11 Effective Negotiation Strategies & Tactics to Score a Great Deal

negotiation shake handsThroughout most of human history, people gathered at traditional markets to trade goods. The amount paid for those goods was always determined through the process of negotiation. In fact, the price tag is a relatively recent invention.

Today, negotiation is a lost art as few modern Americans remain skilled at the practice. We see a price and expect to pay that amount, with the exception of negotiating when buying cars and homes. But even in those instances, you may end up paying more than you should, if you don’t know how to drive a hard bargain. The bottom line is, if you want to save money, you need to learn how to become a skilled negotiator. Here are 11 ways to do just that.

Essential Negotiation Strategies

1. You Can Negotiate Anything

The first thing you should know about negotiating 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. It rarely ever is. At the very minimum, you should always ask the clerk if they have any coupons available or if any other discounts apply.

2. Ask to Speak With a Manager or Owner

Most sales clerks don’t really care if you make a purchase or not. They’re getting paid minimum wage, and your purchases won’t put any more money in their pocket. 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, but that is impossible with most bigger retailers.

In those cases, look for the manager, whose compensation is most often tied to store sales and customer satisfaction. Ask him if they will offer a discount if you purchase more than one of the item, 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.

3. Keep a Poker Face

If you see an item you want and exclaim loudly that it’s perfect and that you’ve been seeking it for all of your life, there is little incentive for the other party to negotiate. Always keep your cool and don’t display any unusual interest in the item. When asked, limit your enthusiasm while unfavorably comparing it to other products. Then 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.

poker face

4. Don’t Make the First Offer and Don’t Negotiate with Yourself

Whether you are buying or selling, you never want to make the first offer. Why? Because the other party may offer a price that is a much better deal than what you initially had in mind. If you’re buying, consider the starting point to be the list price, but 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.

But 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.

5. Bundle

A great way to augment your negotiation over price is to include other items. When you reach an impasse in your negotiations, an offer to purchase multiple quantities of the item or additional items might trigger flexibility on the part of the seller.

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 much greater likelihood he will be amenable to a lower price.

Likewise, as a seller you can negotiate the buyer to a higher price by throwing in an extra item. If you’re selling your house, for instance, and you have brand new porch furniture that fits the deck perfectly, offer to include it in the price you want as an incentive to the buyer.

6. Barter

Do you have any items that might be of interest to the seller? Could you offer some services that would be of value to the seller? Consider making a trade to eliminate or significantly offset the need for actual dollars in a transaction. The idea is to use creativity in order to reach a deal that might otherwise not come to fruition. As a starting point, you can find many bartering websites online.

7. 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 as well.

car negotiation

8. 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 and overseas, for example, I often get my best price only as I am literally walking away from the shop.

9. Keep It Light

You never want to 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 also 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.

10. Use Written Communication If Possible

In foreign markets, it’s common to negotiate in writing on a pad using just numbers. This solves language barriers while producing a record of the negotiations. Furthermore, it’s just easier to communicate non-verbally when negotiating back and forth. Non-verbal communication strips away all of cues that one’s body language and tone of voice can give away – which is why most real estate deals are made through realtors and in writing.

Outside of foreign markets, you will find it easier to negotiate back and forth over email or even through an online chat for customer service. Email is a great medium for negotiating the purchase or sale of a car or other household goods on websites like Craigslist. Email also provides you with the time to analyze the situation and make an educated, non-panicked counteroffer.

11. Practice

The only way to become an expert negotiator is to practice a lot. In the United States, the closest things we have to traditional markets are flea markets and garage sales. Spending a day or two bickering over t-shirts or used furniture will improve your negotiating skills and give you the confidence that will be valuable when you purchase a car or a house. It’s also a great idea to practice in foreign countries, where bargaining is much more widely accepted and even expected.

Final Word

From my travels around the world, I have found that negotiating prices is the norm, not the exception. Whether in the Amazon jungle or the Old City of Jerusalem, you are never expected to pay the first price you are given. In the U.S., negotiating skills are also very valuable and you can apply them to everything from making purchases at the mall and selling stuff on Craigslist to discussing a higher starting salary for a new job. It’s a great way to save money while having a little fun at the same time.

