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Secrets of Power Negotiating

By Roger Dawson

Inside secrets from a master negotiator

  • Gambits can be divided into 3 categories
    • Beginning

Opening moves you can use to secure a strong foothold at the start of a negotiation

  • Middle

Help you move the negotiation in the direction you want it to go

  • End

Enable you to seal the deal in your favor

  • To establish a favorable negotiating range, ask for more than you expect to receive
    • The distance between the two quotes establishes your negotiating range
    • Make your initial offer low enough, so that your target price will end up right in the middle
    • Bracketing: making an initial offer that turns your target price into the midpoint of the negotiating range
    • Example, if the salesperson's asking price is $18,000 and your target price is $15,000, you'd bracket your target price by making an initial offer of $12,000 -- $3,000 lower than your target price, just as the asking price is $3,000 higher.
  • Negotiating gambits have a broad range of applications.
    • if you're buying a piece of real estate, you might request an unrealistically large number of revisions to the paperwork, under the expectation that only a fraction of them will be accepted by the seller.
    • The gambit also works outside the realm of business altogether. If, for example, you're a diplomat involved in a political negotiation between two governments, you could start with much greater demands than you expect the other side to grant.
    • Reluctant seller - To do this, you have to pretend that you're much less eager to sell your product or service than you actually are. If you're selling a property, you could tell your potential buyer that you're not even sure you want to sell it, because it has a lot of sentimental value to you. This is a way to narrow the negotiating range in your favor. The more you convince the buyer of your reluctance to sell, the less likely they'll be to lowball you in their initial offer, particularly as they won't want to make you even more unwilling to sell.
    • Reluctant buyer - They just need to convince you that they're not so interested in purchasing your property. For instance, saying that there are many other well-priced options they're considering is one tactic. It might tempt you to lower your asking price, narrowing the negotiating range intheirfavor.
  • Carefully chosen body language and verbal language can have a big impact when negotiating
    • Flinching - you should act visibly shocked that he would propose such a number -- even if it's entirely reasonable! If you're a good enough performer (and the owner is a bad enough negotiator), he might respond by immediately lowering his asking price. Even if you don't get that lucky, you're still communicating that the price is unacceptable to you in a way that's much more convincing than words alone.
    • VICE technique
      • To use it, let your counterpart make her initial offer. In response, and with a calm voice, you then say, "You'll have to do better than that." The next move is hers.
      • The point of this gambit is to put the negotiating ball right back in her court, so let it stay there until she does something with it. If she's a novice negotiator, she might respond with a better offer -- improving your negotiating range before you've even made a counteroffer.
      • But if she's a savvy negotiator, she'll throw the ball right back to you by asking, "How much better do I have to do, exactly?" Nowyouhave to pin yourself down with a price that will establish the negotiating range.
  • Even if it's a great deal, you shouldn't accept the other side's first offer

imagine you're buying a used car from an acquaintance. You ask him the price. He says $5,000. You want to pay $4,000, so you counter by offering $3,000. And then, without a moment of hesitation, the man says, "Alright, sold! It's all yours!"

On paper, this sounds like a cause for celebration. You just beat your target by $1,000 without even having to really negotiate! In reality, though, your mind's alarm bells would be going off, because if the man was that quick to sell you his car for nearly half his asking price, perhaps there's something wrong with it.

You'd also leave the negotiation frustrated with yourself for not pushing your luck even further. If it was that easy to get him down to $3,000, what would have happened if you'd offered an even lower amount -- say, $2,000? Perhaps you could have gotten an even better deal. Now you'll never know.

By contrast, imagine if the man refused your initial offer and then drew you into a long, hard-fought negotiation in which you finally landed at your target of $4,000. You'd be paying $1,000 more than in the other scenario, but you'd probably feel more satisfied with the outcome. By not budging on the price without a fight, the man would make the car seem more valuable, and he'd leave you feeling like you couldn't have gotten a better deal out of him.

In an ideal negotiation, both sides leave the negotiating table feeling like they won. But the other party can't feel like they've won if you don't put up a fight. With that in mind, you should always refuse the first offer -- not just for your own sake, but for the other party's sake as well.

  • Continue to use the technique of bracketing and taper your concessions during the middle phase of negotiating.
    • make sure the concessions are not of equal size, and make sure the last concession you make isn't a big one. You want the concessions to taper down into smaller and smaller increments.
    • On the other hand, if you concede $10,000, then $5,000 and then $1,000, you'll create a much stronger sense that you're reaching your limit.
  • Always insist on a trade-off.
    • never make a concession without asking for one in return.
    • What should you ask for in return? Keep it open-ended. Rather than proposing something yourself, let the other side propose something for you. Just ask, "If I can give you what you're asking for, what will you give me in return?" This way, you're putting the ball in her court.
  • To avoid making concessions and position yourself as more of an ally than an adversary, invoke a higher authority
    • This entails pretending that there's another person or entity who has to approve any concession or decision you make. For example, you could tell your client something like this: "Well, I'm not sure if I can convince my people to approve this deal without an additional charge for expedited shipping."
    • Notice the vagueness of the authority you're invoking: your "people." Depending on the situation, you could also pretend that you have to defer to "corporate," "the committee" or your "family." The vaguer, the better. If you specify an individual (say, your boss or spouse), the client might ask if she can talk directly to the authority. You're inviting her to cut out the middle person: you.
    • I really tried to convince my people to give us the free expedited shipping, but they just wouldn't budge. What can we give them in return? I want to find a way to make this work.
  • If a negotiation gets bogged down, be prepared to call in a third party or even walk away
    • If you're really stuck, one option is to bring in athird partyto provide a fresh perspective and propose a new solution. This could be a neutral third party, like a professional mediator or arbitrator. But it could also just be someone who can play the role of intermediary -- even if he's technically on your side.
    • be prepared to walk away from the deal, and project your ability and willingness to do so.
    • Projecting walk-away power is one of the most effective ways to strengthen your hand as a negotiator.
  • When an issue becomes a sticking point, set it aside for later.
    • The first is to shake things up. There are many ways to do this, depending on the situation. You could change the setting of the negotiation by suggesting you continue the conversation over dinner. You could lighten the mood by talking about your hobbies or some juicy industry gossip. You could bring in some fresh energy by switching up the members of your negotiating team. Whatever you do, the point is simply to thaw the ice and keep the flame of the negotiation alive.
    • Another option is to use theset-asidegambit. The idea behind this gambit is that when you reach an impasse in a negotiation, it's usually about just one or a few of the many issues you're trying to work out with the other side. For example, if you're trying to sell a custom-built product, the sticking point could be the time-frame for designing the prototype. The client is insisting on just a month. You know that's impossible, and so you're trying to convince him you need more time, but he just won't listen.

