So what are the best ways to approach a negotiation? Well there are essentially four steps to most negotiations; preparing, setting up, negotiating and closing.
So if you're negotiating with your client, here are a few tips for each stage of the process:
1. Preparing
- Take time to familiarize yourself with all the details of the deal to help build your confidence during the negotiation
- Decide three things before going into the deal: a) what your ideal output is b) what you'd be happy with and c) the point at which you'll abandon the deal
- Work out what the 'worst case scenario' impact (financial or otherwise) would be to you / your business
- If possible, try to get an idea of what's important to the other side and even try to test their position before you go into the negotiation itself (knowledge represents the upper hand)
- Always aim realistically high and hold this position as long as you can. You can always come down but you will not be able to push it back up
- Be prepared to justify your starting position and also be prepared to say no
- Prepare what you have to 'trade' with – and prioritize these things in order of value to you.
- Remember that what you decide during this negotiation will set a precedent for what happens in the future ie once you make 'allowances' for no reason, expect your client to ask for similar concessions in the future – you're making a rod for your own back if you do!
2. Setting up
- Try not to be intimidated by the other side of demeanour, data, facts, stats etc. but try to anticipate what they will begin with and what you'll respond with
- Lay out the agenda for the negotiation but try not to be the one who reveals a starting position first
- Be inquisitive and use intelligent questions to garner more information. Do not try to convince the other side to come round to your way of thinking and do not be over-emotional
- Sound 'sure' when you state your position and have the confidence to request clearly what you're looking for.
- Anticipate that the other side will be challenging your position / pricing
- Decide that you will stay strong if the other side decides to play power games such as 'good cop bad cop' or aggression to force their position
3. Negotiating
- Never give something without asking for something in return. Take your time and do not be too quick to change your position when the other side pushes.
- If you lower your price then the scope of what you are providing for that fee should change in accordance eg "if you'd like to reduce the overall cost, we can replace the X element with X (ie a cheaper component) 'or" how about we only allow for one round of amendments rather than two, which will reduce the overall cost by X "etc.
- If a question or point comes up that you have not anticipated, do not feel pressured to decide on your response then and there, take time to think before you answer.
- Do not be inflexible, aim to be as co-operative as possible through the negotiation
- Ask questions "What is important to you about …?" "What if weave you X and you gave us Y in return"? "What is most valuable for you / your company?"
- Do not undervalue your position by agreeing to split the difference
- Focus on the value you bring, not the price (find out what the other side values)
4. Closing
- The end of negotiation is where most concessions are made, stay logical and do not be fooled by 'last minute' tactics to throw the negotiation off course
- Aim for a win / win position but at least ensure the other side fees that they have gained something valuable from the negotiation
- Do not be forced into a bad deal. It's better to walk away than accept something that has not been thought through properly
Have you found these points useful? What other negotiation tips would you offer to someone who you've found helpful?