Let me be blunt. I’m no master negotiator. Of course, the title of this essay isn’t “Negotiation Tips for Masters”!
Over the last few years though, I have slowly picked up a few tips and tricks that I try to use from time to time to save money. Most of these techniques are best utilized to negotiate products or services. However, they can easily be adapted and used to negotiate salaries, job opportunities, or even help resolve an everyday argument. While I had my Real Estate business, they often came in handy when negotiating everything from short sales to lease-options and from tenant complaints to refinances.
This isn’t a definitive guide, rather an invitation to open a discussion. My ultimate hope is that a couple of the tips demonstrate how everyday negotiating doesn’t have to be a sleazy, awkward process. We all negotiate everyday whether we like it or not. Up until recent years, I simply chose to ignore that fact, which has cost me more money than I want to think about.
As part of the discussion, please feel welcome to add your own tips, suggestions, and criticisms! I look forward to hearing your responses.
How to morph from “scared” into “comfortable” when negotiating
Most people who are comfortable negotiating will tell you that the hardest part of the transition was overcoming the unjustified fear we attach to the negotiating process. Obviously, very few people intentionally strive to get into awkward social situations. But the truth is there’s no rule that everyday negotiating has to be awkward. More times than not this fear is self-perpetuating.
Here are a couple truisms that I adopted that quickly and radically shifted my view of the negotiating process:
The true value of an item is what someone is willing to pay for it.
If you want to quickly realize how true this really is, get into Real Estate. Stop looking at price tags, service charges, and listing prices as set in stone! These numbers are simply the high-end starting point. People give discounts all the time for all sorts of creative reasons. There are very few places and very few situations where you can’t negotiate. Not the other way around.
Realize that you have the RIGHT to negotiate. Embrace this.
Seriously. Chances are you’ve worked very hard for your money. It’s your RIGHT to ask for a better price, more benefits, a free warranty, or a 20% first-time-customer discount. Your business is extremely valuable! And here’s another little secret: most vendors want you to negotiate. They’d love to give a quick 10-20% discount if it means retaining you as a customer. Most pay far more than that on average to get a new customer. Show them your value and exercise your right to negotiate!
Once I adapted these two truisms into my daily life, my fear of negotiating all but dissipated. I have to admit, it feels empowering to comfortably ask and receive a discount on an item that I would have normally paid full price for anyway. Ensuring that we don’t overpay for no reason (a.k.a. consistently pay advertised price) has become an integral part of Courtney and I’s financial plan.
The Story: How I saved $150 with a few simple questions!
I feel like it’s important to be open and honest about both successes and failures. Therefore, I’ve decided to share this story even though parts of it are embarrassing!
A couple weeks ago, as we continued to prepare ourselves for our move overseas we realized that we would soon lose our decent health and dental coverage. I knew I needed to get in to see the dentist before we left. To be honest, I was pretty scared of what the results would be. Even since leaving home for college, I’ve neglected my dental hygiene. Sure, I brushed my teeth regularly, but nowhere close to two times per day. I’ve realized that what I call “brushing” really wasn’t doing much at all. I wasn’t using the proper technique and certainly wasn’t being as thorough as I needed to. And let’s not even talk about flossing. To be honest, I just didn’t view it as necessary. It wasn’t part of my routine, and I was just too lazy to realize the damage I was doing.
Big mistake! I sat down for a basic examination of what inevitable work I would need only 3 days before we were to leave for Australia. I had backed myself into a big corner. Quickly, I realized the gravity of the situation as the dentist reviewed the x-rays and photos they had taken. I had the early stages of gum disease, along with a couple minor cavities. Gum disease, even in the early stages, at age 25 is nothing you really wanted to write home about. However, the good news is that it was very treatable and just the slap in the face I needed to re-commit to proper dental hygiene.
I knew even more bad news was around the corner, though! We had basic dental coverage which only paid for 80% of all work. In addition, I knew that some other procedures where only covered at 50% (or not at all) depending on whether they were classified as “cosmetic”. Around the corner came the billing receptionist:
Billing: Here’s a quote on the services that are recommended. Look it over and I’ll help explain how it’s set up and answer any questions you have.
