Negotiation is a fundamental skill that can make or break your financial success. Whether you’re bargaining for a higher salary, securing better rates, or closing a business deal, mastering negotiation techniques is essential. Andrew Lokenauth, the author of TheFinanceNewsletter.com, on his X (formerly Twitter) handle recently shared twenty powerful strategies to become a negotiation expert. Let’s dive into these tactics:
What Effective Negotiation can get for you
Negotiation will help you make more money by:
- Securing better rates
- Getting more raises and promotions
- Selling products and services for higher prices
Negotiation will help you save more money by:
- Getting discounts on purchases
- Lowering bills and expenses
- Avoiding fees and penalties
Without negotiation skills, you’ll miss out on many opportunities and leave lots of money on the table.
20 Strategies to Master Negotiation
1. Embrace the Power of Silence: After making an offer, pause and let the other party respond. Awkward silences can prompt concessions and create pressure.
2. Make Them Negotiate Against Themselves: Prompt the other party to improve their offer by asking how they can enhance it.
Say “This offer isn’t where I need it to be. How can you improve upon it?” Get them thinking of better offers.
3. Leverage Competition: Mention quotes from competitors to encourage the negotiation partner to lower prices or offer better terms.
Make it known that you’re getting quotes from competitors. “XYZ Company offered me a lower rate, could you match it?” prompts them to lower prices to win your business. Use competition to your advantage.
4. Use Odd Numbers and Precise Figures: Odd numbers and precise figures feel more carefully calculated and grounded than round numbers.
Proposing $49,431 seems more grounded than $50,000. Odd numbers and unusual precision feel more carefully calculated.
5. Ask for More: Aim high by asking for more than you think you can get, then “concede” toward your actual goal. This gives you room to compromise while still ending up with what you want.
6. Use Positive Framing: Frame your requests positively to elicit a better response from the other party.
7. Employ Conditional Phrases: Use “if-then” statements to propose trade-offs and find common ground. Say “If you can do X, then I can do Y” to propose trade-offs and find common ground.
8. Harness Reciprocity: Make a small concession, and the other party may reciprocate, leading to mutually beneficial outcomes. for instance; “If I adjust my timeline by a week, could you increase the payout by 5%?”
9. Utilize Indirect Reciprocity: Leverage social proof and third-party credibility to your advantage. For instance; “My friend Jamie said you were great to work with.”
10. Watch Body Language: Pay attention to nonverbal cues, such as hesitation or rushing to respond, to gauge flexibility on pricing and terms.
Notice if they rush to respond or hesitate before answering. This can signal their flexibility or firmness on pricing and terms. Reading nonverbal cues can help you know when to push or back off.
11. Mirror Body Language: Build rapport and trust by mirroring the other party’s speech patterns, posture, and tone.
12. Set Clear Limits: Determine your walkaway point before negotiations start to avoid bidding against yourself or accepting unfavorable deals. Decide the maximum you’re willing to pay or the minimum you’re willing to accept before you start negotiating. This will help you know when to stop bidding against yourself or accepting deals that don’t meet your needs.
13. Have a BATNA (Best Alternative To Negotiated Agreement): Know your walkaway options if talks stall. When negotiating a salary, your BATNA could be staying at your current job. If bargaining a mortgage rate, your BATNA could be getting a loan from another bank. Have a backup plan.
14. Do Your Homework: Research fair market prices and competitor pricing to support your requests with data.
15. Ask Probing Questions: Surface more information by asking questions that delve deeper into the other party’s position. for instance, “Help me understand why you can’t come down to X price?” or “How was that monthly payment amount calculated?”
16. Use Open-Ended Questions: Encourage dialogue and gather insights by asking open-ended questions. Open-ended questions allow you to gather more information and encourage the other party to share their thoughts.
17. Ask Them to Justify: Put the burden of proof on the other party by asking them to justify their offers or positions. For instance, “Can you walk me through your methodology on how you arrived at that number?”
18. State Your Needs Powerfully: Clearly communicate your requirements without being aggressive. For instance, “In order to accept this offer, I need you to increase the salary to $X” is direct but not aggressive.
19. Be Persistent: Don’t give up easily; persistence can lead to favorable outcomes in negotiations.
20. Follow the 7 P’s: Proper Prior Preparation Prevents Poor Performance. Master your facts and leverage points to negotiate effectively.
By implementing these strategies, you can enhance your negotiation skills and achieve better outcomes in various aspects of life, from financial transactions to career advancement.
