Know What You Want
IT IS AMAZING how many people enter into a negotiation without knowing precisely what they want to achieve, and so they make up their goals and desires as they go along. They are easily influenced, persuaded, and manipulated to buy or sell at higher or lower prices.
The solution for this predicament is for you to think through your ideal desired outcomes in advance. Ask yourself the question, “If this negotiation worked out perfectly for me, what result would I achieve?”
Think on paper. Write out and describe everything that you want, in advance. People who know exactly what they want, and have written it down, have a distinct advantage over those who are vague or unsure.
Discuss It with Others
Whenever possible, discuss the upcoming negotiation with someone else and explain the details of a perfect outcome. This exercise of discussing with others and thinking on paper doesn’t mean that you will get the product or service for free, or that you will achieve a goal that disadvantages another person. However, by thinking through the negotiation in advance, you are much more likely to reach a win-win outcome with which you and the other person will be satisfied.
As part of this process, determine the price that you are going to have to pay to achieve the ideal outcome. What are you prepared to give or concede in order to get what you want in this negotiation or transaction?
Best, Medium, and Worst Outcomes
Think in terms of three levels of possible outcomes: best, medium, and worst. When you go into a bargaining session, you should have these three outcomes in mind and aim for the best possible price and terms from the beginning.
You will often be amazed at what happens when you start with the highest possible price for selling and the lowest possible price for buying. Sometimes, due to factors over which you have no control, the other party will agree with you immediately, and no further bargaining is necessary.
The medium outcome you have defined is acceptable, and the third possible outcome is the worst that could happen. If you are driven back to accept the worst, this is the lowest you would go and still proceed with the transaction. This is called your “ultimate fallback position.” You will fall back to this level even though you would hate to do it, but it is the lowest you will go before walking away. Below this level, you would not proceed. So determine clearly, in advance, the least you will accept so that you are fully prepared.
Start at the Top (or Bottom)
Where do you start bargaining in a negotiation? You start slightly above your very best or optimal result. You may have to make concessions along the way and end up at a lower level, but always start off at the very best level that you would wish to achieve.
Labor negotiators are famous for using this tactic. In union contract negotiations, the negotiators start off with a demand for a 50 percent increase in pay in one year, plus improvements to medical care, pensions, and other benefits. They present this offer as their minimum demand for a new union contract.
By the time the dust has settled, they have accepted a 5 percent pay increase over two years, with no improvements to medical or pension plans. They then go back to their membership and hail this as a great victory.
Think through your best-, medium-, and worst-case positions in advance so that you are absolutely clear about what you want and what you will not accept. Then begin with your ideal outcome and negotiate down (or up) from there.
