Recently, I wrote about how I negotiated a competitive discount with my electricity supplier. In this post, I spoke about how research, preparation and a little bit of courage are paramount to negotiating a good deal. Consequently, I thought I would elaborate further by sharing my thoughts on how to negotiate a better deal by utilising the principles of negotiation.
What are the principles of negotiation?
In my day job, I spend most of my time negotiating with internal and external stakeholders. Consequently, strong negotiation skills are the number one criteria for my position. As a result, I’ve learned a thing or two about the principles and strategies of negotiations.
The below is my summary of what I perceive to be the most critical principles of negotiations.
The attitude you commence your negotiations with is critical to getting what you want. If you commence negotiations with an aggressive, condescending or arrogant tone, you can almost kiss your chances of getting what you want goodbye. This is because such an attitude is likely to elicit an equally negative response.
Studies have found that emotions are contagious. Emotional contagion is the mimicry of other people’s tone, body language and speech patterns. This phenomena occurs without us even knowing and can significantly impact how a conversation unfolds.
Establish your bargaining range
Knowing what you want, what you’ll settle with, and what’s unacceptable to you are critical considerations when entering negotiations.
If you don’t establish your bargaining range before entering negotiations, you may find yourself in a position where you agree to something that is unsuitable to you simply because you’re unable to properly consider the implications of the other party’s proposal thoroughly on the spot.
Do your research
As I recently outlined, doing your market research is critically important when entering into negotiations with another party/parties.
For example, when buying a property, you don’t just take the real estate agent’s word for value. Real estate agents often over state the value they can get for a property in order to secure a seller’s business. Consequently, it’s up to you as a buyer to do your market research of comparable recent sales and get a valuation done by a certified practising valuer to ensure that the current market value is consistent with the listed price.
However, If you don’t know what the playing field is, it’s easy for the other party to BS the crap out of you!
Know what your alternatives are
Before entering negotiations, it’s important to know what your alternatives are to negotiating an agreement. If you’re alternatives are acceptable, then you know you don’t need to strike a deal.
This gives you power in the situation and will enable you to confidently walk away from negotiations without a deal; rather than walking away with a poor deal for yourself.
Treat negotiations like a game of poker
Negotiations are like a game of poker; if you’re strategic, keep your cards close to your chest and put your best poker face on, you’re more likely to come away a winner. But, if you show your hand before you’ve secured the deal, it’s not going to be much of a contest.
Why is it important to keep the principles of negotiation in mind?
During my recent discussion with my friend about electricity prices, she mentioned how it seemed impossible for them to get the best deal from their supplier until it was too late and they had signed up with the other provider. After this, their previous supplier came running with a deal twice as good as their previous “best offer”.
This is why approaching negotiations with the principles of negotiations in mind are critically important. If you play nice, do your research, establish your bargaining range, know your alternatives, and put on your best poker face, your chances of success are much higher.
If the other party knows you know what you’re talking about and aren’t emotionally attached or desperate, they’re going to know that you mean business and aren’t going to be fooled.
This gives you the power in the situation… Meaning you’re unlikely to walk away unhappy, whether you got the deal or not.
The principles of negotiation are a key tool for your frugality and wealth maximisation tool box. Employing good negotiation skills into your every day life can help you get what you want, when you want. So, put yourself out there and score some better deals for yourself!