If you’re a business owner – or even an employee – at some point in your career, you will have to negotiate with potential clients, business partners, or vendors.
Even if you’re not a business owner or an employee… you still have to negotiate with other people at some point. Whether it’s about which restaurant to visit for dinner, or which movie to watch, or what time to send your kids to bed… you’re negotiating.
So, it’s probably a good idea to learn the mechanics of successful negotiating.
And at this point, I’d like to give you the proper definition of a “Win-Win Negotiation”.
A Win-Win Negotiation is an agreement between two or more parties that gives each party what they want.
Now… they may not walk away with what they originally came to the table wanting, but they should walk away happy. That’s the key.
For example… you may be placing an order with a manufacturer for them to produce 1000 widgets for you. And the cost of each widget to the manufacturer is $3, but they want to charge you $15 per widget.
If you approach the situation correctly, you could negotiate a deal where they would charge you $7 per widget.
The question becomes, “How?”
Your job as a professional negotiator is to know everything there is to know about the deal before going into the negotiation.
If you’re going to buy 1000 widgets, you need to research the prices of ALL of the potential manufacturers before going into any negotiation.
Here’s why.
If you know that Manufacturer A is charging $10 per widget, Manufacturer B is charging $15 per widget and Manufacturer C is charging $9 per widget, you now have the ammunition that you need to go into the negotiation.
Even though Manufacturer C has the lowest cost, they may be too far from you. Or they may charge way too much for shipping and handling. But Manufacturer B is right down the street from you, so if you buy from them you won’t have to wait for the widgets to be shipped and you don’t have to pay for it.
So the idea is, you need to bring their costs down.
Here’s where the research comes in…
You call up Manufacturer B and say something like this…
“Hi, my name is John and I’m interested in buying 1000 widgets from you guys. I’ve had the chance to look into your prices and your competitors prices, and I’m really interested in doing business with you over them. My challenge is that they are charging $8 per widget when you guys are charging $15. Now… because you’re down the street from us and we can get the product a lot faster… If you’d be willing to bring down your cost, I will gladly make you my dedicated manufacturer for the lifetime of my business and I will only buy from you.”
There are a few things about that message that make it work well.
The 1st thing is that you’ve complimented them based on research that you’ve done with their competition. When you say you’ve looked into their competition and you picked them over the competition, you’ve given them a great compliment.
The 2nd thing is that you’re being honest with them about why you want to pick them over the other guy even though they cost more. You want to get access to your widgets faster instead of waiting 2 weeks for delivery.
And the 3rd thing is that you’re promising them long term business. “I’d gladly make you our dedicated manufacturer” The first question that comes to the mind of any manufacturer when you say that line is, “How do I know that you’re going to keep your promise?”
I personally don’t mind drawing up a contract to state exactly the terms of our agreement so that they can be reassured that I will keep my word. If you plan on keeping your word, there’s nothing wrong with saying it in writing.
Not only does the contract force you to keep your word for doing business only with that manufacturer, but it forces them to give you the price that you agreed on.
Which brings us to the price.
If you noticed, I originally stated that the lowest cost manufacturer cost $9 per widget, but in the script I said that they charged $8. This is the oldest strategy in negotiation.
Always ask for a price lower than what you actually want.
If you want to pay $10, ask for $8. If you want to pay $8, ask for $5.
The same thing applies to movie times.
If you want to go to the movies at 7pm, ask to go at 5pm. If you want your kids to go to sleep at 8pm, ask them to go to sleep at 6pm.
It’s very basic, but extremely powerful.
And the last thing is this…
You have to be willing to walk away from a deal. And that’s very important.
The pros can sense if you’re too attached to a deal, and so they will take advantage of your attachment to get what they want. You have to completely detach yourself if you want to have power in the negotiation.
Read that last paragraph over and over until it really “clicks”.
Good luck with your Win-Win negotiations!