to an Objection
- As an alternative, we propose…
- The suggestion makes the proposal less attractive because…
You’ll notice that each of these phrases and questions are very clear. In addition, if you’re not a native English speaker, you’ll want to be familiar with A Few Commonly Used Cultural Idioms:
- Draw a line in the sand: This can mean to refuse to compromise beyond a certain point. For instance, refusing to lower prices beyond a particular figure.
- Back and forth: Refers to when people with different interests make offers, counteroffers, suggestions, reconciliations, and compromises as they seek to come to an agreement.
- Drive a wedge between: To say or do something that causes hostility or disagreement between people.
- Drive a hard bargain: Means to show very little willingness to make compromises when talking over a deal.
- Come to terms: Gradually reconcile interests and come to an agreement.
- Give and take: The act of making mutual compromises to move a discussion toward an agreement.
- Stand one’s ground: To be firm on the conditions you have set.
Be Aware of These Dirty Negotiation Tricks
I’d like to think that most people come to the negotiating table wanting to make a fair deal. However, I understand that is not always true. In my real estate business, fortunately, I’ve been around long enough to know which local agents are ethical and which are not. But in many cases, you won’t know anything about your counterpart.
So, here are some tips from HuthwaiteInternational.com to help you recognize and deal with some of the most common dirty negotiating tricks:
Jet lag. If you’ve traveled a long distance to the negotiating table, realize that jet lag will impair your judgment, so don’t be rushed into negotiations.
“It’s different over here.” It’s imperative that you bone up on any cultural differences before negotiating, and, if possible, acquire the services of a local expert who is familiar with local customs. That way, you’ll be aware if someone is trying to gain an advantage by attempting to persuade you that things have to be done a certain way in their culture.
The application of standard terms and conditions. Your counterparty may say these are standard terms, but read the fine print carefully, as these “standard terms” may significantly favor the other party. Just because they are printed in the contract doesn’t mean they can’t be changed.
Rolling concessions. Once all is said and done, the other party may still be trying to get more concessions. For example, look for a phrase such as, “I think we’ve nearly got a deal, if we can just agree on this last item, I think we’re there...” This is very common in real estate transactions. One of my agents had a closing two weeks ago, and the buyer was still trying to get money out of the sellers—after the closing! If this happens to you, don’t just give in; maybe there’s something you can trade.
Delays and deadlines. This usually involves setting a deadline, or the deal is off! It puts pressure on the negotiation and is often used when the other party has travel-time constraints. To resolve it, make sure you keep your travel arrangements to yourself, and remain flexible.
Memos of agreement - plus.. This happens when one party summarizes the agreement, and then tries to change it. Don’t fall for it! Make sure the summary details all the terms of the agreement.
Hot and cold. In this case, the negotiator constantly changes his position, which may cause you to share more information or offer more concessions. This is similar to “the person who talks first loses.” Keep your cool, and pepper the other party with questions to elicit more information and return the power to you.
Changing negotiators. If your negotiation is not proceeding as your counterparty likes, they will sometimes bring in a new negotiator who will play dumb to any concession to which they’ve already agreed. You will need to insist right up front that any previous agreements hold.
The Types of People who Aren’t Negotiable
I said at the beginning of this article that almost everything is negotiable. However, not all people are negotiable, and it’s important to recognize it before you waste your time. I’ve included a couple of examples, also from Harvard.
But first, let me describe the people who you may think are not negotiable, but who, ultimately are:
Emotional counterparties. Emotions are normal in conflict. As I mentioned earlier, if emotions run too hot, take a break. It’s important to address and recognize the emotion or feeling; then you can go on.
Unreasonable counterparties. Just because someone doesn’t agree with you doesn’t mean they are unreasonable, right? Maybe they are just approaching the problem from a different direction than you. Try to see it through their eyes.
Okay, here are the folks where psychologists say you should take your negotiating bag and go home:
The waffling negotiator. They alternate between conciliation and provocation. Many times, at the beginning of a negotiation, people come across tough and unyielding, then soften up as negotiations proceed. But the Harvard Business Review says to watch out if they are conciliatory at first, then become provocative, and go back for round two—conciliatory, provocative, etc. It’s a losing battle.
The good and evil negotiator. There’s no room for a gray area. That person “lacks the mindset necessary for negotiation.”
If you run into this person across the table, here are four steps to help your negotiation:
- Know that this person is not going to change. Try to get as many wins and as few losses as you can. Then leave.
- Stop making concessions. You are wasting your time. Just finish as fast as you can.
- Reduce your interdependence. You want this person out of your life. If it’s someone who owes you money, don’t do a payment plan; get your money now, or you will have to renegotiate every month. If you are working with such a person on a team, define each person’s task and don’t try to work on any part of the project with him.
- Make it public, hold them accountable, and use a third party if you can. “Get everything out in the open and put everything in writing.”
I hope these tricks and tips will help you hone your negotiation skills. The more you use and are aware of them, the better you will get at negotiating—whether for you or your clients. Remember, a great negotiation is a win-win for everyone!