The initial quote contained non-insured charges of $587 dollars (and another $1300+ in insured). We went over the suggested plan item-by-item so she could explain how each charge corresponded to my conversation with the dentist. The was nothing extra we hadn’t discussed and I quickly realized that I desperately needed to get this work done before it became worse and at least while a portion was covered by insurance.
One thing that did jump out at me was five $38.00 charges for an antibiotic injection that wasn’t covered at all. I asked the billing receptionist about the charges:
Baker: Hmmm, I see that there are 5 different antibiotic injections here for $38 dollars each that aren’t covered at all. Do you guys have any other options available for me? Can we use a different antibiotic that may be more affordable or partially covered by my insurance?
Billing: Ummm, let me check on that for you…
[After a couple minutes, she re-enters with a new printed quote]
Billing: Well, we don’t have any generic options for that antibiotic and your insurance doesn’t have any coverage. However, due to your situation I was able to get those reduced to $20 each instead of the $38.
That immediately knocked $90 off the bill! Since it only took a couple seconds to inquire about any other options, I was quite pleased with that reduction. I spent the next couple minutes talking about some of the other procedures, including the difference between grey fillings and white fillings and how they were viewed by insurance. I made sure I understood each item and that I truly needed everything listed (which I did, unfortunately).
Baker: Thanks for all the help. One last question… I’ve talked to the nurses about potentially doing these procedures as early as tomorrow. What is your discount for paying the entire bill up front and in cash?
Billing: Ummmm… [3 long seconds] If you can do it tomorrow, we could probably do 10% off your fees.
Baker: That would make it much easier to show to my wife. Can you print out a new quote reflecting those changes?
Billing: Sure, I’ll be right back.
Another $50 bucks knocked off with a simple question. Remembering that I absolutely needed the work done and was working under a time-frame of around 48 hours, I was very pleased. Despite popular belief, it wasn’t awkward at all. That brought the total to just over $447, just under 24% off.
Sure 24% off isn’t going to win any Master Negotiator awards, but most people are too afraid even to ask in the first place. I might have even been able to push for more, but honestly I had received fantastic customer service and they were rearranging things in order to get me in before the trip. Both parties were happy.
Even just a few years ago, I would have just paid the bill without inquiring much about it. I would have been timid and would have shied away from negotiating from fear of rejection. For the average person, just a few tips can make a big difference. There are a couple that I consistently try to remember when negotiating purchases like the one above.
Basic Negotiation Tips I Did Well
- Find common ground early… return often… - This is a simple rapport-building tip, however so much of negotiating is simply having great rapport. I try to utilize this in all new situation, not only ones I intend to negotiate. While at the dentist, we had conversations about my family, my upcoming trip, and even my blog all before discussing the bill. Turns out several of the nurses and the dentist all love travel, too! Who doesn’t really?
- Quickly try to isolate the shot-caller – It’s important that you are negotiating with someone who has the power to actually make the needed changes. It’s o.k. to politely ask to speak to someone whom is able to grant the discount. Look for mangers, owners, and people who directly handle billing. In my case, I got lucky that the “billing receptionist” had the ability to provide the discounts on the spot.
- Establish the “Man Behind The Curtain” early – On the flip side of the above point, if at all possible try to establish early that you will have to discuss all final decisions with another party. In my case, I told the receptionist very early that “I will, of course, have to run everything by my wife before finalizing anything.” You can use a wife, business partner, or attorney depending on the situation. Companies have been using this on you for years (think car sales). Don’t feel bad for providing yourself an out.
- Hmmm… Wow… Gasp… – This one takes a little more finesse, but has been very effective for me. The basic idea is to respond with a reaction of “surprise” upon reading or hearing an offer. I tend to use “hmmm…” to imply that I’m a little uncomfortable and am thinking about the figure. It’s a little less intense than using “wow” or gasping slightly. The key is to provide a subtle indication to the other party that you are looking for something different.
- Inquire about alternative “more affordable” options – This is a great way to be non-confrontational while still “asking” for a discount. This is one of my favorite ways to start negotiating. In the example above, this helped me save the first $90 by asking about alternative antibiotic options. Service providers often have many different methods and/or materials they use to do similar jobs. You won’t know your options unless you ask!
- Shut up and ask! – At some point, all the fancy tips in the world won’t net you what simply asking for a discount will. Although asking about alternative options is a great way to be non-confrontational, being too vague is a great way to make a situation awkward. At some point in the negotiation you need to just get over it and ask. I’ve found that 9 times out of 10, I’m amazed at the results!
