How To Negotiate

Deliguy

Deliguy

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Sep 27, 2006
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Oregon
I happen to be a pretty good negotiator much to the amusement of my business partner and friends who send me into the line of fire so I figured I'd do a quick rant to basically outline my strategy. The art of negotiation for me isn't so much about getting the most for the least. It's making sure you don't get taken advantage of, which happens to be the reality of all business. So I'll take you through a typical negotiation scenario and the outcome of what I do to jerk them around.

Just for shits n giggles:
<Rant>
Whether its a new product or service or a pre-existing one coming up for renegotiation the opposition always enters with an ideal target pricepoint their greedy faggot asses want as well as a list of justifications for it.

So lets pretend someone comes in with either a new or preexisting product or service you buy from them wanting to negotiate their prices. If I'm a new customer I usually quickly make up some bullshit based on what I know of them (usually by a quick glance at a brochure they hand me) saying "my friend Joe got a deal for a $500/month and I think thats pretty good so I'll take the exact deal he got for the same price." Or if its a prexisting deal I'll say "OH HAI! Thanks I appreciate you talking to me about it, I'll make it easy for you, I want the same package, same deal as I already have. Lets renew right now."

At this point they'll get greedy because obviously that doesn't match their target so they'll immediately fire their big guns and say something like "no we have to raise your price up to $700/month" or "the lowest we can go is $700" (just as an example). This is the perfect time to immediately act shocked and be like "Whoah! Lets not get greedy. Help me out here, how much can you lower that for me?" After that they've already prepared to spew off all the reasons and justifications for the entirety of the extra $200 price hike. So they'll quickly list all them which I write down in list form as they're talking. Then they'll say some more balanced number they're willing to settle for usually imbetween like $600.

The trick at this point is to not respond to the new middle ground figure. Instead I like to stare at my list of reasons for the price hike and pretend like I'm really considering it. Meanwhile though I'll actually be going through the list of price hike reasons and putting a dollar value on each one in my head making sure my total is for the entirety of the price hike. Even if the reasons they give are bullshit like costs of doing business, recession, gas prices etc etc. After a nice long pause giving them a chance to ponder whether or not I fell for it I'll respond with "well thats certainly better than the price you're supposed to give me" "But I'm bothered by a few of your reasons for raising the prices on me like that."

At that time go through your entire list of reasons they gave and refute every one with good logical reasons of why i don't deserve that cost being passed on to me, or why that cost isn't really a cost to them at all. Each time I refute one I'll wait till the moment in the argument when they quit caring and realize I'm just being difficult about something that doesn't really make a difference. At that time I'll dock them the value of the justification I had in my head off the price and get them to admit I'm right. This wears them down very quickly but will last as long as I want it to.

At this point I make sure to go through every single thing on the list until the entire gap of the price hike is accounted for and they admit defeat on all of them. That creates a great time to thank them for working with you on the negotiation and being so reasonable with the middle ground price point. This relieves the tension and annoyance they've built up for you right before you start the hard math portion. This is where I will add up all the exact penalties I gave them and they agreed to from the middle ground price point. This is the fun portion because while they're agreeing with you the whole time you're deducting money from it the moment you finish they quickly realize they've been had when you end up with a new price they've seemingly agreed to that is actually lower than your original asking price.

To show you what I'm talking about:
I asked for $500
They wanted $700
They middle price pointed me to $600 while giving me $200 worth of reasons for the price hike.
I gave them $200 worth of refutes bringing my agreeable price from $600 to $400, while keeping them in agreement.

You saying the final number is the moment they start to panic and want to start the negotiation over. This is when I let them know how much I appreciate their service/product and even consider expanding to more of their services/products. So I'll tack on and start asking questions about a $100 worth of what I can estimate would be their high gross margin addons and seriously consider buying them. Them not wanting to sidetrack you from wanting to buy something will usually accept the distraction and start trying to sell you as many addons as possible in hopes of recouping the loss they just agreed to.

At this point I'll usually sift through the extra products and services they offer and the upsells and settle on a few that will bring my price point just BARELY above my original asking price (like with the $500/month I'll get the price to about $525 with all the extra upsells) and before they can think about it shake their hand and declare DEAL in a definite and authoritative manner, making them feel accomplished in successfully raising the prices on you or getting you to buy something for more expensive than it should be.
</rant>

As far as mannerisms and attitude the tried and true method of going from one extreme to another works great. Most people do it very wrong however and go from happy and nice to angry and hostile when they say something you don't like. That is definitely the wrong two extremes to choose and it'll just lose you credibility as a bipolar nutcase. Instead I like to go from loud and flamboyant while being super polite and friendly to super quiet and standoffish, sometimes even dead silent for long periods, when they tell me something negative.

For instance if they say something like "I'm sorry we can't do that, we need this." I'll become super quiet and just stare at them. Then in a super quiet whisper say, "really?...why?" Then stay silent until they tell me something I like to hear at which time I'll smile and chat em up till their ears fall off or they say something I don't like again.

Either way negotiations are fun and a really great skillset to have. You guys have any negotiation tips you use?
 


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Solid post. I enjoyed the part where you use distraction and bait the seller with chances to make up the margin; it's a very clever tactic I've used several times.

