Source: The G7 Design Business Tips Blog
We negotiate every day in our lives and especially in business, whether you are buying or selling. This article focuses more on the selling side of negotiation, or indeed these tips can be useful for negotiating a strategic partnership of some nature.
First of all, you need to clear your mind of all pre-conceptions that your objective in the negotiation process is to make it as one-sided as you possibly can in your favour, without giving anything away – or that somehow there is a “winner” that will rise from the negotiations. Negotiation should always be about working in partnership to achieve the best for both parties, and setting forth the terms of a healthy and productive business relationship, where both sides benefit, and no one loses out. Here are ten tips you should keep in mind next time you negotiate:
1. “Preparation is the mark of the Professional” – Brian Tracy.
You should always spend time preparing for meetings, and be fully conversant with your own situation and theirs. This means you need to have as much information as you can about the other side – learn what their motivations are, and the reasons for needing what you offer.
2. Know your own limitations and break points – what is the limit of your negotiation, and at what point do you need to walk away? Most imperative of all, prepare yourself to walk away if the deal is unacceptable to you and your business.
3. Don’t play games with the other person. It is far better to be up-front and direct with them, which will save you time, and you will certainly come across as a professional.
4. Allow the other negotiator to propose first. This will give you a lot of insight about a) the value they place on your offerings, and b) how much you can ask for your services. In some cases, you may even discover that they have unrealistic expectations of the cost of your services/products. However, by doing this, you will be in an advantaged position to slide your scale to suit.
5. When you give your prices, set your initial figures as favourable to your side as is plausible. Naturally, if during the course of negotiation your price is reduced, you are losing less if you started high, and vice-versa for buying.
6. Don’t get into a haggle-war! This means, it is better to start with your initial proposals, and after some negotiation put forward a revised proposal – if this is rejected for the second time, it may be time to walk away. You need to judge the situation – depending on the gravity of the deal in question, it may be pertinent to put forward a third proposal, but be aware that the more revisions you put forward beyond two, the other party may begin to lose respect for you and your company, as you appear more and more desperate to close the deal (NB: this does not apply to situations where a deal must be reached, e.g. like negotiating to avoid falling off a fiscal cliff!)
7. At times, there may be certain contracts that are of such high value to your company, and you really do need to succeed in the negotiation process. However, at no point should you ever reveal or imply how much you need the contract from them, as this will give the other party the upper hand, and they will be placed squarely in the driving seat.
8. In situations where the buyer is already sold on you or your company, if you need to lower your price, don’t do this without reducing value in some way.
9. Don’t be over-friendly – this is business! Niceties and pleasantries have their place at the beginning and end of conversations or meetings, but business is business, and you need to focus on your objectives. Disregard whether you like the other party(s) or not, because healthy business relations are founded upon mutual respect and understanding – not a notion of friendship.
10. Listen intently and carefully to what the other associate has to say. This way, you will not come across as single-minded, you will keep a full track of the negotiation, and you will not miss out on vital information, or opportunities to read between the lines of what they are telling you.
Hopefully, by this point you have successfully concluded negotiations, and there is one final point to remember – put it in writing. Then get the other party to confirm the agreed terms with their signature next to yours.