How to Negotiate
There are a lot of things they do not teach you at school and negotaitng is one of them
I see a lot of it in my daily job and I have come to the conclusion that we are not good at it.
I see it mainly with people buying property. The property goes up for a certain price which is usually one that is thought up by the estate agent.This is a high price as every expects that the price will be negotiatd down. The purchaser looks at it and claims some sort of knowledge and negotiates it down by a thousand pounds and everyone goes away happy.
The seller because he inflated the price and the seller because he knocked the seller down.
I have not really seen many people vary from this. It is regarded as bad manners to offer a much lower price but it can work. The property experts who run seminares claim that they get up to thirty per cent off. I don't not believe this . If the price has been negotiated down by thirty per cent that I doubt it was a genuinee valuation.
They claim that they get a thirty per cent recuction because they are either so clever or they buy in bulk. This seeems to go against the idea of why you are buying the property in the first place which is for capital growth.
They the claim that they can get the property revalaued for lending purposes back up to the 100 per cent they first thought of. this is regarded as good negotiating tactics. It does not take a genuius to see they can't have it both ways. They are using false valuations followed by false discounts.
They then seek t oprove this by saying is you look at the sale prices of comparable sites they are selling at these prices. But this is mainly with new properties where the builder is in collusion with the purchasers and the lenders so that everyone goes away thinking they have had a bargain. All they have done is hsuffle borrowed money around and someone will have to pay it in the long run.
The above on the sale of property is a simple negotiations and people do it every day.
In our society we are too polite to become tough bargainers as we are seen to be fair and this is regarded as unfair.
If it is business and everyone is a willing party I cannot see how it is fair or unfair, it is just business.
What is a negotiation?
We are doing it all the time but we just do not think about it Most negotiations are just a discussion of the price and someone drops the price and that is it. Estate agents are a good example of this.
In a good market they try to up the price in a bad market all they do it drop the price.It means nothing to them as they do not own the item they are selling and the drop in price hardly affects their commission as one or two per cent of a thousand pounds is very little They could make all their profits every year by selling a lot of propery at an undervlaue. They lose nothing but a few pounds whereas the sellers loose thousands of pounds.
Most people shy away from all negotiations. It is a bit like not making a decision but not making one they have made one.
With ignoring negotiations or not negotiating you are losing money every day. If we under price our services to our employer or to our customer we are losing thousands. Nobody is going to complain if you keep your salary down or if you give your profits away to your customers.
Most people think they have done well if they just close the deal at any price. They then have work to do and they take no notice of whether they are making a profit or a loss.
They can blame the competition and say well if if did not do it at that price someone else would have and we would have lost the business. They then get more and more cheap business with no chance of putting their price up.
Good work may go elsewhe because they are then seen as cheap and not very prestigious. In other words you cannot be any good becasue you take on work at any price.
Estate agents are not negotiators or salesmen they are just closers.The more deals they close the larger their commission. Because they are not actually buildling or delivering the goods or products there is no upper limit to the amount of deals they can do in a month.
Once they have closed, 90 per cent of their deals will go through wihtout any more help from them Only a few will fail and maybe some need chasing to conclusion.
Is it selling?
It is not selling ,it is when the sale has been agreed and they are reaching agreement on the detials. It is difficult for me, as so many people buy my service on price, even before they know what the service is.
If I am getting a phone call out of the blue without any recommendation or from an existing customer it can be totally on price so I have to make a decison as to whether I am being generous that day or not. I usually ask them where they have come from.
I have a bottom line beloow I which I will not go and I try to move them up from there . The more successful I have been on reccommendation and repeat unless the more I can ease up the price.
If it is somthing like a will I have a set price and when I meet them I try to upsell to powers of attorney etc.
This doesn't have too much price resistance and they are good earners for me as they are fairly standardised.
All the other srvices are subject to me being undercut. I am usually undrcut by speicilist firms who cannot do the other areas of work that I do or by one man bands. None of my competition is partuclarly sucessful or profitable so I spend little time worrying about them
I also take the view that clients who are excessively price sensistive at the beginning might be hard about other problems so it is best that they go elsewhere rather than result in some sort of complaint. All my drossI am happy to pass on to my low priced competitiion.
So the negotiation has to be flexible. You cannot be seen to be just giving in on every occasion. Other days when I am well over my targets I might be very generous and try and get in as much work as possibe at a resonable price as I am well into bonus. So I might as well have the extra work.
If you are not desperate you can discount or increase your price depending on how you feel on even the same day.
It is very hip these days to talk about win win situations. I suppose this is to conteract the situations where we only cared about our own profits to the detriment of others.
This can be a sales ploy which I heard recently when the seller came in and said" We are looking for a long term relaitionship". He then did not give me any leeway on a the price in fact he never told me what the price was until very late in the day. His literature had not revealed it and neither did the contract he go me to sign
He mentieond 15 % of money recoverered. soI sssume that was it.
It was a no win no fee negotiation so I was not that worried as I had written the money off. I gave him two cases and if they work out I will give him some more work.
Apart from an up front fee which seemed to contradict the no win no fee I was happy to go on that basis.
It shifted a problem off my desk and on to someonelses. I was not capable of resolving it and if anyone asked me it is being dealt with by those who know.
The most pathetic negotiations I have seen and it it quite comon is to have people on a probaton period for a certain amount of money then after that period increase it by 1000 pounds. In my view if they can't do the job they will still not be able to do it in six moths time. It is regarded as clever.
The last time I saw it used it was in my firm and the member of staff on whom it was perpetrated had to ask for her money and the partner conncerned had not done it automatically or review it.I thought it was bad form.
Needless to say the person concerned never has any luck keeping staff and I am not surprised. It is poor management.
So win win I presume is where everyone goes away happy. Therefore you have to see the negoaiations from the other persons point of view and there has to be built into the agreement equality.
I see a lot of firms having short term arrangements with their suppliers as they fall out over details and they will go elsewhere rather than negotiate with their existing suppliers.
I try to build on term arrangements with everyone I do business with. If they have concerns then I should be the first person they speak to .
I have not seen one succceful person or companby that doesn't strive to keep up long term arrangements. It is more productive in the long term.
I am always susupicious of people in business who contact me for no apparant reason when it is obvious they have used professional services in the past. Why have they not had a long term relationship. Mainly it might be becausse they have fallen out with their professional firms.
It might be the firms we not good enough but I see my competiton and they are adequate and are cheap so why would poeple keep changing.
I come to the conclusion that they are potentially difficult clients. i.e. too price sensitive or too demanding. Whatever I do not need them.