Some people will tell you win-win is a myth, and all negotiations are inevitably antagonistic. If that were true, there would be no happy marriages, no happy customers and no happy employees in the world. Which is clearly not the case.
Any relationship that works — whether money is involved or not — does so because people have interests that coincide:
- They both want the same thing
- Or they want different but complementary things
- Or there’s no conflict about the things they don’t have in common
Negotiation is a complex art, but it isn’t practised exclusively by specialists. Mickey and Minnie would never think of themselves as negotiators, but they are. They are constantly negotiating the boundaries of their relationship, mostly smoothly, but with the odd flare-up. (Like that time Mickey’s team won the Cup and he came home drunk at midnight to find his fondue in Pluto’s tummy.)
Just like Mickey and Minnie, you are constantly negotiating – with friends, family, partners, colleagues, customers, clients and even fellow passengers on a crowded train.
I’m assuming that you want business relationships as harmonious and mutually rewarding as Mickey and Minnie’s. Even when it comes to one-off deals, I assume you want to treat and be treated fairly, for the sake of your reputation as well as your own peace of mind. Here are some tips on how to do this – as well as some suggestions for dealing with tricky negotiators who aren’t so interested in playing fair.
1. Talk to the right people
If you find yourself continually having to negotiate with people who believe ‘win-win is for losers’, and try to get the best deal for themselves at your expense, you should ask yourself whether you’re dealing with the right people.
Sometimes, negotiating with a ballbreaker is unavoidable. If you find your dream home, you’ll have to negotiate with the owner. And sometimes a business opportunity is so good that you’re prepared to put up with stressful negotiations in order to land it. But unless you really enjoy the cut-and-thrust of competitive negotiation, you should aim to deal with people who understand the value of a mutually beneficial agreement, and are prepared to consider your position as well as their own.
Apart from the negotiation itself, do you really want to do business with selfish, inconsiderate people? They are unlikely to suddenly develop integrity and generosity once the negotiations are concluded. So assume the spirit in which negotiations are conducted is a good indicator of your future working relationship.
Personally, I want to do business with people who value my time, skills and the value I bring to the table. They don’t all have to be my best friends, but I want to have a healthy professional respect for them, so I can bring my usual enthusiasm to our work together.
2. Always have another option
If you walk into a negotiation knowing that you have no alternative to accepting a deal, you are in big trouble. If the other party senses this from you, then unless they are people of wisdom and integrity, you are screwed.
The strongest card you can pay in any negotiation is knowing you are free to walk away if you don’t like what’s on offer. When you know you have other options, it puts you in a relaxed frame of mind, making you more confident and creative in finding mutually beneficial solutions.
So do everything you can to make sure you have other irons in the fire. If you’re selling, make sure you generate plenty of leads. If you’re job hunting, get more than one interview. If you’re looking for partners for a new venture, make sure you have several candidates.
In the worst case scenario, if you really are desperate and have no alternative, then don’t let it show. Even if they aren’t the type to take advantage of you, desperation is never an attractive quality. Before you walk into the room or pick up the phone, get yourself into a positive mindset, even pretending to yourself that you have alternatives. You might be surprised at the effect this has on the outcome.
3. Know your worth
This goes back to Lesson 14, where we looked at pricing. The same principles apply whether you’re talking about product pricing, fees for services, salary, or non-monetary considerations such as privileges or opportunities.
Ultimately, the value you deliver to the other party is the most robust measure of your worth — and the one with the strongest appeal to their self-interest. If you can prove to them that they will gain more than they invest by doing a deal with you, it will put you in a strong position.
You should also be aware of ‘market rates’, since competition will affect the other party’s perception of your value proposition. E.g. if you are the only person who knows how to fix their website just before a major product launch, they are likely to place a premium on your services. But if there are plenty of alternatives, you’ll have to work harder to show it’s worth investing in you rather than shop around for a cheaper alternative.
Beware of making concessions in advance, based on your assumptions about the other party.
Before the negotiation you should also identify your deal breakers — the things you absolutely can’t accept. This could be a financial figure, or other conditions such as working hours, flexibility, timescale, or freedom to do things your way.
4. Start with points of agreement
First picture a win-win outcome in your own mind – your best guess at how a successful deal might look, with clear benefits to you and the other party. Then describe this outcome to them, to see whether it appeals to them too.
Once you’ve identified a mutually desirable outcome, make it a priority to identify points of agreement. You may be anxious about areas of potential conflict, and eager to start negotiating these, but it’s really important to list explicitly the areas where you are both happy to agree. This will put both sides in a more positive frame of mind, and give you a foundation to build on.
5. Establish criteria
When you identify points of difference, do your best to establish criteria for reaching an understanding. The more objective these are, the easier it will be to reach agreement. And watch out for the other party using criteria that favour them but are less relevant to you.
E.g. If you can prove that using your product will save them X amount of money, and take very little time, then ‘a proportion of X’ provides you with a reasonably objective criterion for negotiating your price.
