Throughout 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.
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.
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.
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.
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.
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.
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?