Learn the Art of Negotiation

February 19, 2020

If you're serious about getting better at negotiating, try Chris Voss's Masterclass:

Career FBI hostage negotiator Chris Voss teaches you negotiation strategies and communication skills to get you better results every day.

A downloadable workbook that beaks down Chris's negotiating tactics, plus examples of hot to use skills like mirroring, laveling, and more.

How to quickstart learning negotiating?

"Never Split the Difference" is a book I would highly recommend. The author did an AMA a couple of years ago here.

Never Split the Difference: Negotiating As If Your Life Depended On It
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Never Split the Difference: Negotiating As If Your Life Depended On It
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He covers a lot of techniques, but I felt the two main takeaways were:

  • That a negotiation is not as much about purely logical price points as you would think, and more about emotion and a desire to be seen from your own point of view.
  • Get the other guy to do the problem solving for you, but in a way that makes them feel in control (feeding back into item).

He did an interview in a podcast which covers a car buying example.

So he's making a really low offer to the car dealer on a very in-demand car. The dealer's point of view is:

"This is a very in-demand car that lots of people want and this guy is offering me peanuts. He's being a total jerk".

Rather than try to fight this viewpoint, the negotiator makes clear that he completely sees this point of view by repeating it back to him:

"I'm really sorry, this is such a beautiful car and worth so much more than what I'm offering, but I just can't manage $X. I'm really being a jerk here but is there any way you could manage $Y?"

How to get better at the art of negotiation?

Being willing to walk away with nothing has changed my life. I spent a long time with the wrong people and one day I realized that I would rather have nothing than belittle myself with people who aren't willing to compromise. I am willing to leave comfortable situations to ensure my happiness.

I've always felt a lot of this should be basic knowledge. Also when it comes to negotiating a salary or price of a car etc. Have a REASON why you believe the price you want is the correct price. Just saying u think I deserve this much of a raise or your only willing to pay so much for a car isn't a reason. Do your research and come up with a reason.

This is how I managed to turn a generous raise of 10% because I had a great year into a 25% raise. They said 10%, I said I wanted 40% and we settled at 25%. But I didn't just say I think I deserve 25%, I gave reasons comparing to the job market, how much I've helped the company save, what other jobs I can easilly get and how many offers I get every week.

I figure out what my line in the sand is and I do not cross it. Any time I compromise these values I am always unbelievably unhappy; it's more upsetting knowing that it's my own fault for not listening to myself.

Just like in business you want to have a well practiced elevator speech, in negotiating a price for an object you want to have some well practiced "go to" lines about the object. There's a lot of advice here about dollars but I say focus on the product and the value (features, benefits, advantages) rather than the dollars. Interlocutor makes dollar offer, you respond with well practiced line about the product, interlocutor increases offer, you respond with another well practiced line about the product, perhaps even in a well practiced sequence where your first comment is a fairly obvious observation like "object has been well cared for and is in nearly new condition" and you move on to less obvious details like "this was manufactured in Italy with old world craftsmanship, not like the cheap crap made in China these days...". Keep pointing out features, benefits, and advantages of your product until the offer gets up to where you need it to be.

Take it for what it’s worth, I’ve negotiated millions of dollars in deals over my career. I have read many of the suggested books mentioned above. In my professional opinion, there isn’t a better person to turn to for negotiation than Jim Thomas. He has a book called Negotiate to Win and it really gets to the heart of what’s important in a practical application.

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Negotiate To Win
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Negotiate To Win
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I’ve had Jim come and train my leadership teams at every business I’ve been a part of for the last decade and he is elite. Doesn’t matter if you’re negotiating over trinkets at the flea market or a major corporate acquisition, his method will deliver results.

How to negotiate a salary when looking for a job

A really important thing that you SHOULD do is treat it like a speech. And in a speech, you SCRIPT out exactly what you're going to say. And you stay on track or make adjustments to get back to track.

So write out exactly what you're going to say. Write an intro, how to segue into the ask. Write a list of achievements, certifications, whatever you need to justify your raise. And then write a list of references that got your back. And then of course you go into how much you're asking for. And then in summary, your ask.

Every step of the way should be scripted. You should practice it. Over and over until there are no UMS UHH. Anything. Practice it like your talking, not writing. Because many of us write more eloquently than we speak. You want to be natural.

You're going to script questions and answers as well. You're going to think about all the negatives, the shit you didn't get done, the sales target you didn't hit, etc etc. You do not need to be blindsided by questions. You don't need to be stumbling for words to questions you should already be prepared for. And of course if you have any sales target you didn't hit, any big problem that you see that can hinder your negotiation, that needs to be addressed by you. In your speech, in a salary negotiation they're not looking to praise you. They're gonna want to highlight your weakness. Their job is to pay you less.

