How To Bargain And Succeed In Negotiations
The first step to successful bargaining is to avoid it.
In 2015, my wife and I went to India. We hired a driver and toured cities, food, and culture.
It was an incredible experience. But once we entered the markets, my bargaining skills were tested.
Everything was priced for a bargain. The shirts they made. The rugs they weaved by hand. The marble tables they pushed.
"Buy a piece of the Taj Mahal."
I went back and forth on everything I bought. It felt like an eternity. We bargained in rupees, so my brain was taxed, and it always left me exhausted.
An introverts worst nightmare.
I lost most of the bargaining battles, or I won, hell if I know.
The first rule of bargaining is to avoid it.
In all negotiations, it's best to default to collaboration and rapport first.
Try to avoid bargaining at all costs.
By the time your counterpart makes their first offer, you should have elicited enough information to understand what a great deal looks like to them.
It's what Chris Voss calls Tactical Empathy infused with calibrated and no-oriented questions.
By the time an offer is made, you should know precisely where your counterpart stands, including their cultural norms.
According to David Finkel, there are five levels of rapport.
The first is content rapport. It's the lowest level but includes things you have in common with your counterpart, like life experiences.
The second is nonverbal rapport, which are things like eye contact, your handshake, and posture.
The third is your counterpart's sensory style. Are they auditory, visual, or kinesthetic?
The fourth is their personality style. My Dad's extroverted type-A personality will warrant a much different approach than my introverted, type-A personality.
The fifth is empathy. Tactical Empathy or any meaningful conversation is to help you connect with your counterpart and build meaningful relationships.
Sometimes, bargaining is unavoidable, so if you do, follow the Ackerman system.
As you take on the Ackerman approach, it's essential to deploy tactical empathy after each round of offers.
Resist the temptation to set a low anchor price. Always build a negotiation plan first.
It's how you should start all significant negotiations.
Lowball offers create negative emotions, like resentment or disrespect. These emotions will make your deal doomed from the start.
We recently had to sue a company for failure to pay outstanding debt.
The company told our attorney they'll pay $100,000, a fraction of what they owe us, in monthly payments, of which we know they're not truthful, as they couldn't pay their debt in the first place.
Our counteroffer after an initial laugh was our counteroffer remains the full value of the lawsuit, as we don't consider this an offer.
We remain committed to taking this to court.
Their lowball offer ignited resentment in our CFO and me.
As you bargain, the goal you want from the other side is to feel that every price increase creates a real burden on you.
David Finkel calls this the flinch. Make your counterpart feel the burden they're putting on you.
This all leads to the Ackerman system of bargaining:
Establish a target price for what you want to buy.
Make an initial offer at 65 percent of your target price.
Assuming no deal, raise your price by 20 percent.
Assuming no deal, raise your price by 10 percent.
If still no deal, raise by another 5 percent.
Your final offer should be an odd number. Always be prepared to include some non-monetary compensation to show your counterpart you're committing all your available resources.
When you bargain, your first step is to avoid it, but if you can't, follow the Ackerman system.
Add this to your negotiation skill set and take your deals to the next level.
