The best way on how to bargain like a pro is to improve your reputation, communication style, and scope setting. It’s not a good idea to meet with a counter-party without doing the homework beforehand and putting in the preparation.
Below are negotiation tips from my friend Adam. You can find him at the BlindLuckProject.com and on Twitter: Blind_Luck. He’s been negotiating deals from working as a supply chain manager in the aerospace industry at a fortune 500 company negotiating deals worth 100’s of millions of dollars with large groups of stakeholders.
While I personally know the basics of negotiation, such as how to negotiate rent, I haven’t the breadth of experience he has!
The largest contract he ever worked on was a 5-year contract worth over $150 million with 18 parties each with their own competing needs. So with that said, let’s see what he says!
Negotiating is more of an art form than a science, to master the game, you’ll need to master several skills similar to a game of poker.
- What is the other person thinking?
- What do you have that they want?
- Do they have what you want?
- Is it possible to change the scope of the discussion to get around sticking points.
- Are they bluffing?
- Control of your own emotions
- Know when to fold and walk away from a bad deal.
It’s a lot to do all at once especially if you haven’t practiced these skills. Just like no 2 people are the same, no 2 deals are the same either.
In this article I’m going to outline what I learned as a professional negotiator working multi-billion dollar programs with complex relationships and multiple stakeholders with conflicting needs. There are many ways on how to bargain like a pro.
Today we will be focusing on developing business relationships and closing deals.
How to Bargain Like a Pro: Reputation
1) Personal Relationships
At the end of the day, you are working with people and it’s important to keep this in mind as you enter any negotiation. People make mistakes, people have bad days, people get emotional, and people don’t always act rationally.
If you forget you are dealing with real living breathing humans and treat negotiations like an equation to be balanced, you won’t get very far with any deal. People like to feel like you’re helping them out, they are getting what they need, and that their boss will be happy.
It’s not like you’re keeping score and there are winners/ losers, if everyone doesn’t feel good about a deal no matter how “good” it is, the chances are low that it will move forward. How to bargain like a pro means maintaining the human element.
2) Your Word is Your Worth
Closely related to the point above about negotiating being a people business, you need to be trustworthy! If people feel like they can’t trust you, they aren’t likely to make a deal with you. Or if they do make a deal they may ask for something extra to make it worth their while, should it become a headache down the road.
Your goal is to be so trustworthy that your word can be taken to the bank. Often the real deal is talked out and agreed to in principle with both parties trusting that both sides will honor their word as you move into formation of a formal contract.
If the final agreement looks different than what you said you’d deliver not only are you hampering your ability to get this deal done, but future deals as well.
By establishing trust, you are building a relationship that will hopefully grow into many fruitful deals not just one deal where you pulled a fast one over on someone. How to bargain like a pro means recognizing that people talk – how you conduct yourself for this deal will likely be shared with others who could be potential business opportunities.
How to Bargain Like a Pro: Stakeholders
Know the stakeholders. Just because there is one person sitting across the table from you the deal never has just one interested party.
For example, if you’re selling a house likely the buyer’s spouse or partner will have an opinion on the sale, are their concerns addressed? Does the house meet all building and safety standards? Even if the buyer is comfortable with it personally, they likely need to get homeowners insurance, will there be any issues with the insurance company?
Does the bank they are borrowing money from think the purchase price is reasonable? Even the neighbors are stakeholders, if they decide they don’t like the new buyers they may try to disrupt the deal (yes this does happen).
Knowing how to bargain like a pro means knowing who the interested parties in the deal.
How to Bargain Like a Pro: Communication Style
1) Less is More – Speak Less, Listen More
One of the biggest mistakes I see in negotiations is talking too much or over sharing information. Stick to the needed facts. You never know what information may kill a deal; a seemingly small detail might be problematic for another stakeholder.
How to bargain like a pro means never saying more than is necessary.
2) Ask Open Ended Questions
For the same reason you don’t want to over share, you want to get the other side talking as much as possible, asking open ended questions gives you a glimpse into the other person’s motivations and what they value in a potential deal.
To illustrate, if you’re buying a home you might ask why the seller is selling the home (I know realtors may disagree with me here), are they under financial stress? Is it an estate sale and they’d like a quick sale? Maybe there have been maintenance issues that they don’t want to deal with.
