It goes without saying that deal negotiation is a key part of good business. Think of it like a poker game — you’re not just playing your hand but your opponent (though maybe don’t refer to the other party as your opposition). There is skill and diplomacy involved, and patience.
Most of all, it’s compromise. No one is going to end up with 100 percent of what they want, so be prepared for a lot of give and take. Here are some tips to help you improve your odds of coming out on top in deal negotiation.
Understand the other side
First of all, you have to know where the other party stands and what they value. Simply trying to gain the upper hand won’t do much. Aim for a discussion where you both attempt to understand each other’s wants and values, and know why they want what they do. Finding their motivation will give you a better angle to negotiate from and help you make more informed decisions.
Focus on your priorities
Negotiation is all about compromise. No one is going to walk away with everything they want, so sit down before and figure out what you are willing to compromise on — as well as what hills you’re willing to die on. This will give you more confidence and help make sure you know your limits and what you are willing to walk away from. It also reduces the chance of you making rash decisions in the heat of negotiation, since you’ll already know what your priorities are.
Make the first offer
This might sound counterintuitive, but bear with me. Usually knowledge is power, so keeping your cards close to your chest gives you the upper hand since the other party doesn’t know as much about you as they’d like. But according to Forbes columnist Kristi Hedges, by making the first offer, you’re dictating the ballpark area for counter-offers. You’re dictating the value of both what you have and what you want, and it shows that you mean business. That being said, don’t try to shock them with a ridiculously high figure! Let them know where you stand, set the bar high, and take it from there.
Now that an offer is on the table, avoid insulting a counter-offer with a lowball. Consider it a reset and avoid antagonizing and offending the other party be devaluing their offer. What you’ll end up with is both sides bristling and you’re less likely to get what you want.
Keep your priorities in mind as well as the other negotiator’s values to make sure it doesn’t descend into a negative and reactionary situation. Be respectful and show that the other party’s wants are valid. Respect will keep everything civil and you’ll be much happier at the end.
Above all, keep a cool head. Logic and rational thought will go a long way, and remember that negotiation skill takes time to develop. Plan ahead, learn to think on your feet, and you’ll end up much happier than someone who reacts on impulse.