A Better Way to Negotiate
Negotiating for a major purchase, such as a new car or home, is often a source of anxiety. We want our hard earned (and saved) money well spent and to get the most value for every dollar. It is important to be knowledgeable about what we are buying (for example, knowing the gas mileage of a new car). It’s also important to be prepared for the negotiation process ahead. Taking time to ready ourselves can help make our purchasing experience more positive and provide greater confidence and peace of mind that we are maximizing every dollar.
This brings to mind a story from a college professor that illustrates the importance of clear communication in the negotiation process.
The story goes like this:
On your way to lunch you see two co-workers arguing over who gets the last orange. Since you are a third party walking by, they ask for your help to come to an agreement. What do you do? Many will respond by saying cut the orange in half and give a piece to each party. One co-worker eats the fruit and throws away the peel. The other co-worker throws away the fruit and uses the peel to bake. Unless you take the peel or fruit from the trash, value was wasted. By not focusing on the underlying interests behind each party, both threw an opportunity in the trash.
When I first heard this story, I somewhat dismissed it. However, when the time came for my first negotiation experience, it was very apparent that each party had an underlying interest on why they were there. If you can find out what that interest is, the process will seem a lot smoother.
For your next big purchase:
Next time you are making a big purchase, consider the tips below to help you conduct a successful negotiation and minimize any uneasiness during the process:
- Build a working relationship – The quicker you can turn a stranger into someone you know, the easier the negotiation is likely to become. Try to find a commonality such as where your kids go to school, favorite sports team, or hobbies.
- Put yourself in their shoes – A great way to understand the other party is to see their viewpoint. Where are they coming from?
- Know your alternatives – To succeed in a negotiation, you must go in with a plan. Be able to weigh the proposed deal against your next best option. If you have alternatives, the pressure is diminished for that specific situation.
- Know the standards – Know the product or service you’re purchasing. For instance, if you’re purchasing a car, reference Kelley Blue Book to get an understanding of how cars are currently selling. Make sure you have done thorough research ahead of time.
- Follow rules of etiquette – Remain respectful of all parties involved. If the negotiation process falls through, move on. You will never regret being polite, and you may have an opportunity to work with the individual again in the future.