All this information is helpful in framing your proposal to solve their problem without giving up what’s important to you. For example, if the home is part of an estate (death in the family) the sellers may be motivated by a quick sale so they can move on.
If maintenance has been an issue, asking for things to be fixed may not be productive as the seller is trying to relieve themselves of the problems, but you may extract a price reduction knowing the property has some issues.
How to bargain like a pro means finding out as much information as possible.
3) Don’t Ask Permission
Don’t ask for permission, make statements. Too often people use weak language when negotiating. You can turn almost any questing into a statement. Let’s take a closer look at how you might negotiate a pay raise
“Can I have a pay raise?”
VS
“It’s time to discuss my annual pay raise, I’ve been working hard and adding value for the firm. An increase of $28K per year sounds appropriate”.
Notice the difference? The first example comes off as weak and unsure, your employer can simply say NO. Don’t make it easy for them! The 2nd example forces them to counter your specific argument with a reason.
If they do ultimately say no, you should follow up with “when would be a good time to go into my compensation package in further detail?”
How to bargain like a pro feels uncomfortable at first but it gets better with more practice.
How to Bargain Like a Pro: Scope Setting
Every contract has a scope of work that is being agreed to in exchange for money or other services. Clearly defining this scope of work is a very important part of the process when formalizing a deal into a contractual agreement.
1) Make the First Move
I often hear people say, “let the other party make the first move” as if it’s a bad thing to “show your hand”. In my opinion this is terrible advice! By making the first proposal you get the following advantages.
- You get to ask for what you want. I’ve seen people start a negotiation hoping the other person automatically knows what they want or need and just magically gives it to them (common in salary negotiations). The fact is just like your spouse or partner can’t read your mind neither can the person you’re negotiating with! You need to clearly state what you want if you have any hope of getting it.
- Anchoring. Anchoring is when you put something on the table such as a suggested salary number or price for a purchase. The reason this is important is the end deal is often somewhat close to the anchor point you set in the beginning. By making the first move you get the opportunity to set this anchor point, if you are aggressive in your anchoring point you have room to give a little and still end up where you originally wanted vs having to fight to gain ground. The added advantage is if you aim high you might get more than you wanted if the other party simply agrees with your request!
How to bargain like a pro means having the confidence to start the negotiation on your terms.
2) Be Assertive but Not Aggressive
I noted above you should be somewhat aggressive when setting your anchor point but at no point in the negotiations should you become combative or aggressive in your demands. Be clear but polite, explain what you are looking to achieve through the process and don’t badger the other party into agreeing to terms and conditions they don’t want to.
If you do, the deal will have a high likelihood of falling apart later or worse yet the party may not want to work with you in the future which is a big missed opportunity. Winning the battle but losing out on future opportunities is not a winning strategy.
How to bargain like a pro involves managing your tone of voice to a neutral one. It gets the other side still interested.
3) How to Bargain Like a Pro: Be Specific
You don’t want to talk in generalities or ranges of possibilities in knowing how to bargain like a pro. Get specific, use proposed prices, clearly defined time periods, and specific criteria to define the outcome.
This prevents misunderstandings down the road like “I thought we meant this…” and saves time by getting people aligned with a possible agreement as quickly as possible.
An example would be “for $500 we will deliver 750 red fidget spinners with part number FIG487 within 3 months of signing this contract”. I was specific in pricing, product specification, and time frame (be careful with dates, if the contract is delayed you might be inadvertently agreeing to a tight performance window).
4) Grow the Pie
This is an often-overlooked way to both simplify your life and bring more value to all parties involved in the deal, in fact it’s one of my favorite negotiating techniques. Instead of beating someone up on price for one aspect of the deal, how can you grow the scope of the deal in exchange for a concession.
An example of this is combining the scope of work of 20 small office product suppliers (paper, toner, pens, binders etc) and asking for a 20% discount on everything if you give one supplier the business.
They are happy because they improve their sales, and your happy because you save $$ while simplifying a once clumsy ordering process by using one point of contact. How to bargain like a pro applies to dollar levels of all sizes.
How to Bargain Like a Pro: Know the Facts
One of the biggest mistakes you can make is not coming prepared. Know what you want and know the facts relevant to the deal.