Do you have any experience negotiating prices? What are some of your best tips and tactics?

  • http://www.penny-saved.com Leroy Brown

    #1 is huge. I always say ( and practice ) that in negotiations, “whoever speaks first loses”, and it’s served me very well. When in doubt, shut up, and you will pay less.

  • http://www.daveramsey.com Michael

    Hey man – just found your blog via The Consumerist. I think it’s awesome! There’s some good stuff here in the archives and I think your about page really sums up what you’re out to do! Keep up the great work and I look forward to returning!

  • Dan K

    The silence technique is great. I used to work for a newspaper, and one of the old-time hard-boild reporter guys used to use it when he called people who might not want to talk to him: they’d pick up, and he’d say, “this is John Smith, with the New York Daily News.” Then he’d go silent. Within ten seconds, the other person would nearly always start gabbing.

  • John William Johnson

    Doing your homework helps. I just came to NYC, where Priceline wanted $70+ daily to rent an economy car- i usually get cars on the west coast for $10-$15. I called some cities on Long Island. I found a car for $30 in Lynbrook, but i really wanted to go to Valley Stream, where they wanted $35.
    When i mentioned the Lynbrook price, they agreed to honor that (like Jason mentioned, they want the sale!). So i went from over $70 to $30! And then i asked if there were other discounts, and they had 5% off for AAA.
    As far as cars go, American Express covers the first $500 of the collision insurance they try to get you to buy. Auto rentals are like movies- they don’t make money on the rental (ticket), they make money on the add-ons (popcarn, soda, etc.).
    Thanks Jason.

  • vernon

    Pretty good summary, Jason. As a media director for advertising agencies, I negotiated nearly every day for 20 years with TV & radio stations, magazines, etcetera. The only thing that I would add is the three-fifths rule. The idea is that the deal – if there is going to be one – will be in a range that is three-fifths of the way from the sellers first price to the buyers first price, or vice versa. This is just human nature. As a buyer, this can help you set your opening price. Decide what you are willing to pay and then do the math on the sellers first asking price so that your real price is within that three-fifths range.

  • Tigerred

    How about interjecting a seller’s strategy also? I’m not always buying but sometimes an selling!

  • Jeryan74

    I hear what you are saying but one of the thingsI really don’t like about shoppingin other countries is all the haggling, so I buy very little there. In usa I may ask for a discount and sometimes get it or watch for a sale,but the process isn’t so exhausting. I don’t buy big tickets like cars at dealerships that haggle alot i know which ones offer fair price right away.

  • http://www.auto-broker-magic.com/ Josh

    Some excellent tips here that are sorely needed by car buyers. Buying cars is typically very unpleasant and stressful, so the more knowledge buyers have, the better. When it comes to new cars, my preference is negotiating through email with multiple dealers before setting foot in a dealership.

  • Michae4peace

    Can you still negotiate if you have bad credit? Tips?

    • carsalesman

      to an extent in cars you can try but make sure to look at if the price has changed, and ask if there were any bank fees that had to be paid, a lot of times with subprime deals banks will impose a bank fee that comes directly out of the profit margin being that the dealer cannot raise the price to accomidate that fee, or the bank may have cut back the price to accomidate what they call a payment call. If neither of those things has happened go ahead and negotiate, if they have one or both the dealer is much less likely to budge.

  • http://twitter.com/ProfEdelson Steven A. Edelson

    I agree with most of your points, but point four is incorrect. Plenty of research on negotiations (from salaries to home goods) show that the individual who makes the first offer is the one who ends up with the greatest advantage in the negotiation. By making the first offer, you anchor the negotiations around that price. That’s why stores generally have prices — they make the first offer and any subsequent offer you make is based (or anchored) on their price.

  • Scott

    Car buying tip, from a close relative who worked as a car salesman for years: The whole business about “I can only do that price if my manager approves it” is bunk. My relative freely admits that he’d go into the manager’s office and make small talk, while adding some animated gestures so the customer looking through the office window would think the salesman was arguing to get them a great deal.