NEGOTIATION involves so many variables — different personalities, different values and different ideas of what is fair — that it is necessary to always be flexible.
So, it is unusual to find one rule that applies in every negotiating situation: Never accept the first offer.
Selling to bargain hunters
This was made obvious to me recently when I was helping a friend who was having a “spring clean”.
To get rid of all her excess possessions, she booked a space at the local weekend flea market and talked me into helping her cart them there one Saturday morning.
As the browsers started wandering in, I stood back and watched — and witnessed some fascinating examples of human nature.
Now, my friend did not really care about how much she sold her goods for.
To her, this was all stuff that she would have thrown out or given away anyway, so any amount was a bonus.
This meant that the first few conversations with potential buyers went like this: “That plate that you’ve got $12 on. Will you take $5?”
“Really? Okay, thanks, I’ll just keep looking. I might come back.”
And, of course, they never did.
After a while, the stallholder next to her came over. He reminded her of the one thing you should never do when negotiating — and explained why.
“They’re expecting to haggle,” he said. “If you accept their first offer, they think there might be something wrong with it.”
So, the next conversations with potential buyers went like this: “That appliance that you have marked at $15, will you take $8?”
“That is very new and hasn’t been used very much. How about $12?”
Ironically, she made more sales by asking for more money!
Buying a used car
Imagine that you are considering buying a second-hand car.
The seller is asking $80,000. You have $75,000 to spend, so you make a first offer of $67,000.
The seller immediately says: “I’ll take it.”
Do you feel satisfied that you have negotiated a great deal?
Probably not. It is more likely you are thinking one of two things:
• “If he accepted $67,000, maybe I should have started at $60,000. I think I paid more than I needed to.”
• “He seemed too keen to get rid of it. What’s wrong with that car?”
Either way, you are not left with a good feeling.
So, as the seller, you owe it to the other person to haggle a little — otherwise he will feel bad!
Even if you get lucky and he asks for something that is easy for you — don’t give in too quickly.
Remember, the value of an item is the perceived value to the other party — not the cost to you.
Changing a delivery date
For example, a client wants you to alter your regular delivery date because of some renovations he is doing.
Because of your delivery driver’s busy schedule, it actually suits you to delay the delivery.
The smart way to deal with this is not to say: “Yes, of course, that actually suits us better.”
Then the client just feels like he is doing you a favour.
Instead, you say: “Normally, changing delivery schedules is difficult. Let me see what I can do. I’ll get back to you tomorrow.”
Then, when you do get back to the client and agree to his request, you will get full value for your flexibility.
Lesson from history
History teaches us the same lesson.
During the Cuban missile crisis in 1962, the United States was demanding the removal of Soviet missiles from Cuba.
In return, the Soviets demanded the removal of US missiles that were installed in Turkey.
Unknown to the Soviets, the removal of these missiles was already planned by the US.
The missiles were old technology, expensive to guard and maintain, and strategically unnecessary because later missiles had a much greater range.
The US, however, haggled for several months over the Turkey installations.
Even though these installations had little value to them, the Americans realised that they had a high perceived value to the Soviets; and by haggling over them, they were able to maximise that value.
One skill that distinguishes successful negotiators from the rest is that they understand what factors have a high perceived value to the other side — and that this often bears no relationship to their real value.
Article by Kevin Ryan, managing director of Training Edge Australia and international speaker with Training Edge International. He has had many years’ experience as a corporate trainer and professional speaker. For details, e-mail firstname.lastname@example.org or visit www.trainingedgeasia.com