How high can you go during a negotiation?
Image Credit: Hartwig HKD
When you are negotiating with someone, should you aim high and risk losing the deal or should you aim low and risk leaving money on the table? We’ve all heard the phrase “Ask for more and you’ll get more” right? However, in the world of high stakes negotiating with all of its negotiation styles and negotiating techniques, does this really apply? It turns out that it does; however, your job just might be working against you.
What Should You Be Asking For During A Negotiation?
When we enter into a negotiation we have a series of decisions to make. When we present a proposal to the other side, we’d like to present them with a proposal that would create the best deal for us. This type of proposal might have the highest price, or the longest delivery time, etc. Deep down inside, we know that the other side will never agree to this, but it’s a good place to start.
One of the things that you need to realize about a negotiation is that there is a direction associated with every negotiation. What this means is that if you lead off your proposal with a value that you feel is going to be too high – they’ll never pay this, then you still have options. You can lower your price / shorten your delivery date / etc. However, if you start out offering the other side a low price and they accept it, you won’t have the opportunity to go back and raise it later on.
It turns out that in negotiations, if you aim higher, then you have a better chance of coming out better. As an example of this, if the value of your product with a nice profit margin is $100, then you should ask for $120. No, you probably won’t get the other side to pay you $120, but every dollar over $100 is going to be pure profit for you and so you need to ask for it. There have been a number of scientific experiments that back this up – if we ask for more, we end up getting more.
Why Do We Have Such Problems Asking For What We Should Be Asking For?
If we understand the basic concept of “if you ask for more, you get more”, then this naturally leads to the question: why don’t we do it more often? Rare is the time that we ever believe that our company has set its prices too low. The reason that this never happens has to do with the jobs that we currently have.
Our jobs do us a disservice – they have trained us to be poor negotiators. Due to a wide variety of inputs that we get while we are working at our jobs day-after-day, we get messages that tell us over and over again that the price and other features of our product are too high or not right for our customers. What this means is that quickly we forget about all of the power that we have as negotiators and we allow ourselves to get knocked down.
As negotiators we run into a lot of people who tell us “no”. What this means is that when we enter into a negotiation, we often go in with a negative frame of mind. All too often we have heard people saying bad things about our product in terms of its price, its features, its shipping, and perhaps even good things about our competitors. What you need to do is to shift gears. You need to take charge of your thinking process and realize that negotiating power is in the eyes of the beholder. What you need to realize is that in negotiating power is simply a state of mind and you actually have as much power as you think that you have.
What All Of This Means For You
When we are getting ready to start a principled negotiation, we are faced with a number of critical questions. One of the most important of these is if we should start out asking for a lot or play it safe and ask for just a little bit. We all have heard the phrase “Ask for more and you’ll get more”, but when it comes to negotiating does this really apply?
When we are making our first proposal to the other side of the table, we need to decide if we want to present them with a deal that we know that they probably won’t accept. The answer is yes – they won’t accept it, but it does provide everyone with a place to start from. The reason that we want to do this is that it’s always easier to lower your price than to try to raise it later on. Studies have shown that if you ask for more, then you are going to end up getting more. We often don’t have the courage to ask for more because our jobs are filled with rejection and this teaches us that we don’t have power. However, it turns out that we may have more power than we thought that we did.
The next time that you enter into a negotiation, make sure that you do so with a good attitude. You need to remind yourself that you have more power than you realize and that you should present the other side with a deal that will allow you to negotiate to the deal that you want to get to. Believe in yourself and you’ll be able to get the deal that you want.
– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™
Question For You: What’s the best way to get a positive frame of mind before a negotiation starts?
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What We’ll Be Talking About Next Time
When I’m working with negotiators who are just starting out, I’m often asked the question “how can I win a negotiation?” Outside of the obvious issue with “winning” a negotiation, the question is actually a fairly good question. What my students are really asking me is what they can do in order to make sure that when they walk away from the negotiating table, they feel that they’ve been able to reach a good deal with the other side. I turns out that this all comes down to how much power we have.
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