Using the power of negotiation and effective negotiating tactics can save us hard earned money over the long run. In last week’s article, I made a point to simply make the argument for why we need to use negotiation as a tool more frequently based on a recent experience I encountered, where it was clear I would need to negotiate the price of a service. This article is a transition from why it’s important to negotiate to appropriate negotiating tactics (which doesn’t include confrontation or scare tactics!).
Being aware and ready to negotiate when the door is open for it, can increase your income and/or minimize your expenditures. Experiencing either of those outcomes (increasing income or lowering expenses) is a sign you are a savvy, financially-minded individual. More importantly though, is increasing your overall sense of happiness!
So, here are the nine negotiating tactics that you need to have in your back pocket so you feel empowered to negotiate more!
1. Pick Your Negotiating Battles: Timing is Everything.
Before beginning the negotiation process, make sure you have considered if the timing is right for negotiating. If you have already agreed to something, your negotiation power is less or if there are other circumstances that minimize negotiation power, be aware of them.
A perfect example from earlier this year was from the “chip shortage” on cars. Dealerships had more demand for new cars than they did new cars; therefore, negotiation power was heavily in favor of dealerships. While there was maybe some negotiation to be had, dealerships knew they likely could sell a vehicle on their lot to someone else rather quickly because there were more people shopping than cars.
If you are wanting to negotiate shrewdly on a new car purchase, the timing of doing that during the chip shortage was little-to-none.
If you are wanting to negotiate your salary, take time to think about big events coming up. Are you completing another degree? Are you completing a large project that will gain you recognition for? Having those things completed and as power for negotiation is important. Negotiating before their completion may be jumping the gun a bit.
So, before entering into a negotiation take a moment to think about if the timing is right. The one caveat to this is that you can’t wait forever. Don’t use excuses to put off negotiating if it can make your life better today and the negotiation is appropriate (i.e. you’ve already finished multiple projects or have done other work that warrants a raise!).
2. Know Your “Why”
The second of the negotiating tactics that I think is so important is to ask yourself “why is this negotiation important?” If you know why a negotiation is warranted you can be much more effective in articulating why what you are asking for is important and warranted.
Also, having a reason for your actions can help you focus on what is most important to you. Is it simply that you don’t want to pay more than you have to for something that you need? Is there a tradeoff you want to be mindful of (i.e. if you spend a penny over a certain amount you’ll be sacrificing something else, etc.).
3. Have a Desired Outcome
It is important to know what you want to happen as a result of entering into a negotiation. The purpose of negotiating is not to sit and talk in circles; the point of negotiating is to walk away with something. You may be negotiating for a better work-life balance at work, negotiating over household responsibilities, or over a termite service (this was the story from last week’s article!).
Whatever you are negotiating, know the outcome that you would consider best case and know what you are willing to compromise on. By having a desired outcome and acceptable outcomes in mind, you can focus on the result you would most like to see happen. You may not get everything you want, but knowing what is acceptable makes the end result truly a resolution. Until you’ve reached one of your acceptable outcomes you are either still negotiating or at an impasse.
4. Recognize Who is in the Power Seat
No matter the negotiation situation, take time to recognize who is in the power seat. My argument is that it is always you. You are always the one in the power seat.
I could probably give a TED Talk on this; but here is the abridged version. I genuinely believe most people mistakenly give others more power than they deserve. You are the person that holds the power. You hold the power to say “yes” or “no.” There are multiple service providers for one service if you are willing to shop around. There are so many products in the world that you can substitute in for each other to meet your needs. You have the power to change employers or careers to best fit the life you want to lead.
This doesn’t mean we don’t help others or lead an egocentric life, but we are the individuals who have the power to make our boundaries known, to make our values known, and to be clear about our expectations.
By giving yourself the permission to feel powerful when entering into a negotiation situation is one of the negotiating tactics critical to a successful negotiation. No one controls the trajectory of your life and what you want other than yourself. Go out and get what you need and want most, because you have the power to do so!
Complete side note: You may have felt my voice take a more serious tone in this last point. I’m so passionate about people finding their own power. This is one of the main reasons I was called to the business name MPower. If we all harnessed our own power – change M to My – or “My Power” to feel a little more empowered to make a difference in our own lives or those around us, we could live better, happier, richer lives.
5. Arm Yourself with Information
Don’t walk into a negotiation without information and knowledge to support your desired outcome. Your mentality is critical, but showing your position is supported by other sources is a truly effective way to negotiate towards the result you want.
If you are going to trade in a car, use the information you can find through kbb.org or by getting other trade-in quotes (I’m currently loving online trade-in quotes from CarMax and other independent dealerships that have come about during the pandemic).
If you are going in to request a raise or negotiate a starting salary, use your current pay as a starting point, but also use Robert Half reports, information on salary.com, and any other public source for salary information. Show you’ve used the public resources to make reasonable requests, and haven’t just pulled starting salary information out of the air.
Get second opinions or multiple quotes. If you like one provider, use the other quotes as a way to negotiate a lesser price to work with the provider you want to work with.
6. Carefully Frame Your Negotiation
Once you have considered if the timing is right, you have armed yourself with nerves of steel, and have gathered all of the information, thinking through how you want to negotiate for your desired result is the last step before walking into the actual negotiation. I think this is perhaps one of the most nuanced negotiation tactics I’ve discussed on this list.
I want to use negotiating a car as an example here. One tactic car dealerships often use on their side of the negotiation is to ask you what payment you are comfortable with each month. They will lock you into the longest term car payment to get you under your threshold. What they want you to not realize is you are going to pay significantly more for the car because of it in added interest expense.
So, instead of talking about cars in terms of the monthly payment. Talk with them in terms of the overall car price and the total interest amount you will pay over the length of the loan and negotiate that. The lower you pay for the car overall and the shorter the term and interest rate you will pay, the lower you are paying for a car. Make sure you make them negotiate on what matters to you, in your framework not theirs.
7. Listening Carefully is One of the Most Powerful Negotiating Tactics
The most important part of a negotiation is not what you say, it’s what you hear. When you negotiate, be ok with silence. Let quiet hang over the conversation at important moments. Resist the urge to fill the void yourself. The likelihood is that the other person will decide to fill the open space and this is likely when they will give you concessions or points of contention during this time. Take time to listen and process what they’ve told you.
Look for opportunities in what they are saying. Listen for points of compromise and/or what they need in return to give you what you are looking for. Clarify what they’ve said if needed.
8. Be Willing to Walk Away
Dr. Thia reminds us “No” is a complete sentence. Know when someone isn’t hearing you. Recognize when others aren’t willing to compromise to a reasonable solution. Be willing to walk away. If you are not being heard, respected, or treated fairly, be willing to walk away.
No home, no car, no nothing is worth feeling like your well-researched opinions don’t matter. You have the power to end it all by saying “No” and walking away.
9. Find a Resolution to the Negotiation
If you have gotten your desired result, celebrate the end of the negotiation. If you’ve had to compromise, make sure the conversation is left to reopen to reconsider for your desired result at some point in the future, if you feel that is appropriate.
If you’ve walked away from the negotiation all together, do what you say you were going to do – find another service person, get a second opinion, etc. If the door is closed here, the door is open somewhere else; go find it.
Free Resource – Becoming a Millionaire Next Door
If you found this article on negotiating tactics helpful, MPower co also has a free resource that you’ll love! It’s all about how to become a millionaire next door. Becoming a Millionaire Next Door takes focus and time and using money wisely, like you are now set up to do with the negotiation tips above! Click on this link to get your free download to be more financially savvy.