Best Ways to Negotiate

Good negotiation means making a deal that is beneficial to both parties. When you always aim for win-win deals, your reputation and respect improve. People are more likely to work with you in the future as they know that they will not be exploited in any way.

Sellers refrain from making the first bid in a negotiation fearing they stand to lose on a potentially higher quote that the buyer would have offered, had he not gone first.

The problem is, the buyer is thinking on the same lines.

But this is hardly ever true because a prudent businessperson will normally have a reasonable understanding of value.

In fact, research suggests that a seller is likely to come out with a higher price if he goes first rather than the buyer. Why? Because the buyer will set a low anchor.

What’s an anchor? Well, an anchor is the first number that’s coined in a negotiation. An anchor is a starting point for the negotiation, and it can greatly influence the remainder of the negotiation.

If you’re a seller, make the first bid and set a high anchor. If you’re a buyer, make the first bid and set a low anchor. 

If you fail to prepare, then you are preparing to fail. Co-ordinated negotiation is key, especially if you are in a team then you need to ensure that you are on the same page. You should find the alternative if your negotiation does not work out. It is called ‘BATNA’ which means “best alternative to negotiated agreement” or to put simply, what can you do if it does not work out.

One of the best ways to negotiate successfully is by listening to the other party and drawing out information from them. The adage that 2/3rd should be spent on listening and 1/3rd on speaking is good advice to follow.

If you are negotiating for an important deal, then it is important to set a scene. A formal setting creates a professional environment, you should have this when you have an upper hand. On the other hand, an informal setting is rather hostile. In contrast to that, a more informal setting can create warmth and encourage agreement easily. So, depending on the situation, choose a scene for your negotiation. 

Bargaining power comes in many forms. You may have more bargaining power than you think. The key here is to understand your strengths and weaknesses. Apart from the obvious metrics like market power, bargaining and negotiating can be possible in terms of time (deadline timeline) and relationships (a long-term relationship).