Become A Master Negotiator

Summary: Breaking the price up into small increments to lessen the impact of the total amount.

With this tactic, you break dollars and cents down into such small amounts that your counterpart doesn’t realize he is dealing with large sums of money.

Example

Last year, at the San Diego County Fair, I was intrigued by a vendor selling ceramic knives. When she finished expertly cutting up everything in front of her, I made the mistake of asking how much the knives cost. Her reply was, “Peter, these knives have a full guarantee for a period of ten years. Over those ten years, they are going to cost you only about eighteen cents a day.”

What this saleswoman did was break the total price down into the daily cost. Obviously, almost anyone can afford eighteen cents a day. I am still kicking myself for falling for the Funny Money close.

Car dealerships are masters of the Funny Money tactic. They try to get the buyer to think only about the monthly payment and keep him in the dark about the total price and interest rate until the deal has been struck.

Counter

In both examples above, the buyers should do their homework and spend some time working out the total price. If their counterparts are unwilling to provide a full disclosure of all terms, the buyers should simply walk away from the deal.

Have you used or encountered this tactic in your negotiations? If so, how’d it go?

Summary: Making a ridiculously low or high offer.

Example

You’re trying to sell your house for $289,000 when your agent brings you an offer of $260,000 from a couple who saw the house over the weekend. If your house is competitively priced, this would be considered a lowball offer.

Lowballing is effective because it tends to lower a counterpart’s aspirations. If you counter the couple’s offer with $180,000, their next offer of $275,000 won’t seem so bad. If they had originally offered you $275,000, you would probably have countered higher than $280,000.

Counter

If someone lowballs you, you have three options: (1) Do not counter! Utilize These Boots Are Made for Walking and move on. (2) Counter by repeating your asking price. (3) Using the tactic of the Withdrawn Offer, counter with a figure higher than your asking price. Explain that the couple must have misunderstood the actual price, and then counter their ridiculous offer with an even more ridiculous price.

If someone highballs you, you also have three options: (1) Do your homework to find out whether the price is competitive. (2) Use the Power of Competition. Demonstrate with a competitive analysis that the price is unreasonably high. (3) Ask for a price breakdown.

Have you used or encountered this tactic in your negotiations? If so, how’d it go?

Summary: Taking back an initial offer to keep from being taken advantage of.

Truly withdrawing your initial offer may be in your best interest in some situations. This tactic can be used when you feel you are being taken advantage of or put in a position where you can only lose.

Example

Joseph is selling a house that he owns jointly with a partner. The asking price is $226,000, but the buyer is a very tough negotiator. By using the Salami tactic, the buyer manages to reduce the price to $221,000, have the escrow extended to ninety days, and stipulate that Joseph and his partner will carry back a $20,000 second mortgage at 9 percent. Joseph thinks the deal is finalized… until the buyer brings his wife into the picture.

The buyer’s wife says she hates the kitchen and will not allow her husband to pay any more than $219,000 for the house. That is when Joseph says he has bad news for the buyer: Joseph’s partner has decided that they should not sell the house for any less than $223,000. Since the buyer really does want the house, he spends the rest of his negotiating energy trying to get the price back down to $221,000.

Counter

First, rather than scrambling to get the price back down, the buyer could utilize These Boots Are Made for Walking. If Joseph really wants to make the deal, he will come back. Second, the buyer could use Apparent Withdrawal, giving the appearance that he is quitting, to regain control of the situation.

Have you used or encountered this tactic in your negotiations? If so, how’d it go?

Summary: Acting uninterested in continuing the negotiation.

Although you sometimes may not want to go to the extreme of walking away from a deal, you may still want to give your counterpart the feeling that you are not really committed. Apparent Withdrawal should be used when you want to give the appearance that you do not care, when in reality you are simply trying to retain control of the situation.

