The Science Behind Negotiating

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Negotiation is part of finance whether you are gregarious or just want to be alone and crunch numbers. Understanding the logic behind it and honing your skills will help you succeed when sitting at the negotiating table.

Many people consider negotiating an art, but there are logical and objective elements to a well-done deal. Give and take is part of the dance, but at the end of the day an offer is either accepted or rejected. But how do you ensure your offer is the one that prevails?

Leave Emotions at the Door

Negotiations can become tense really fast. Everyone is trying to gain control, and “winning” becomes the mantra.

Frustrations can run high. But remember, if you’re feeling it, they’re feeling it too. It’s important to separate the people from the problem—work to deal with emotions and personality issues separate from the issues at stake.

You'll need to develop emotional intelligence to monitor and recognize the various emotions in play. This includes positive and negative.

If you have emotional intelligence, you'll also be able to see through the words that are said. Once you understand how everyone feels, you can calmly proceed.

Know the Product or Service

You will be at an advantage if you thoroughly know the product or service you are negotiating to buy. During a meeting, features will be pointed out to you. If you are already familiar with them, you'll know if they are important to you. You’ll know whether the price is worth it.

Likewise, if you know a product doesn’t have all the features you want but will do the job, this could be helpful knowledge when negotiating. You’ll ask for a lower price than you would if it had those desired features.

The salesperson will try to overwhelm you with everything available. But if you know the product beforehand, you won’t be caught up in the bells and whistles irrelevant to you.

Many people fail at negotiating because they don’t have a clear idea of what they are negotiating for.

Know the Alternatives

Every seller knows who their competition is and where they stand. As a buyer, when entering a negotiation, ensure you know the other person’s competition just as well.

Thoroughly compare line by line all product features. You’ll be at an advantage in the negotiation because you’ll know the alternatives.

Probing Questions Tell All

Ask the question and then listen. Make sure you stay engaged and give feedback on what you have heard. This allows them to know you both understand and are listening.

A good salesperson only talks about 30 percent of the time during a sales process. If you’re a salesperson, be a good one.

Silence is your friend. If you have a team member who talks too much or tries to fill in silence, try intervening.

There’s a technique where you ask a question or for the order, and then you’re quiet. It’s important to stay quiet because the first person who speaks “loses.” That’s because people want to fill the silence. Let the person across the table do this.

Listen to what’s not being said. If they are avoiding a topic, note it and begin questioning.

Use Objective Criteria

Ensure that everyone is on the same page. What are the facts? It’s common to argue back and forth on the facts. But establish these early in the negotiations.

It’s important to bring a standard of fairness, efficiency, or scientific merit to bear on the problem. If you do this right up front, you’ll probably reach a deal that is fair.

Making the First Offer

Making the first offer can be strategic. It can set up an anchor or baseline, which future negotiations can pivot around.

The first offer sets the tone for discussions. It is also a good move if your initial assessment shows a wide separation of the issues under negotiation. It may help focus all sides.

But not making the first offer protects you against committing errors. You can wait for the other side to give you insight into their goals or preferences by allowing them to make the first offer.

This is a good course if you are unfamiliar with the market and think the other side has more information. When you don’t know the actual value, waiting may help give you more knowledge.

Making a Counter-Offer

If the other side makes the first offer, don’t feel obligated to promptly counter-offer. Take some time. Analyze the offer’s legitimacy and demonstrate why it’s not acceptable.

If you want to move forward but don’t want the offer, maintain rapport and keep them engaged. If you’ve taken your time to diagnose the offer, you can eliminate the anchor with backed justification.

On the other hand, don’t jump on an offer. Take the time to evaluate it. If it’s better than you thought you’d receive, you may be missing some information.

Patience Wins the Game

Methodical patience will win the game. Take time to prepare and bring your “A” game to the table. Always know the alternatives to the product or service you are negotiating.

Making the first offer could be a strategic method of establishing future negotiations. While carefully analyzing offers you receive could allow you to position yourself better.

The Epoch Times copyright © 2023. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.