So just like a fucking press release, if you address it first you get to SPIN it your way instead of being on defense.

For example: I didn't hit my target billability (target 90%, actual 85%)

Now let's tackle that head on. Jack, I know that 5% may not seem like a lot. But to me it's a fail. I look at it as something I will discuss with my immediate supervisors on ways I can improve my billability.

Instead of waiting til they bring up how important it is. Everybody has weaknesses, just gotta make sure we tackle em first.

I mean there's a million tips and tricks for negotiations out there. But I promise you, if you're not a natural speaker (most aren't), you're going to be nervous and lose your edge and leverage if you don't script it. When you have it scripted, you can calmly sit there instead of wondering what to say and what they're gonna ask. It's already stressful enough justifying yourself to your superiors. So mitigate it as much as possible!

You have to also understand your market value and capabilities of the company. Let's say, you work for the city and entry is a set rate so even negotiating can be problematic during hiring process if you don't have merit. Just because private pays more isn't a good reason but years of X experience validates my payraise.

A McDonald's likely won't budge because they know they can hire someone else for less money. Loyalty and great work ethic isn't an argument for some big retail giants. Upper management rather go through employees then pay deserved workers more.

You have to interview or know how much another company will pay you for the same or similar work. You need leverage when you meet with an employer. Saying so and so makes more than me looks poorly in the company's eyes. But knowing that Y company expressed interest in me and offers that or during the interview process knowing their competitors offers this salary and incentives gives you a stronger position.

Realize it can back fire by them firing you or not hiring you. You can always look for another job. You also need to understand that for every person who speaks out about wanting more money there are at least 10 people willing to accept your current salary with your qualifications or more.

Should you ever negotiate an entry-level salary?

Before you begin negotiating your salary and not to commit odd - ask about the salary usually practiced for the type of position you are applying. Then make a point on your daily needs: your new salary will of course cover them. So you know under what income you can not get off.

Let the interviewer broach the subject and make the first proposal. By doing so, you save valuable time allowing you to better understand your interlocutor and possibly discover the price he is willing to pay. Another advantage you will estimate better the challenges and responsibilities of the position and therefore the wage associated with it.

If the interviewer asks you what salary you are considering, never answer precisely before having a real job offer. Some recruiters still work this way: which one is the cheapest then he gets the job.

If the recruiter really insist, give him a salary range rather than a specific salary. If you have previously inquired about wages that prevail in the industry, you should achieve a realistic enough salary proposal.

Finally, remember this basic business principle: if you let your interviewer speak first, maybe they will offer you more than what you expected.

How to negotiate a raise and what to do if it doesn't work out

It doesn't always work out, but don't be afraid to back up your request either and change jobs if need be.

I went to HR at some point in the not too recent past. Market had changed for my role, and I had mentioned to HR that they had been underpaying me quite a bit in a private meeting, to the tune of about 20% less than market. I knew this since I would constantly be presented with roles via LinkedIn in that range. I told them I didn't expect them to increase my salary by that much, but even a 15-20% increase would be fair -- considering I really liked the place, and I felt the environment was more important to me than a large increase like that. I wanted them to meet me halfway so we could continue the relationship.

Long story short, raise time comes around many months later, and they gave me a cost of living increase of something like 2-3%. They also only gave me 1/3 of my bonus. So, I did what I had to do. I left the job, and got a 50% increase in pay. Considering I rarely feel comfortable about taking counter offers, and I didn't want to be continually ignored in the future going forward in a similar fashion, I decided to just move on.

Sometimes, it's best to move positions to get into the cash position you want to be -- so long as you can do the job, and do it well.

Negotiating a promotion or a raise in the eyes of a manager

I've been a manager once. And I wasn't very good at it. A shitty upper management situation, combined with not enough real power, and a really toxic corporate culture, plus failings on my own part (a general reticence to properly disciplining people under me, and a tendency to let too much slide) led to a really terrible first experience managing people. I've never done it since, and have no desire to do so. I hate corporate politics with a passion. These things should be obsolete.

I was managing a squad of geeks at an international ad agency. For the most part, the stereotype about techs not knowing what they were doing or were poorly trained or whatnot was generally un-true for my staff. The shitty attitude bit was definitely there, and I had had 1-2 lazy engineers, another that was really slimy (didn't trust him to save my life and I had to really watch him to make sure he wasn't looking at some gal's personal files), but really despite poor attitudes they were a group of really well-trained guys.

And there was one bright spot in particular: John(name changed). He had started out as a backend dev before I was told that he was being moved into my staff (in another really poorly designed management scheme, I had basically no say in who would be on my staff. If management wanted a guy hired into my staff, he or she was). After I got over the irritation of having a backend guy dropped into my staff, I realized that the dude actually really knew his shit. And he was definitely the hardest working tech marketer I had on my staff. He truly seemed to find a lot of joy in the work he was doing, and it seemed a lot like he was truly honored to have been put in with us "elite" guys that were doing high-end work - as opposed to some of the sullen neckbeard types in there.