Example

Several years ago, a friend of ours was negotiating to buy a beautiful home. He had gone through several days of negotiating on many deal points. He was in love with the house but the seller’s last concession was still $4,000 above what our friend wanted to pay. So he called the seller’s broker and said that he was going to have to withdraw from buying the house because he could not make the numbers work to his satisfaction. Our friend was confident that neither the seller nor the broker would let a $300,000 deal go over a difference of $4,000. Since our friend was willing to pay the $4,000 if he had to, this was a case of Apparent Withdrawal rather than Withdrawn Offer.

Counter

The broker had at least three possible tactics at her disposal: These Boots Are Made for Walking , I’ll Meet You in the Middle, or Trade-Off Concession. Any of these tactics could have worked to bring our friend back to the bargaining table without giving in to his lower price.

Have you used or encountered this tactic in your negotiations? If so, how’d it go?

Summary: Citing lack of precedent as a reason for turning down a deal point.

When you cite a precedent, you use something that has happened in the past to justify a current request, position, or concession. Lawyers often cite precedents, using actual court cases to support their positions. Reversing this tactic by saying, “There is no precedent for that,” or “We’ve Never Done That Before” in reference to a deal point can be very effective.

Example

A hotel guest asks to extend his check-out until 2:00 PM. The guest services person denies the request, saying, “I am sorry for any inconvenience, but we never extend checkouts past noon.”

Counter

The guest could respond by Asking a Closed-Ended Question, such as, “How much would it cost to stay an additional two hours?” Or he could counter with a precedent by pointing out, “Every OTHER time I have stayed with this hotel chain, I have been allowed a 2:00 PM check-out when I requested it.” As a last resort, he could utilize the tactic of the Higher Authority, going over the guest services person’s head and asking to speak to the manager.

Have you used or encountered this tactic in your negotiations? If so, how’d it go?

Summary: Using a well-respected source of information to support a position.

Objective criteria are often useful as a baseline for negotiations. Some well-known standard benchmarks include the Kelley Blue Book, the Consumer Price Index, the Consumer Confidence Index, and the interest rate set by the Federal Reserve Bank. For example, whenever someone buys or sells an automobile, each counterpart has the opportunity to reference the Kelley Blue Book for objective criteria. This source provides the retail and wholesale value of the car and specifies how much various options are worth. It even tells how much money to deduct or add for specific mileage.

Example

You are asking $17,500 for a car you are selling. A potential buyer tells you that according to the Kelley Blue Book, the value of your car is just $15,000.

Counter

When a counterpart References a Benchmark, you should first verify that his information is correct. There are lots of ways to present information, and your counterpart will probably present his statistics in a way that supports his position. For example, if he tells you the Kelley Blue Book values your car at $15,000, ask, “Are you referencing the wholesale value or the retail value?” Buyers usually reference the wholesale value.

A second tactic may be to provide new information from another source. You might point out an ad from Craigslist that offers the identical make and model car at a price similar to what you are asking. Finally, you might take a different angle and explain why your car is an exception to the objective criteria. Perhaps you are the original owner, and have kept the car in perfect condition and have all the maintenance records to prove it, and you believe these exceptions support your price.

Have you used or encountered this tactic in your negotiations? If so, how’d it go?

Summary: Asking for concessions one at a time, to make them more palatable.

Few people eat a whole salami with one swallow. Salami just goes down easier if you cut it into small pieces. The same principle applies to negotiation. Your counterpart will be more likely to make major concessions with less resistance if you cut the concessions into several small pieces.

Example

Kate is in the market for a new desk, chair, and dresser. The total furniture set she wants retails for $850. She has set a goal of purchasing the set for $700. If she walks right up to a salesman and says she will buy the set if he sells it for $700, he will probably tell her to get lost. She stands a much higher chance of getting the set at her price if she uses the Salami tactic.

