In the previous articles of the series, I talked about the importance of preparation, why it is critical to truly listen, and how to understand your opponent at the negotiating table. Today I will talk about why going for a compromise is not the best idea and why you should always shoot for the win-win deal or no deal at all. I will also talk extensively about price negotiation since that is something we deal with on a regular basis as we go through our lives.
As the book title Never Split the Difference indicates, Chris Voss is saying that a win-win solution is often interpreted as splitting the difference and going for compromise.
If you are buying a car and asking $20,000 for it and I want to buy it for $10,000, we agree on the middle, and I pay $15,000. However, did we reach a win-win solution? Possibly. But possibly not. What if I went for win-win and you for win-lose? What if the actual value of the car is $9,000?
Then I lost badly, and you won with a good margin. The $10,000 I was willing to pay would be actually win-win as in my eyes, the car had a value of $10,000, so I would feel that I got a good deal, while you would still make a $1,000 so also a good deal. Just be careful. The win-win mindset can often lead to disasters if you don’t understand well what win-win in the particular situation means, and you end up with a compromise. Compromise can often be the worst outcome as both sides can feel dissatisfied.
Don’t make their problems your problem
One of the frequently used negation tactics in business is to claim that the budget doesn’t allow your asking price. This can sometimes be even true, but more often, it is not as people can usually find the money for things that are truly important. “You are asking for $100,000, but our budget allows only $80,000,” is an excellent strategy to set a boundary that sounds unbreakable.
Don’t make it your problem. Guide the other party on the journey to self-discovery, so they come up with a solution. Maybe the missing $20,000 can be found somewhere else, rather than you selling your services or product cheaply.
Be prepared to walk away
No deal is better than a bad deal. There will be other opportunities to get what you want in the future. Be patient. You need to have the mindset of being willing to walk away. If not, you get desperate, and you end up with a bad deal. Resist the urge to succumb to artificial deadlines. Patience is a powerful weapon.
However, if there actually is a real deadline, make it clear at the very beginning of the negotiation. Make it clear that if there is no agreement by this deadline, then it means no deal. Then both sides have the same timetable in front of their minds, and it lowers the chance of prolonged impasse.
Understand why the other side wants it
The fair value of something is always driven by two things: the actual value and your perception of the value. If I give you $100 dollars to proofread an article for me, you will probably think it is easy money and be very happy with it. If you then learn that I sold the article for $100,000 (I know it never happens), you would feel cheated. You would think that you should get at least a couple of thousands for your work. The value of your time hasn’t changed, but your frame of reference has.
That is the reason why it helps to understand what the negotiation is really about. You may think that you are selling me a car to get from point A to point B. For me, the car may represent a beautiful piece of art that I plan to lock into my garage as an investment. For each of us, the fair value may be very different.
If you know my emotional drivers, you can frame the sale in such a way that I’m willing to pay you more. Instead of focusing on fuel economy, you can focus on the uniqueness of the car, the design, the fact that only 500 of them were made, and thus you expect it will appreciate in value.
By pointing out the rarity, you can also use one of the heaviest tools in the negotiator’s toolbox against me – the loss aversion we discussed in the first article of the series. You show me not only that you can provide me with what I want, but also what I’m going to lose when the deal doesn’t get through.
Neuroscientist Antonio Damasio talks in his book Descartes’ Error about an exciting discovery. After a study of people who had brain damage in the parts where emotions are generated, he discovered that these individuals are unable to make decisions. They can logically explain what they should do, but ultimately, they just can’t decide. He calls it a somatic marker hypothesis. Regardless of our belief that we decide based on logic, in reality, it is always about emotions.
Never ask “why”
Never ask “why” questions in serious negotiations. They are accusatory. They make you sound like an enemy. Rather ask “what” and especially “how” questions. “How can I do that?” type of question forces the other party to expend their energy on finding ways how to help you rather than how to fight you. It alludes to you really trying to accept their proposal, but you just can’t. It forces the other party to be flexible and helpful. They will feel in control.
Ultimately any agreement, any “yes,” doesn’t mean much without clear “how.” You need a plan of action.