Then I found out that when he came over to us to work, they gave him only like a 20% salary boost. My best tech, the guy that worked harder than anyone else, and seemed to really give a shit about his job was also my worst paid.

I went to management to try to get him a raise. I made my case about him being my best tech, and that he very much deserved to be making at LEAST the minimum tech pay. I was told that there would be no raise, and enjoy the fact that I was "getting him for a bargain." I think it was that moment that I was most disgusted working at a corporation.

As someone who has been promoted to the top of my title in 4 years for what is normally a 12-20 year progression, I can say that I'm always a little skeptical when it comes to promotions.

I've seen my own companies salary ranges/mid ranges so I know it's not out of line to request and have talked to my manager twice about getting me more in-line, but this post likely explains what is going on. Especially because I have made it pretty evident that I plan to advance my career outside this current position, but I basically have to wait for a position to open at my company or have another company take a shot, but IT Architecture is a hard sell getting someone to come in from the outside.

Though, I do have a couple other leads that I'm following up on as far as new opportunities. From a "rockstar" employee perspective, it isn't as easy as some like to think to go out and get those mega raises either, so being stuck in a position where we all know that you're worth more, but people can't do anything about it, really starts to become a demoralizing experience going in to work everyday and keeping up being a "rockstar."

How to negotiate apartment/house rent increase

In a negotiation, you need to know what your alternatives are, and what their alternatives are -- for the apartment in question.

What is the going rate for such an apartment in your area? If the typical $ rate is what they are now asking, and people are lining up reliably to pay that, you don't have much of a bargaining position.

If on the other hand, it's a stretch for them to be able to find someone to rent at the new rate, then you have some bargaining power.

Just because your rent has increased doesn't mean that it's out of line with market prices. Do some research to find out what the going rate is, and how strong demand is. Only then can you say whether it's reasonable or not.

"Doesn't hurt to try" is not useful advice.

How to negotiate a car purchase

The most valuable you are to the dealership is when you are actually at the dealership attempting to purchase a car. They know that the second you walk your chances of coming back drop immensely. The even joke about this, its called the "Be Back Bus". Being in the dealership asking to buy a car is when you ACTUALLY have the "most possible bargaining power."

Are you going to waste your own precious time sitting at the dealership going through paperwork knowing you are going to leave? (just to "stick it to him" after feeling slighted for whatever reason) And on top of that your big "play" against the dealership is sitting around waiting/hoping for their return call so you can further waste both of your time by immediately complaining to their supervisor about customer service from days ago and hoping/praying they give you a discount for it? (Again, complaining because you felt slighted that he asked about financing rather than skipping straight the OTD price)

That isn't how buying a car works and sounds more like the wet dream of some kid fantasizing about being an "alpha" on a power trip.

If they actually insulted you, have some dignity and go buy a car somewhere else. But I don't believe salespeople are sitting around insulting people buying cars from them. If you ask for OTD and they try to pressure you to get your "monthly budget" just stay firm and state that you only want to talk about OTD pricing. If they continue, tell them again that OTD is all that matters and if they aren't willing to give it to you, you'd like to talk to another salesperson. 9/10 they are going to give OTD. If not, then get up and go buy a car at one of the million other dealerships that are willing to take your business.

The above scenario will hardly ever happen though, because this notion on here that all car dealerships are cesspools is unfounded and 99/100 times you clarify that you want out the door pricing you will get it immediately.

It took me about two weeks to get to the no-shit "wheeling and dealing" part of buying our new Mazda. So practice your poker face, be deliberate, and do not get dragged in to something that you dont understand inside and out. Recognize the salseman's song and dance and dont fall for it.

You need to have a starting number and an ending number. Your starting number is a reasonable lowball offer that is still justifiable. It opens the negotiation. For this car, let's just call it 25,000, two thousand less than the asking. And let's call your top dollar 28,000 (your personal decision here). At 28,000 you're still going to pay about 2000 in sales tax depending on your state. I recommend making an excel spreadsheet with line items for the car's price, sales tax, title/license fee (which you should insist they eat. Tell them that "Mr. [Dealership Owner] will take care of that for us.").

All in all, this operation is 80% planning your strategy at home and 20% in person.

You go in with a plan, you execute it, they scoff at your numbers, you leave, they call you, you tell them you're free this week just call me when you can reach $X. Just when you're about to settle on the price, dont forget add ons like all-weather mats, free oil changes, and a Honda hat or coffee mug to remember this awesome experience and the salesmans' wonderful help.

