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1. Sharing information
Traditionally we don’t want to share our information, but we have to remember that “If I want to be trusted, I have to first offer it”. Hiding information has it’s negative impact. No need to share all the information, but have to share some relation building information or personal information, good references can also be shared with that to gain trust.
2. Rank order priorities
Typically when we negotiate, we know what our key issues are, and we sequence them. Some research shows that you are able to achieve better outcomes by ranking and leaving all the issues on the table and being transparent about it. That way both parties can compare their rankings and determine what the full set of options really are.
3. Go in knowing your target price and walk-away terms
Often we go into negotiations with walkway price or reservation price - one or the other – or let our partner start the bidding. One need to research for himself based on firm data, as not only will it provide more confidence and power to one, but it also reduces the chance that he’ll throw something crazy out there. By knowing own range, it will help make better decisions in the moment, and be clear about own limits.
4. Make the first offer
This is clearly defies conventional wisdom. Usually, in negotiations we believe it’s best to extract as much as possible from the other person before tipping our own hand.
But modern research is clear on this point: people who make first offers get better terms that are closer to their target price. The reason is the psychological principle of anchoring. Whatever the first number is on the table, both parties begin to work around it. It sets the stage.
Often we are reluctant to go first because we may be way off, and disengage the other party. But most people make first offers that aren’t aggressive enough. So the tone on first offer should be ““you get what you pay for.” Higher prices make the buyer focus on the positives, while lower ones invite focus on the downsides. Consider real estate: a high-priced home makes us look at all the desirable qualities, while a below-market offering brings up a bad location or not with all the amenities or not up to the mark in quality.
5. Don’t counter too low
If you aren’t able to make the first offer, then you need to also protect yourself against the anchoring effect. Caution: most people go too low, too quickly. Your counter should be based on the same information you would have used if you’d made the first offer.
Let the other person know that their offer is way off, and go back in with a new reset. It also may be helpful to call out what you’re observing to redirect the conversation.
6. Counter offers make both parties more satisfied
Every buyer wants to feel that they got a good deal; every seller wants to feel as if they drove a hard bargain. There should be satisfaction on both fronts if there was some back and forth. One shouldn’t take the first offer, even if it meets his needs. By going back and asking for concessions one can ensure that the client got the best deal, and increase customer’s satisfaction as well.
