I recently read Secrets of Power Negotiating for Salespeople by Roger Dawson. I found this book to provide excellent insight into selling and negotiating. Among the kernels of wisdom imparted by Roger Dawson are the following:
- You should ask for more than you expect to get because a) it gives you some negotiating room; b) you might get what you are asking for; c) it raises the perceived value of your product or service; d) it allows the counterparty to retain his ego when he believes he will win a concession; and, e) you can create a climate where the buyer feels that he won.
- Never say yes to the first offer or counter offer from the buyer. It automatically triggers two thoughts: "I could have done better" and "Something must be wrong."
- When a buyer hesitates to make a purchase by claiming that they need the approval of a higher authority you should a) appeal to their ego; b) get their commitment that they will recommend the purchase to their higher authority; and c) go to a qualified subject to close. An example of the latter is "We will assume that you will sign the contract unless your lawyers veto it within 24 hours."
- While the value of a material object may go up, the value of services always appears to go down. Never make a concession and trust that the other side will make it up to you later. Always negotiate your fee before you do the work.
- Never offer to split the difference between the offer and the bid. Forcing the other side to do so gives you room to offer to split a narrower range of differences. For instance, if the bid is $10,000 and the offer is $14,000, the buyer is better off forcing the seller to offer $12,000 and then the buyer can offer to split that difference and pay only $11,000.
- When asked for a small concession by the other side, always ask for something in return. Doing so elevates the value of the concession so that you can use it as a trade-off later. Most important, it stops the grinding away process.
- When you have to make concessions, it is best to make the initial concession reasonable - maybe half of your negotiating range. Then, each subsequent concession should be progressively smaller. This is because you are communicating that the other side is not going to do any better.