1) Do Your Homework
A lot of the tips above don’t work if you don’t do your homework and know what scope of work you need, or what price would be reasonable. If you walk into a car dealership and you are asked “What type of car would you like today?” and your response is “Well I don’t really know and I’m not sure how much I can afford”.
You know what’s going to happen? That’s right! You’re going to get a huge SUV at a fat price! Know what you need, clearly state what you need, and do the homework so you know what a fair price is. Was the extended warrantee on your list of things to buy while you were there? No?
Then you probably don’t need it! You can’t bargain like a pro without knowing the background.
2) How to Bargain Like a Pro: Trust but Verify
As a rule of thumb, I refuse to negotiate with people I don’t trust. Just like earlier when I said you need to be trustworthy and stand by your word, the same is true for the people you do business with. If you can’t trust them, how do you know they’ll follow through on an agreement (It’s just a piece of paper after all) are they going to try to get out of doing parts of the work?
My feeling is the written agreement is just to help remind everyone what was agreed to. It doesn’t actually hold much weight unless you want to spend time, energy, and money to try and go to court. Keep your life simple and do your best to work with only people you can rely on to hold up their end of the deal.
If you don’t know the person, ask for references, and follow up with them to ensure that the individual is trustworthy. How to bargain like a pro means honing in on your reputation.
3) Double Check Everything
Once you have agreed to the principles of a deal it needs to be formalized into a written agreement or contract. Before you go and sign the dotted line, make sure everything matches what all parties agreed to! Are all the correct products and or services listed? Are the dates correct?
Is the price still what you thought it was? I’ve caught many mistakes in my final review of documents.
Most of the time they are honest mistakes such as a mistyped date, or an address that is incomplete, but occasionally I see things that look a bit too “conveniently missed”. If you do catch an error, make sure to speak up and have it corrected.
If the error is simple you can write in the correction, clearly strike out the error and have all parties signing initial and date the correction. However, If the error is more substantial, I recommend correcting and reprinting the relevant pages then reviewing again.
How to bargain like a pro by knowing the deal you were getting yourself into. You don’t want to have a bait and switch happen on you.
How to Bargain Like a Pro: Master Your Emotions
As I said before negotiating is a people business. When dealing with people one of the hardest things to do is controlling your emotions and presenting your proposal in a way the entices a favorable response. Here are a few tips.
1) Always be Willing to Walk Away
This is a simple but very powerful technique. In fact, I often structure my offers in such a way that I have to walk away from someone.
Let’s say you want to buy a new F-250 Ford Truck, Diesel, Crew Cab, Red (see how I was specific). You could send an email or letter to the sales manager of 10 dealers in the area that states the following.
“I plan to buy a new F-250 Ford truck, it needs to be a Diesel, Crew Cab, and Red. The first person who is willing to sell me this truck for delivery by weeks end for the price of $55,000 will receive my business”
This puts you 100% in control! You’ll likely get a few people who won’t respond (they don’t have the truck or don’t like the price), a few people that will signal they have the truck but want a higher price. Inevitably someone will come thru who really wants the sale and offer you the truck at the price you want (or something very close such as a white truck) this is exactly how I purchased 3 trucks for the firm I used to work for.
Bonus tip – do this 1 week before the end of the financial quarter. The dealer is highly motivated to close deals to hit their monthly & quarterly numbers.
Another walk away technique you can use is sending your requests for bid on a scope of construction work for your home. Inform each contractor that there are 2 other contractors bidding on the same scope of work.
When you receive all the bids you can then select the least expensive one that meets all of the requirements you’ve outlined. The simple fact that the bidder knows there are other people competing for the scope of work will ensure they submit a competitive proposal.
How to bargain like a pro by knowing a walk away point is key.
2) How to Bargain Like a Pro: Don’t be in a Hurry
This is another big mistake I see people do with negotiating. They want something, they want a good price, but they needed it yesterday. They are in a panic, and if they don’t make a deal they have a problem (such as when trying to buy a car after your car has broken down) this prevents you from being able to walk away.
The other party knows you really need the product or service they are offering so they are going to try and get the best price they can in exchange for solving your problem today (note it’s your problem, you’re in a hurry not them!).
Slow things down and make sure you’re in control of the timeline! If you’re the buyer, don’t be in a hurry. Let the parties know you plan to shop around to make sure you get the best deal. That’s how to bargain like a pro.
