Rules for Negotiating…Never Pay List
1. You Can Negotiate Anything
The first rule is that everything is fair game, not just cars and houses. At stores, we tend to look at price tags and presume that the offer is final. This is rarely ever true. At the very minimum, you should always ask the clerk if they have any coupons available, if they honor the discounted pricing of competitors, if there are volume discounts, or if any other discounts apply (senior, military, etc.).
Be assertive, confident, and above all show respect. Use “I” in your conversation. Learn good listening skills. Ask probing questions and then shut up. The other negotiator will tell you everything you need to know, all you have to do is listen.
You can become an effective listener by allowing the other person to do most of the talking. Follow the 70/30 Rule. Listen 70 percent of the time, and talk only 30 percent of the time. Encourage the other negotiator to talk by asking lots of open-ended question; questions that can’t be answered with a simple yes or no.
2. Aim high and expect the best outcome. Successful negotiators are optimists. If you expect more, you’ll get more. Sellers should ask for more than they expect to receive, and buyers should offer less than they are prepared to pay. People who aim higher do better. Your optimism will become a self-fulfilling prophecy. Conversely, if you have low expectations, you will probably wind up with a less satisfying outcome.
3. Do your homework. Know the prevailing price for a product, and understand the pressures that yoru seller is working under. Gather as much pertinent information prior to your negotiation. What are their needs? What pressures do they feel? What options do they have? Doing your homework is vital to successful negotiation. You can’t make accurate decisions without understanding the other side’s situation. The more information you have about the people with whom you are negotiating, the stronger you will be. They may be under more pressure to make a deal at the end of the month, quarter, or year.
4. Ask to Speak With a Manager or Owner
Sales clerks don’t have the authority to negotiate pricing so the second step is to find the person at the store who will directly benefit from the sale. Ideally, you will want to speak with the owner of a small store, understanding that is usually not possible with bigger retailers or chains.
Still if you are at a chain, look for the manager, their compensation is most often tied to store sales and customer satisfaction. Ask for volume discounts, or if you’re a regular customer, ask for a small percentage off retail as a loyalty reward. The key is to let them know that the sale is dependent on their response, otherwise they have no incentive. You are indirectly telling them the sale depends on a lower price.
5. Keep a Poker Face
Keep a cool demeanor; don’t display any unusual interest in the item. When asked, limit your enthusiasm while unfavorably comparing it to other products. Suggest that you might still be interested for the right price.
The strength of your negotiating position relies on your actual alternatives to this deal. As a buyer, you should never fixate on a single product; always shop around and keep your options open. As a seller, you should always be prepared to seek more potential buyers. Be informed, do your homework, come armed with knowledge of the prevailing price, and competitive information.
6. Don’t Make the First Offer…Never Negotiate With Yourself
You never want to make the first offer. The seller may offer a price that is a much better deal than what you initially had in mind. Consider the starting point to be the list price; make it clear that the price is too high. From there, ask the seller if there is any flexibility and force the seller to offer you a lower price. It is only at that point you should make your first offer.
Once you have made your offer, do not volunteer another price unless and until the other party has responded with a counteroffer. Expect the negotiations to be a back-and-forth process, but remain confident throughout. You are building a relationship, be respectful, be a good listener.
A great way to augment your negotiation over price is to include other items. When you reach an impasse in your negotiations, make an offer to purchase multiple quantities of the item or additional items that might trigger flexibility.
The seller may be willing to lose a customer if it’s a single item. But when a seller has the opportunity to make a much larger transaction, there is a greater likelihood he or she will be amenable to a lower unit price. Likewise, as a seller you can negotiate the buyer to a higher price by throwing in an extra item. The longer this process takes and the higher the investment in time by the seller, the less willing they are to walk away from a deal. This is especially true on a car lot. Take your time and be patient.
8. Use Silence and Time as a Tactic
Never respond too quickly to an offer. Pausing or even suspending negotiations can convey that you’re not desperate to close the deal and that you have other options. Silence can force a surprising amount of pressure on the other party. Sellers in the US hate to lose a deal when they have invested time, time is your ally.
9. Be Willing to Walk Away
Even if it’s the car, television, or house of your dreams, if the seller won’t come down to the maximum price you have set for your budget, force yourself to walk out of the store or away from the deal. This strong stance more often than not will get you the price you’re looking for, as the seller doesn’t want to lose the sale. In flea markets, for example, I often get my best price only as I am literally walking away .
10. Keep It Light…Your Are Building a Relationship
Never let negotiations become too tense; always feel free to smile and inject some humor in the conversation. Lightening up the mood can ingratiate you with your opponent while conveying your negotiating strength. If you do not appear to be taking the negotiation extremely seriously, your opponent may conclude that you are ready to move on if you don’t get the price you want.
The only way to become an expert negotiator is to practice a lot. Start small; hone your skills at garage sales and flea markets.
This Is How It is Done…Never Pay List
Negotiation will work best when the person you’re negotiating has the power to be flexible with the price you’re paying. If you’re in the checkout at a large chain store, you’re likely not going to have any success negotiating because the person you’re interacting with has very little power to change your price. I do ask for the coupon price, comparative pricing from a competitor’s sale price, or discounts like: senior or military discounts.
Before shopping I do my research and have an idea of what I think I should be spending on an item. I begin by asking about the item without mentioning price. This often gets the seller to quote a price even if there is a sign with a listed price. If necessary, I’ll ask how much the item is. I consider this to be the opening price in the negotiation.
Typically I respond with an offer that’s below what I intend to pay for the item. This gives me some room to move up later on if needed. I’ll just say something like “How about $5 for these six?”
Sometimes, the other person will basically disengage from the negotiation at this point. If that’s the case, I don’t view it as too much of a loss. If I really want the item, I’ll pay the listed price, but most of the time, I’ll just keep walking.
If the person says, “Sorry, I just can’t drop the price,” which sometimes happens, I’ll respond by moving up to the price I expected to pay and simply saying that I can’t afford to spend more than that on the item, so they can take the sale or leave it.
Every once in a while, they’ll take my initial offer, which is great, of course!
Most of the time the person will throw out a counter offer that’s lower than their initial price but substantially higher than what I offered. Obviously negotiation has begun.
At this point, I rely on a bit of mental math. Let’s say that the item is listed at $5 and I offered $2 with an expectation of paying $3 for it. The person counter-offers $4. At that point, I try to figure out what percentage they went down from their target price toward my target price. There’s a $2 difference between their price and my target price and they went down $1, which is 50%. So, I’ll do the same in the opposite direction – the difference between my initial offer and my target price is $1 and 50% of $1 is $0.50, so I’ll add $0.50 to my offer. Sometimes, that mental math is easy. At other times, it’s tricky and I have to just give a rough estimate. I find the calculator on my cell phone to be a huge aid.
When the price gets close to my target price, I’ll often simply “lock up” when I get to my target price. I’ll usually just say “I can’t afford to spend more than that on this” when the negotiation is close to the target I’ve set.
If you can’t seem to get the price you want, you have to be willing to walk away. That doesn’t mean the negotiation is over, many times, the vendor will agree to your request if you’re strolling away from them. It means a customer lost, and they’re better off making a bit less profit than making no profit at all.
If they let you walk away, you need to decide on your own whether you’re willing to pay the lower price, even if it’s higher than your target price. Sometimes you will, sometimes you won’t.
Additional Information Sources
Family Circle Pam Kramer
Bargaining 101: How to Negotiate a Better Price
About.com Kelly Robertson
5 Ways to Negotiate More Effectively
Time Martha C White
10 Tricks for Haggling Over Price-At Any Store