Article: Negotiation Essentials
My wife and I just returned from a very nice vacation in a beautiful country in Central America. Not only did we have a great time—we also enjoyed a few good deals.
For example, we paid around $24 for a taxi ride for which the asking price was $30. We
shelled out $40 for a two-hour boat ride that set other couples back a steep $100. We
got 25% off for two nights at a splendid beach resort although we had simply walked in
rather than booking at an online discount rate.
You think it took a lot of time and effort to negotiate these deals? Not really. All we had
to do was follow a few simple rules. These rules apply to your personal affairs as much
as they do in the world of business. They also work in most countries around the world.
Amazingly, I have found again and again that these rules are overlooked:
Never Accept the First Offer
To most members of the human race, negotiating is a game. A serious one, sure, but nonetheless one to be played and enjoyed. I'm not talking about the U.S., Canada, or much of Europe here. Most Latin Americans, Africans and Asians, however, as well as many Southern Europeans, share this playful attitude. To them, the first offer is just the opening move in the game. Accepting it right away means you're refusing to play.
In all of the above settings, and in many other such situations, we rejected the first offer
received, asking for a better price instead. We got one—almost every time.
Do Your Homework
Without knowing how much something should cost, you are all but guaranteed to end up overpaying. Do your homework and find out upfront. Sure, there's a limit to how much time you'll want to spend on this, but the return on the time invested often makes it more than worth your while.
In case of the taxi ride, for instance, our 'homework' consisted of asking at our hotel how
much the ride normally cost. That took but a minute and saved $6. Before the two-hour
boat ride, we talked to two other vendors offering such rides in the area to find out about
their pricing. Five minutes spent, $60 saved.
Leverage Your BATNA
You probably heard of the 'BATNA', the 'Best Alternative to the Negotiated Agreement.' Those corporate types might dish up the term trying to impress you with their negotiation savvy, but let's be honest here: all it really means is "What's your next best option?"
In case of the two-hour boat ride, once we had done our homework and identified our BATNA, we stumbled across our most attractive option: a nicer-looking tour, albeit at a much steeper asking price. We refused and pointed to the pricing we'd get elsewhere. Since the company already had others signed up for the tour, meaning we offered incremental revenues at no incremental cost, they accepted our counteroffer.
At the beach resort, we knew we had other options in the vicinity. Although it was
already late in the day, leveraging this knowledge was all it took to get the receptionist to
offer a significant discount. This again took only a few extra minutes, for savings of well
over a hundred dollars!
Following these essential negotiation rules doesn't take much. All you've got to do is remember them and spend a little time in order to prepare accordingly. Time worth spending? I think so.
| Printable PDF version | written by Lothar Katz |
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