There are still a wide variety of other issues on which you can probably reach an agreement, though, ranging from the specifications of the product to the terms of payment. With that in mind, you should set aside the issue that's the sticking point and focus on the other ones where you can find common ground. After all, you can always circle back to the sticking point during the end phase of the negotiation.

That might sound like kicking the can down the road, but it serves a very strategic purpose. Having worked through so many other issues and getting so close to the finish line, the other party will probably be reluctant to lose the deal over a single measly detail. He most likely won't want to walk away from a struggle empty-handed and feel like his time and effort were for nothing.

  • At the end of a negotiation, it's easy to get a small concession from the other side
    • The more time and energy we invest into an enterprise, the less we want it to go to waste. The more we think of something as being ours, the less we want to let go of it. And the more we feel ourselves nearing the finish line, the less we want to stumble in the final stretch.
    • Nibbling - simply wait until the final moments of the negotiation, and then, right when it seems like you've reached a deal, you ask for one last little concession or two. For example, if you're buying a used truck and you're about to sign the check for $7,000, you could nonchalantly say, "Oh, and the truck is going to come with a full tank of gas, right?"
    • Of course, the other side can also try to use this gambit against you. If you're selling something, one way to protect yourself against it is to list out the costs of extra benefits in writing and show them to the prospective buyer ahead of time. That way, you'll preempt them from trying to ask for those benefits for free at the end of the negotiation. Another method is to use the higher authority gambit. For instance, you could claim your manager hasn't authorized you to grant the request that's being nibbled for
    • Finally, you can try to make the other side feel a little embarrassed about their attempt to nibble. To prevent this counter-gambit from stinging too hard, put a big smile on your face and, in a good-natured tone, say something like, "Oh, come on. You've already gotten a great deal out of me!" Hopefully, this will cow them into dropping the request
  • If the other side of a negotiation gets a little too greedy, you can respond by withdrawing an offer
    • it's time to withdraw your offer. This involves a two-step maneuver. First, tell the other side you're going to take his request to your higher authority to see if they'll approve it. Then, come back and deliver the bad news: not only has the request been denied, but it actually turns out that your offer was too generous and has to be rescinded as well.
    • To dampen the blow of this gambit and shield yourself from the other party's wrath, make sure you act apologetic, hide behind a higher authority and provide a plausible excuse.For example, you could tell the widget buyer, "I'm so sorry -- this is really embarrassing. But you know that price of $1.75 I was offering yesterday? Well, someone in accounting ran the numbers, and it turns out we made an error. Because of a recent increase in the price of raw materials, the lowest price we can offer is actually $1.80."
  • When you've done a good job of negotiating, sugarcoat the deal to make it an easier pill for the other side to swallow
    • It's calledpositioning for easy acceptance. To do this, you just throw in a nice little extra freebie -- no strings attached. If you're selling a car, you could give away your snow chains. If you're selling equipment, you could offer to personally supervise the installation. If you're selling a product with a warranty, you could extend it from two years to three.
    • The freebie can be pretty small -- the idea is simply to be the last person to give a concession. That way, the other party can agree to the deal while feeling like they won the final victory. This will soften the blow of the previous defeats and help them feel good about accepting the deal
    • In fact, do the opposite: act like he got the better deal and congratulate him on a job well done. Remember, a win-win negotiation is one in which both sides go away feeling like they won, so let the other side bask in the glow of that feeling.
  • Summary

By employing a wide range of strategic moves known as gambits, you can greatly increase your chances of success in a negotiation. In the beginning phase, you can establish a favorable negotiating range by asking for more than you expect, flinching, using the vise technique and pretending to be a reluctant buyer or seller. In the middle phase, you get closer to the outcome you want by tapering your concessions, hiding behind a higher authority, and by using the trade-off and set-aside gambits. Finally, in the end phase, you can seal the deal by nibbling or withdrawing an offer.

Actionable Advice​

When negotiating deals involving large sums of money, it's common for people to fall into the trap of thinking in terms of percentages rather than absolute numbers. For example, let's say you're about to buy a house for $200,000, and you could get the other side to come down to $199,000. The savings of $1,000 is just one half of one percent, so it doesn't seem like a big deal if you look at it that way, and it's easy to let go of. But what if you spent just a minute convincing the other side to come down by $1,000? In and of itself, that's a lot of money for a very small amount of time. Just imagine if you had a job that paid you $1,000 per minute!