If you are the seller, communicate that: the last truck flew off the lot at the current price; you’re ok waiting for the right buyer to come look at it; you haven’t seen a truck like it in a while – they are hard to come by!
Let the clock do the heavy lifting for you. Inevitably, the person under the most time pressure will compromise.
3) Focus on the Other Sides Pressure (Solve the Problem)
This is where listening and asking open ended questions pays off. What is the pain point for the other side? Do they need to make a sale by months end? Are maintenance problems giving them a headache? Did the last repair man do crummy work and it’s being replaced?
Whatever the “Need” or “pain point” is make sure your proposal solves this problem in a direct and simple way.
By solving the main problem, you can ask for other concessions that may not be as important to the other party. If the previous guy did shoddy work, explain how you are going to repair the damage and assure them that you’ll use the best materials and practices to prevent further issues.
Is a quick sale helpful to the salesperson? (Classic month-end motivation) offer to take that car you want today if you can get the price you really want (be prepared to walk if they say no).
Is price the main sticking point? Maybe you can pay a little more if you grow the scope of work to include products and services you’d like to receive. The total price will be higher, but you got a better overall value (and hopefully saved time by not having to shop elsewhere to complete your list).
Tip: when buying a car, ask for mud flaps, floor mats, trunk liner, and paint repair kit. You can almost always get these for free! If they won’t budge on price start asking for extras to close the gap. Amateurs focus on money. How to bargain like a pro focuses on the bigger picture.
4) Don’t Give Anything Away (Pay Attention to the Details)
This is a tricky one but I need to bring it up. Too often the numbers look good, the product is what you require but in the terms of the agreement are little details that end up costing you money. Push back and don’t give anything away.
Some simple examples are you have to go pick up the product instead of it being delivered which costs you time and money. Payment up front (vs net 30 or 90 day payment terms).
These details add up they shouldn’t be overlooked! Who gets to keep the pallets, do you get to reclaim scrap materials from shipment for resale? I went so far as to ban weekend or partial shipments so I wouldn’t have to hire as many receiving staff or pay them overtime.
Just because there isn’t a $ sign in front of it doesn’t mean it doesn’t cost you money. How to bargain like a pro by reviewing all of the terms of the deal!
5) How to Bargain Like a Pro: Don’t Take Things Personally, It’s Just Business
One of the quickest ways I’ve seen deals get killed is when one side gets upset over something. When working on deals you need to understand that not everybody’s goals are aligned with yours. It’s only natural that they will ask for things you can’t give them or make demands you feel are unreasonable. Disagreements happen – that’s all part of the process.
In fact, I like disagreements when negotiating because it means we are fixing a problem before it becomes a bigger issue after a deal is made.
This is all part of the process. Remember, it’s not personal it’s just business. By doing your homework ahead of time and knowing what you need to get out of a deal you can calmly state what you need. If you reach an impasse there is nothing wrong with putting a pause on things to revisit at a future date “we seem to be stuck for today, let’s revisit this on Monday to see if we can close the gap between the 2 sides” often giving time for a fresh perspective is all that’s needed and a solution is found.
Occasionally I run into what I call “Pit Bulls” they won’t give on anything and pound the table with their fist and make bold statements about what they must have! Generally, it’s best just to walk away from these types of people. Those people do not know how to bargain like a pro.
They are attempting to bully you into doing something that’s most likely not in your best interested. Unfortunately for them, it’s not a very effective strategy for getting repeat business.
How to Bargain Like a Pro: Final Thoughts
At the end of the day, we are all people and negotiating is the art of working with people to get what you need in a deal that all parties agree to. How to bargain like a pro is creating win-win deals that work for all sides.
The most effective way to do this is to conduct yourself in reputable way thru clear and specific communications. Know the facts and at all times, keep your emotions in check while finding ways to ensure the other parties needs are met, while also giving up as little as possible.
Sounds pretty simple, right? In principle it is, in practice dealing with people is never that simple!
If you enjoyed this guest post by Adam the Friendly Sasquatch, make sure to check out more great articles over at BlindLuckProject.com.
Frequent topics are early retirement, beating the odds, and general philosophy to live a full and fulfilling life.
You can also find him over on Twitter @Blind__Luck.
