The art of negotiation

[pboychuk]

Hi,

I wish there was a college course on how to negotiate, but there isn't. This is a skill I have not naturally acquired, its not part of my personality. But, I want to learn how to negotiate prices with my suppliers. Up to this point I basically just accept the asking price and be. However, I assume the first price presented to me in some cases is higher than what I could be paying.

I am basically wondering if anyone knows of a good book, website, or has any advice on how to negotiate, I feel I need to develop this skill in my earlier stages of business so I can be prepared for the day when fractions of a dollar will lead to thousands saved or otherwise lost.

[Aletheides]

I can't recommend you to any in particular, but I'm sure you'll be knee deep in books if you check Amazon.

If someone quotes you a price just ask them "Can you do any better?" You don't need to mention a lower price, because sometimes you will find that they lower the price even less than what you had in mind. If they lower it you can ask again "Is that the best price you can offer?".

I also recommend playing suppliers against each other. This is really effective "Well so and so is offering me this at a price of..."

In cases where there is no price, the rule of thumb is that the first one who mentions a price loses. I've never really been in this situation though, as a serious supplier is always going to give you their prices up front. I think it pertains more to salary negotiations.

[Heath Sanchez]

Great tips Aletheides. Another good method I have used is to ask for their lowest possible price, and if you aren't happy - simply say, 'Thanks for your help, but I was looking for lower price.'

If you let that settle for a day or two, with no response - you'll know for sure that it really was the lowest they could do.

But often, a supplier will call or email you back with a better price.

Hope this helps!

[jasaunders]

Many colleges do offer courses on negotiation.

There are many good books that include negotiation, mostly sales related books. I have not read any related specifically to negotiation.

The most important principal in business negotiations is to never negotiate on a single point. If you are only negotiating one point, there will always be a winner and always be a loser. In negotiations, everyone needs to come out (or feel like they came out) as a winner.

There are always multiple issues that can be negotiated. For example, in working with suppliers, of course you can negotiate price. But you could also negotiate payment terms, type of shipping and MOQ. Many suppliers have set prices that they will not lower, but they can offer you more favorable terms in other areas. The key is to never deal with only a single issue.

[JLeezer]

The most important principal in business negotiations is to never negotiate on a single point. If you are only negotiating one point, there will always be a winner and always be a loser. In negotiations, everyone needs to come out (or feel like they came out) as a winner.

There are always multiple issues that can be negotiated. For example, in working with suppliers, of course you can negotiate price. But you could also negotiate payment terms, type of shipping and MOQ. Many suppliers have set prices that they will not lower, but they can offer you more favorable terms in other areas. The key is to never deal with only a single issue.

Excellent point. I have been sure to do that when purchasing our rental properties. It is very easy to be caught up in the purchase price without considering other factors such as closing costs, minor repair costs, etc. Depending on exactly what outcome you are trying to achieve, these other factors may be more important. For us, we wanted to minimize our usage of cash when purchasing one of our properties. So we offered a price of 5% lower than the asking price, but also requested that the seller pay closing costs up to $5,000 and fix numerous issues that were found in the inspector's report which amounted to about $1,500. We could have just offered 8% lower than the asking price (about equivalent to the closing costs + repair) but that would have required more cash up front.

I guess my point is to look at what you need the outcome to be for it to be a success for you, then find all the ways you could get an outcome close to what you want.

[Lambo]

yea negotiations are key in business....courses should be a good start, but real life experience is where its at

[pboychuk]

Well, I mean i didnt grow up under a rock, I know to offer a lower price and walk away to see if they will budge and use the "other supplier" thing as a bargining tool. But, I think what I am really interested is the psychology behind negotiation. Such that, I could acquire the best prices not based on negotiating quantities and services. But instead use specific occurences, between me and a supplier, to my advantage and make them feel obligated to negotiate.

Maybe I am thinking about this too much, I dunno. Its just a skill I feel you cant acquire from a book.

[Gaulkin]

Negotiation is an art and not a science. Keep practicing and eventually you'll get the hang of it.

[JohnnyBudZ]

My dad and uncle have been in the garbage industry for YEARS, they always had to deal with negotiation arbage contracts with the city. What ive learned from him is that negotiaion is a STYLE, not a procedure or something you can read about. Imsure you could get some great advice from books and web articles, but as gaulkin said, this is something your going to have to learn on your own, through experience.

As my father did once say, " Its not about the style of your negotiation tactics, its about being able to read pyscology"

You must be able to read a person, anyways, thats my 2 cents.. hope it helps.

[Nigami Enterprise]

Best way to negotiate is to do it with a smile on your face.

You can literally say anything while smiling. The art is not knowing your limits but also knowing their limits. The more you know about them and their products the more successful you will be.

If you no how much it is costing them to provide the product then question them on their GP. Break it all down in front of their eyes bit by bit. And always dangle that carrot.

[eliz4biz]

Interesting topic...I have been a negotiator all of my life and negotiated contracts in the corporate world for years. Although I strongly believe that you can LEARN to negotiate, I do believe some of us find it a part of our personalities. pboychuk, it is ALL about people as mentioned and knowing how to read them. Just keep at it and if nothing else you will grow so much in your business that you can hire an excellent negotiator.
I have been going to start a post on here about an idea I have, so this actually brings it to light. I'm thinking about starting a personal negotiating service...will elaborate further in another thread as to not take away from yours.
Good luck!

[pboychuk]

Grr, i just spent 5 minutes typing a lengthy reply and i accidently hit the back button.

Im too angry to retype.

Thanks for everyones input.

I believe negotiation is a skill I will learn and get better at with practice and time.

[JohnnyBudZ]

"Pboychuck", its quite possible you know this... but I think there is osmething wrong with your webpage..?

On my computer it says Code: 404 Forbidden?

[pboychuk]

Yes my website is down, I am switching everything to a new host, and between school and business I haven't had time to get it back rolling, its only a side project so it receives no priority. I will take it out of my signature

[davebs]

I think the best advice is to just work with people. Be up front about what you are trying to accomplish and how you would like to accomplish that. Either the guy you're dealing with can help you achieve your goals, or he can't. Price is just one part of the equation, but people often make the mistake of concentrating on price as opposed to value. You'll always be able to find someone to beat someone else's price, but that doesn't mean you're going to get a better value. It's quite possible that your new partner will simply compensate for the lower price with doing a worse job. Find someone you enjoy working with that you believe wants to see you succeed. Then, try to get them to work hard and provide value. That's negotiation, not the BS so many people peddle about concentrating on price as if most services were a commodity (they're not). And to be fair, that's pretty generalized and potentially simplistic advice, but that's why getting out there and seeing what actually works works best. Good luck.