Don’t be afraid to go first
It often happens that people are too afraid to put their cards on the table and name the price. Pity. Being the first who names the price is a great way to get an advantage and frame the conversation. As long as you do it the right way. In most talks about the price, you should lead with a range and with some extreme values.
Shift the expectations by using anchors
When negotiating price, be wary of something Chris Voss, a former FBI hostage negotiation, calls the extreme anchor. It is a technique often used by salespeople. Have you ever bought something in a sale? The original price was something ridiculous, but the discounted price was fine in comparison. Even though it may have been still crazy high. You decided to buy as the discounted price felt reasonable compared to the original.
You can use this to your advantage in situations like negotiating a salary. By going first, and by using a range rather than one number, you can create an anchor that is higher than what the hiring manager was thinking while giving him or her a chance to feel that you are reasonable and go for the lower end of the range.
Let’s say they are thinking of offering you $90,000. You preempt the offer and say something like, “based on my research, this role, in similar companies, is paid in the $100,000 to $120,000 range.” You anchored the conversation higher. It is much more difficult for the hiring manager to push back and say they want to pay only $90,000. They are more likely to go for the lower end of your range. By using this higher anchor, you bought yourself more negotiation room. Even if the hiring manager has a top limit of $90,000, they are more likely to accede to some non-monetary benefits that are important to you.
The range that has its lower edge at your expected value has the highest chance for you to get what you want. Daniel R. Ames and Malia F. Mason explore the effects of ranges and anchoring in this paper.
Don’t be afraid to ask high
During my career, I have coached several people who were unhappy with the salary they’ve got when joining the company. Some of them were ready to leave a week after they joined because they felt that the compensation they were getting was too low, even though they’ve got what they asked for! I’ve had similar conversations with freelance developers and coaches who were trying to set up their hourly rate and were worried about asking too much and pricing themselves out of the market.
Don’t worry. Go for it and ask for the highest, yet justifiable, the number you can come up with. You can always negotiate lower if needed. You should never go to negotiation asking for less than you want as it automatically means you won’t get what you want.
You not only set the expectations about the price, but you also frame your own value. By naming a high price, you or your service will also be perceived as more valuable. Why do you think the premium brands in any industry can ask for a significantly higher price? Especially considering that the actual product is often being built in the same factory as some of the unbranded products.
Never accept the first deal
You should always counter the first deal you get. Why? To get a better deal, obviously. But also, not so obviously, to let the other party feel better about the deal. If you eagerly accept the first offer, you make the other party feel like they could get a much better deal. They will feel bad, and they will be less likely to deliver on their promises.
If you counter, even with the small additional requirement, they will feel that you are not totally happy, and therefore they got a good deal.
When your first offer is countered, don’t try to counter again just for the sake of doing it. There is little point. Just consider their counter on its merit.
Alternately, if you are delighted with the first offer, you don’t need to counter just for the sake of countering, but you should at least pause. Don’t look too overeager. A hesitant, “ok, I guess that is fair,” is a better approach than grinning and shouting, “yes, yes, thank you!”
Use non-rounded numbers
A good way to appear serious about your last offer is to use numbers that are not rounded. If I say that the least I can accept as a salary is $90,000, it still feels like a placeholder. If I say that the least I can accept is $90,152, it feels like I thought about it a lot, did lots of calculations, and this is the actual number, not a placeholder, not something that can be moved down anymore.
Compliment the negotiation skills
After you have an agreement, it is still not over. Coming to “yes” is almost the end, but without a specific action being taken, it can still become “no.” You can cement the achieved agreement by making it clear that the other party did a great job negotiating with you, and they got a good deal. Make them believe that this is an excellent win for them. Make sure they don’t have a chance to second guess their decision to agree to your terms. And drive for action to have the signature on paper.
As you can see from this series of articles, most of the negation techniques I talked about are rather simple to understand. Yet, they are not that easy to implement during the actual negotiation. The one thing that helps is practice. The more you consciously practice some of the techniques, the better you get at them, and the less likely you are going to avoid negotiations in the future.
The more you are willing to negotiate, the more likely you are to get what you need and want in your life. I wish you many happy and successful negotiations!
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