The smartest buyers do a few things:

  • Visit multiple dealerships and then take the lowest price to the dealer you want to buy from and see if they'll beat it ("XYZ Dealer says they'll sell me this vehicle for this much, can you do better?") Make sure you're comparing similar builds. The sales manager WILL notice if you compare a base to a loaded, or anything different.
  • Wheel locks are unnecessary, tell them you're not paying for them and to take them off. They'll end up leaving them on and not charging you (watch the charge isn't moved elsewhere)
  • That's way too much for tint.
  • Be ok with not buying today. Every month there are new promotions.
  • Be ready to walk, they'll chase you.

How to negotiate the best possible price on a leased car

I wouldn’t advise solely negotiating the sale price on your lease. You can also negotiate the money factor (the interest rate for the lease). Most dealers aren’t going to offer you a lease at the “buy” rate. However, if you ask for it (and mention up front that your credit is strong), they may be willing to mark it up less. You can and should also negotiate your trade-in value if you are trading a car.

Many car buyers aren’t interested in selling their car privately due to the hassle, and potential for future issues from the new owner. If you’re trading for any reason you’ll want to negotiate that number as well as the sale price, and the money factor. The residual is set in stone. All leases have a “sweet spot” term length, in which the money factor and residual are fiscally most attractive for that particular car and trim level. This can vary from model to model, from trim level to trim level, and from month-to-month.

Typically the sweet spot is either a 33, 36, or 39 month term, but that is not always the case. A good dealer will work the lease for you using several different terms to confirm which term length equates to the lowest payment. The rate and residual can also vary between different lenders, but most dealerships will only lease cars using one lender. This is most often the bank owned by the manufacturer themselves.

An important reality to keep in mind when picking out a car, is that 99% of the time, when you go up in trim level, you go down in residual value. In the banks eyes, all of the extra bells and whistles (that come with a higher trim level) lose value quicker than a base model with no extras. If you find yourself stuck between two trim levels, it may make the most fiscal sense to pick the lower trim level and add a few extra options to get as close to the higher trim as possible.

It’s common to ask the salesman to work a lease using two different trims, and to make your decision based on the difference in payment. Ask yourself two questions: 1.) How long do you keep your cars? (If you’re going to drive it until the wheels fall off you have to buy it). 2.) How many miles do you drive per year? If you’re driving 20,000+ miles per year you’re not a good lease candidate. But, if you’re driving the industry average of 10-15k, and you like to get a new vehicle every 3-4 years, leasing might make the most sense.

Remember, cars are a depreciating asset, so renting them isn’t necessarily a poor financial choice. One last word of caution, dealers are pitted against each other daily, but if they are aware that you are planning to take their best quote and then drive to the next place, they’ll probably hold out on giving you their best deal. No business wants to be put in a position of “the biggest loser wins”, so-to-speak. Just pretend that you fully intend to purchase from one store, and if you aren’t satisfied with the deal, shop around. Your commitment to the deal is ultimately what will also secure your best deal, so be prepared to commit once you’ve found the store, salesman, and car that you like.

My story of negotiating a car deal

I bought my first car since I graduated college about 10 years go. I had a hard number for my total cost out the door, and gave that to them and let them figure out if they wanted the sale or not. They did, so they made it work with a "dealership discount" line item that I knew they were losing most of their profit on, to where the interest I pay over time almost cancels it out.

Anyway, they brought me a checklist with like 50 items to initial, meaning that I was accepting the car and terms at the state it was in. Everything seemed fine, stuff like "engine is running satisfactorily" and "body is in acceptable condition" which for a 2 year old car it was all basically like new, at least to me who had never had a car close to this young. But there was one item I didn't understand right away, "all 4 tires match" and so I didn't check it. I hand it back and he goes to sign it as well and then stops with "oh wait, you missed this one" and I asked what it meant, he said that by signing I was accepting that the tires didn't have to all be the same exact tire.

I said "well I DO want them to all be matching, since that is something on the list."

He kinda scowls, then says he will be right back, he is going to go check if they match. He comes back and says "they're all brand new, but it is in fact two different tire brands on the front and back but they're functionally identical and just really tried to get me to sweep it under the rug. But I just said "nah, I want them to match." So he writes that down in the pre-agreement saying he will do that work in addition to like 2 or 3 other very small things they were planning to fix as well.

I sign and we drive off. I bring it back a few days later to get the work done by their service department, and I ask the service tech if he can put the tires he takes off, which are both brand new complete with the little fuzzy tire hairs, in the trunk once he swaps them. He says sure, and that's how I ended up with a car I really wanted way below KBB complete with 2 free tires up front.

But I also opted out of the "services" they offered besides GAP, so when a pothole popped a tire like a week later I was forced to pay out of pocket for the new tire. I did that so I still had a set that matched for putting on the front once the current ones wear down. Luckily it didn't crack the rim.

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