- Frame desires/benefits as concessions if possible – This is another tip that requires a little practice and finesse. The key here is to demonstrate the value you bring in the most positive way. In my personal example, I implied that I would pay the bill in full up-front and very quickly (tomorrow). In reality, I only had 48 hours to get the work done before I was going to leave, so I was in a time crunch anyway. There was nothing dishonest in this approach. Getting paid quickly and upfront is still of great value to the dentist office. I just wanted to frame this fact in the most positive light for myself!
- Imply a discount – This is a simple tip that only requires changing a couple words, but that is very powerful. Instead of asking “Do you offer a discount for active military personnel?” You replace that with “What is your discount for active military personnel?” Of course, the first can simply be answered with “no… sorry”, while the latter is often much more difficult to quickly dismiss. I used this example this past Christmas when my brother was home shopping for clothes (he is currently serving in Afghanistan)!
- Don’t negotiate against yourself. Just be quiet. – You’ve just asked for a discount. You framed your value properly and implied a discount. The quickest way to shoot yourself in the foot is to talk before the other party. Just keep your mouth shut. I’ll admit sometime the silence can get a little weird, but opening your mouth will cost you money in the long run. Once again, I’ve learned this the hard way. The best negotiators listen far more than they talk.
- Make people invest time/energy into you before negotiation starts – Vendors spend a lot of money advertising to get you into the store and in front of a product or sales rep. A person who has shown active interest for the last 20 minutes is worth far more than the person who just called on the phone, who is worth far more than the person browsing on the internet. The further you are in the process the more value you hold. In my example, I was sitting in the chair after having around an hour of x-rays, photos, and discussions under my belt. I desperately needed there services and was willing to execute quickly. Towards the end I was very valuable to them.
- Offer to pay up front and in cash – Often times, “paying up front” will be your biggest bargaining chip. This is especially true for service-based vendors. One of the worst parts of a service-based business is chasing defaulted accounts and managing payment plans (again I know from experience). In my experience, the smaller the business the more valuable paying up front will be. Don’t overlook the value of paying cash, though. Vendors pay credit/debit card fees to throw their charges on your card. Some of those pass that directly onto you, but other eat it as part of their costs. It might not work every time, but it’s certainly worth offering.
- Negotiate individual before group discounts – This is another “bread & butter” negotiating technique. I find it most comfortable to start this process by examining each item in a quote. For example, as I went down through each item I had the uncovered antibiotics I discussed in length above. Had I asked for the overall discount first, it would have been much more unlikely to go back and get the antibiotics marked down. Alternatively, you can negotiate the price of a single item and then discount it even further by asking for a group discount on multiple purchases.
- Get everything in writing – When it comes to spending your hard earned money, don’t take people’s word for it. Whether buying a house or negotiating dental work, ask them to politely provide you with a new quote or evidence of the offer in writing. In my short time on this planet, I’ve already seen more than my fair share “handshake” or verbal deals go horribly sour.
- Don’t get emotionally involved. Always be able to walk-away. – Remember, negotiating shouldn’t be personal. It’s a business transaction where each party attempts to highlight their value and come to a mutually beneficial compromise. It’s really that simple, unless you start bringing personal emotions into the process. Especially with larger purchases (car, house, lease, etc…) it’s easy to get attached to the item. This is the quickest way to either get taken advantage of or to quickly become offended and angry. You don’t want either. Do whatever it takes to remain impartial and level-headed.
- Don’t let the other party feel abused or scammed. Even if you aren’t abusing or scamming anyone, it’s important that the other party doesn’t feel like they are being mistreated. The best negotiations create win-win situations, where both parties feel like they gained something. Even if we set aside the vital concepts of morals and karma, taking advantage of people is just a dumb business move. Burning bridges and tarnishing your reputation will cost you far more in the long run than the money you saved.
Negotiation Tips I Overlooked Or Did Poorly
- Decide on your breakpoint – It’s a fantastic idea to settle on your “worst case scenario” before beginning the negotiation process. This is effectively the highest you’d be willing to pay for a specific item. This will keep you from overspending due to ineffective negotiating. Bottom line: You aren’t paying over or selling for under your break point. Because of the nature of the services I needed were so unknown, I didn’t enter into my negotiations with a break point of any kind. This might have cost me money.