The only thing I could really add to that is the gate keeper technique. I bring along a second party that is the "supposed" buyer who doesn't want to do any talking. Having this person adds another hurtle for the sale rep as he has to talk through me to reach the buyer.

I like to can get to a similar agreement as what you lined out before, but prior to closing the deal the buyer interjects expressing no interest in high margin and otherwise unnecessary items. The seller will try to fight to get back those items, maybe offering discounts or something else. In the end we'll choose one item I'll "convince" the buyer he needs which will make the seller feel like he had a small victory. This is enough to close the deal and bring the price down lower.

I like to imagine negotiation as a game of tug-a-war. Both parties pull in their respective directions and the price point ends up where either side can pull it. Normally the one with the most willpower will win, but you can make your job easier by having solid techniques and experience. However, if you ever want to do business with the person again, its best not to pull them into the mud. At the very end of the game let up some slack to give them a little victory. It's like playing with your friends, you have to let them win a little if you want them to keep playing with you.
 
I've taken classes on different schools of though in negotiation my tip is to get as educated as you can. It's not something that can be learned in one book or even in one year.
 
Greenfields said:
I like to can get to a similar agreement as what you lined out before, but prior to closing the deal the buyer interjects expressing no interest in high margin and otherwise unnecessary items. The seller will try to fight to get back those items, maybe offering discounts or something else. In the end we'll choose one item I'll "convince" the buyer he needs which will make the seller feel like he had a small victory. This is enough to close the deal and bring the price down lower.
Click to expand...
That's an awesome one!
It's like the moment you see them as you're shaking their hand you can say something along the lines of, "I'm glad you're here, we had a tough year last year and need to trim a lot of fat out of our contract with you."

I've found that it switches them from trying to upsell you to just trying to keep you as a client in an instant.
 
When negotiating, in my experience at least, I think you also need to know when to be firm with someone. It can often come down to a case of who blinks first, and most of the time that isn't me. I've found this to be true in all kinds of negotiations, like buying a car, where despite all the sales tricks they use, you have the leverage. The salesman doesn't have many buyers, but there are tons of places you can get a car from.

You need to use that leverage.

I apply it often to AM when doing things like negotiating payout bumps. In this case, I have the traffic volume and the network wants it. We know that networks have bigger margins than they make out. The "I can only give you an extra $0.50 - $1.00" angle doesn't really cut it most of the time.

So, I tend to run a lot of traffic to an offer, ask for a bump, tell them that I need more, and switch off the traffic. This is a campaign that may or may not be making money, and I could be losing money by not running it.

But, in my experience 90% of the time, the next time I sign onto AIM I'll get an IM that says something like "Hey, I noticed you stopped running traffic to Offer 1234".

As soon as that comes through, you have all the chips. You can say someone else offered you more, or you just couldn't make it work at that price. Whatever you say, you will normally find that the offer that they had "literally no margin" on the day before can now find you some good bump.

It's not personal, it's business. Knowing how to be firm with people and not just accept their terms is a big part of that I think.
 
Thanks for the bump, just got back to the states. For me, the secret to successful negotiating is to never put yourself in a position where you don't have the upper hand. If someone has a monopoly on something, then you have less leverage.

I'm a straight shooter and when it comes to a purchase, I merely flat out say "I don't want to waste time, I will give you $500 cash, right here, right now, and that's it". It worked on my last car purchase... which was slightly more than $500.

Cash is king, but it doesn't work if you're desperate or they have the only thing around. You need to make sure you have options and really are able to walk. Otherwise... you have to move to a different, longer, and more uncomfortable tactic.
 
I just used the reverse from a sellers standpoint. I was negotiating with a chiro to do his local seo work. He wanted to pay X, I want to charge Y.

You all know that Drs have giant egos, and "know" everything. I merely pointed out how his competitors are eating him a new a**hole, getting all the leads, and potentially putting him out of business. "These other Drs. are laughing all the way to the bank", I say. I hit him where it hurts; his pocketbook and his over inflated ego! Now whos'e the proctologist? Me!

Don't ever forget the other guys EGO!
 
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[ame="http://www.youtube.com/watch?v=ZtpN5VKdAOM"]YouTube - Broadcast Yourself.[/ame]
 
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It's entertaining to watch, but I have absolutely no respect for the writers... People watch it simply because it depicts the life they want to live. I mean - it's honestly about a movie star who parties all the time and fucks a lot of hot girls... It's a bizzop with an hour long time slot. Throw in a couple decent jokes and you're golden.

That said, Ari is a great goddamn character.

edit: also agreeing that it's mad formulaic, especially when analyzing entire seasons.
 
couple of thoughts on this.

As a buyer, I do my research and decide on a fair price.

As a seller: I must be prepared to walk away from the deal if margins aren't met.

One thing no one has mentioned is loyalty and the effect it can have on a relationship. Better discounts for more loyalty.

Another thought, so many of our negotiations is on the phone or even via email, many of these tactics listed above do not work. You can always find a better price in the same way you can always find a "better" AM~er. Is it really better just because the price is better?

I do love going into 7-11 and negotiating with certain clerks though!!!
 
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