If the other side counters with “Yes, but we’ve found a cheaper alternative”, you have a choice: either to accept ‘price’ as the key criterion, and risk a race to the bottom, in which they challenge both sides to undercut each other; or to challenge the criterion by saying something like: “I’m sure you can always find cheaper alternatives. Let me explain the value I provide, the thoroughness of my approach, and the results I’ve delivered for other clients. If you can find those things elsewhere, good luck to you, but I’m not here to negotiate on price.”
6. Artists don’t compete on price
If you’re an artist, you may be wondering how on earth you can establish objective criteria for the value of your work. The bad news is, you can’t. Aesthetic judgements are notoriously subjective, as we all know from arguments with friends over why our taste in music/movies/literature/art is infinitely superior to theirs.
The good news is, people who buy art works are not particularly interested in objective criteria. They value their own taste and judgement. They may also be swayed by things like critical opinion, popularity, and status markers such as exhibiting your work in the best galleries, or being published by a respected imprint. So the best way to establish your value proposition is to build up your artistic reputation and the mystique around your work.
And real artists don’t compete on price. Picasso was Picasso. His audience understood what that meant, and either paid what he asked or accepted that his work was out of their reach. You may not put yourself in his price bracket, but choose a bracket and stick to it. And don’t get drawn into justifying your prices to people who query it. Anyone who questions your prices isn’t a serious customer.
If you’re really thinking win-win, then you’ll realise that knowing your own value is perfectly compatible with understanding the other party’s position. So once you’re clear about your own requirements, imagine yourself in their shoes, particularly when it comes to points of difference, and ask yourself:
- How are they feeling?
- What do they want to avoid?
- What could reassure them?
- What are they likely to agree to?
8. Beware of first offers
In his book Everything Is Negotiable, Gavin Kennedy advises us to beware of accepting a first offer, since it can leave both parties feeling they may have missed out. The person who makes the offer thinks “They obviously thought they were getting a bargain — I should have asked for more”. And the person who accepts it thinks “That was too easy — I could probably have bargained them down quite a bit.”
It’s counterintuitive, but sometimes questioning their offer is the best thing you can do for the other person. If you ask them “What’s that based on?” and get a convincing answer, you will feel much more comfortable accepting the offer. And once you’ve heard them say ‘no’ to a counter offer, you know you’ve reached their ‘ceiling’ and are not likely to get a better deal.
9. Look for win/don’t lose options
When trying to resolve points of difference, look for ‘win/don’t lose’ options, which mean you get something you value that isn’t a point of contention for the other party.
10. Don’t give way without something in return
Don’t feel you have to make concessions just because the other party asks for them. According to Gavin Kennedy, the problem with making ‘goodwill’ concessions is that they can be interpreted as signs of weakness, encouraging the other party to push harder. They can also call your integrity into question, since if you’re prepared to drop your prices at the drop of a hat, the other person may suspect you of ‘trying it on’ by quoting an artificially high price.
A classic request for a concession is for a lower fee ‘because we’re a small company’. While you might be sympathetic to their situation, simply lowering your prices puts you at a disadvantage. So you could offer them the ‘small business service’, where consultations take place over the phone instead of in their office; or you could identify parts of the work they could carry out themselves, leaving you to charge the same rates but spend less time on the project.
11. Remember the future
Beware of striking a deal that looks great to you but not so good for the other party. While this may give you some advantage in the short term, you risk damaging the relationship if they resent the terms, and are reluctant to deal with you in future. Even if you are not likely to work with them again, people talk, and the creative industries are particularly close knit — if you get a reputation for using people, it can seriously harm your business in the long term.
12. If they play dirty…
If the other party is aggressive, intimidating or resorts to dirty tricks, then ask yourself whether you really have to deal with them. If at all possible, walk away. Otherwise you have a range of options:
- Call them out on it. “Do you think you can get the best deal by trying to intimidate me?”. Or “The figures you put in the contract are not what we agreed in the meeting. I’ll assume it’s a mistake this time, but if it happens again, the deal is off.”
- Give yourself time. If you feel you’re being steamrollered into a decision, tell them you need time to think it over and come back to them.
- Get back-up. Some situations call for a professional negotiator, a lawyer, or both. If the other side have them, you need them too.
- Stand your ground. Don’t be intimidated. It’s hard work, but sometimes you just have to stand up to a bully.
Image by NASA Robonaut
Written by me, unless otherwise indicated
Getting to Yes: Negotiating Agreement Without Giving In by Roger Fisher, William Ury and Bruce Patton
Everything Is Negotiable: How to Get the Best Deal Every Time by Gavin Kennedy
Mastering the Art of Everyday Negotiations by Tina Seelig
When They Say You’re Too Expensive by Charles H. Green
Salary Negotiation: 32 Job Pay Tips by Calum Coburn
Don’t Make a Bad Deal by Seth Godin