- Start with a extremely low shocker offer… – This is another technique that requires both rapport and finesse. In my Real Estate ventures, I certainly saw this both backfire miserably and succeed wonderfully. Most of the time I would only really suggest this to someone in a very strong opening position. It’s strength lies in its ability to shatter unfounded expectations from the very start. Depending on the situation this can be a great way to kick things off. In my situation, I didn’t think it was appropriate to “offer low”, although once again properly using the technique could have saved me even more.
- “I’d love to work with you, but unfortunately…” – Before stating you needs, it can help to reiterate that you are ready and willing to continue the relationship. This subtle, yet effective statement reinforces that you are serious about the purchase or sale, but that you still have crucial needs that are unmet. It’s a polite way to refocus the negotiation once it has hit a speed bump or simply stalled.
- “Unfortunately, I’m absolutely not a buyer at that price” – Another phrase I have used from time to time to jump-start a stalled negotiation. This one is more direct, but still not rude. I usually will utilize this type of saying when the discussion has become cloudy or when the other party is insisting on a specific term that I’m unable to overcome.
- Upfront Justification – I often use this tip on the selling end. “Considering the amount of work that I’ve put into this…“ Providing justification before a statement can often times help the other party see value they might not have realized. Savvy buyers and sellers both know that the amount of time/energy/love you’ve invested has nothing to do with the actual worth of the item. Still it’s a great technique to help demonstrate why you’ve attached value to an item or service.
- The “what-would-you-do-in-my-shoes” question – My favorite way to initiate this question is to say, “Here’s the main issue… [restate problem plainly]… what would you do in my shoes?” Asking questions like this is an effective way to generate all sorts of creative ideas that you would never even thought to ask. I often ask this to customer service representatives after being told “no”.
- If you are completely uninsured, make it known – Doctors and dentists will negotiate even further the more you are uninsured. I’m assuming that the main reason my dentist office discounted my antibiotic was that I had no coverage for that specific item. I’ve heard stories of medical professionals offering discounts of 50-75% for individuals whom have absolutely no coverage and who negotiate the services up front.
- Obtain a basic understanding of competition. A little research into rental rates, car values, second opinions, and even competitor’s sales can go a long way in ensure you are getting a great deal. The effectiveness of this technique can be magnified if you can bring proof. The more information you have the better position you start the the negotiation in. You can help prevent yourself and others from being victim of scams and schemes.
3 Common Phrases You Should AVOID At All Costs
- “I’m going to be honest with you” – I used to use this one all the time before realizing that it was having the negative effect that I desired. I wanted to show that I was being honest, but didn’t realize I was implying that I had not been being honest all along. Even just starting with “Honestly, I don’t feel…” has a slightly better implication. I’ve noticed that my outcomes are much more satisfactory when I eliminate that sort of phrasing altogether, though.
- “Take it or leave it” - Ultimatums will rarely get you anywhere. In fact, they most often will blow up in beginner’s faces. I use to think I was demonstrating “power” by issuing a statement like this. What I came to realize is that I rarely ended up with anything more than a soured relationship. There are much more effective techniques at your disposal.
- “What’s the lowest price you’ll take?” – When I was selling my car, I talked to roughly 20-25 people. At least 90% of them asked this question (usually before demonstrating any value to me). I can tell you from recent experience that it automatically made me lose respect for the person as soon as it left their lips. Do not start here. Start by demonstrating your value and fully identifying the other parties needs. I’ve listed numerous tips that are much more effective above.
Bringing It All Together!
This has turned into a rather long essay, however I wanted to reiterate what I believe to be the most essential concepts.
Although I don’t claim to have mastered the fine art of negotiation, I’ve certainly have enable myself to feel comfortable with the process in a short amount of time. It is my hope that my story and the personal tips I’ve experimented with help shift some of you from the “awkward” phase to “comfortable” phase. If you’ve experienced this shift already, I hope you’ve picked up a few more techniques or at least will help share your own successes with those of us still learning (myself included)!
Be sure to leave your own negotiation tips, tricks, techniques, truisms, and phrases you’ve learned to avoid below! You’re comments add incredible value for other readers. Share your story and/or criticisms!
photo by conchur