First, Kate asks the salesman what kind of discount he will give if she purchases all three components at once. He might agree to a 10 percent discount. Next, she asks if he will take another $50 off if she takes the floor model. Finally, she mentions that she will buy the furniture set immediately if the salesperson will throw in the extended warranty on the desk. Before you know it, all those little concessions add up to $150.

Counter

If the salesperson realizes he is getting the Salami, he has several options. He can expose Kate’s technique, pointing out that he has made concession after concession, and the negotiation is no longer win-win. Second, he can blowup, using the YIKES! You’ve Got to Be Kidding tactic. When Kate asks for one more concession, he can express utter disbelief, acting as though she has finally introduced the straw that has broken the camel’s back. His other option is to counter, using the Trade-Off Concession by telling Kate, “I will give you the extended warranty on the desk if you will buy the extended warranty on the chair and dresser.”

Have you used or encountered this tactic in your negotiations? If so, how’d it go?

Summary: Working alongside your counterpart to create a win-win outcome.

Although it is always good to have a plan complete with solutions laid out in your mind, getting your counterpart involved in generating win-win solutions can also be helpful. Your counterpart may well suggest an idea you had not considered.

Example

A client informs a consulting firm that she is having major customer service complaints and feels her staff needs training. While the consultant has a good idea about the type of employee and management training the company needs, instead of making suggestions, the consultant asks, “What type of training do you feel would work best for your managers and employees?” Clients usually have a very good idea of the prescription needed to cure their problems.

Counter

A counter will probably not be necessary with this tactic. But the client could employ Deflecting an Answer With a Great Question to change the course of the conversation, if desired. She might also try Sharing Both Pros and Cons of various possible solutions.

Have you used or encountered this tactic in your negotiations? If so, how’d it go?

Summary: Taking a break from a negotiation can sometimes be the best thing for both counterparts. You may want to just use the restroom, let tension disperse, or locate additional information before making a decision. A break might last 10 minutes, overnight or a whole weekend. Novice negotiators have to learn to feel comfortable saying, “Let’s take a break.”

Example

All parents have a difficult discussion or two with their children at some point. The topic of the discussion may be school grades, curfew, telling the truth, or enforcing discipline. Sometimes a discussion does not go well. The parents end up angry, raising their voices and saying things they regret later. The child ends up frustrated and in tears. At a time like this, a great question for parents to ask themselves is, “If we get angry enough to say things we might later regret and our child ends up in tears, will we have accomplished our goal?” If the answer is “no,” it may be time to take a break.

Counter

If your child thinks he is “winning” the discussion and you are taking a break for the sole purpose of avoiding the issue being discussed, he may want to insist on resolving the issue immediately. As another option, he could make sure you establish a specific time to reconvene.

Have you used or encountered this tactic in your negotiations? If so, how’d it go?

Summary: Taking action first, asking for forgiveness later.

Fait Accompli is a tactic described by Gerard I. Nierenberg. The phrase is French for “accomplished fact,” and refers to a deed that is already done-and is therefore irreversible. You employ this tactic when you do something without first negotiating it. Then, when you get caught, you respond to any questions with something like, “Who, me? I didn’t know I wasn’t supposed to be doing that. I apologize. I will not do it any more.”

Example

Your neighbors’ trees are hanging over your property and you are tired of raking up the leaves. Instead of making a big deal and asking your neighbors to cut the trees back to the property line, you decide to trim them yourself. Your neighbors become incensed that you have cut their trees without asking. You reply simply that you thought you were doing the right thing by not bothering them, and you apologize for your actions.

Counter

The reason this tactic is so powerful is that there are few tactics to counter it. What is done, is done. About the only thing the neighbors can do is stop future progress. For example, if you are still cutting the trees, the neighbors could ask you to stop, saying they will hire a professional to trim their own trees. Putting the process on hold puts them in a better position to enforce future action. They could also use The Safeguard tactic to guide the future relationship, asking you to agree that you will never cut the trees again without first getting their permission.

Have you used or encountered this tactic in your negotiations? If so, how’d it go?