I teach negotiation at organizations and universities. During the workshop, participants partner up and do a real-life pricing negotiation (to buy a car, to rent an event space, or some other scenario with a buyer and seller). Each side gets information on who they are role-playing and what the circumstances are (e.g., target price, why they are buying or selling, etc.). Each person has a couple of minutes to read their specific background information and prepare. Then the pairs negotiate for three minutes to agree on a price.
Each person doesn’t see the other side’s information, but I do give both sides the same number for the target price. Many pairs end up at the target price or just above or below. However, there are always exceptional negotiators who end up with a price very different from the target. A low price means that the buyer was an exceptional negotiator and saved money. On the flip side, a high price means that the seller was an exceptional negotiator and earned more. I have seen prices as low as $0 and as high as double the target price.
Each pair gets the same amount of time and the same information. So why do some negotiators get outsized results from everyone else? From a career standpoint, how can you ensure that you’re not accepting too low a price and therefore underpaid as a result?
When I debrief with participants after the negotiation, the ones who get the best results do four things that the average negotiator does not:
1 – Aim high
The participants who just got the target price or a small differential usually didn’t ask for much of a differential. On the flip side, the buyer who got her item for free asked to get it for free, and the seller who ended up getting twice as much as the target price asked for twice as much. If you start out asking too little, you don’t have much room to negotiate.
How can you make a bigger request? Remember that compensation is not just about salary, but also bonus, benefits and other perks–there are many items to negotiate for that can increase the total compensation.
2 – Ask questions (i.e., keep digging for information)
I give the participants enough information to start with–what they’re buying (or selling), target price, etc.–but there is always more information. At the very least, each person in the pair has different information and should seek to find out what the other person knows. Yet, most participants jumped right into discussing and agreeing on a price. The best negotiators asked questions—about the item being negotiated, the terms, even the back story of the other person. In continuing to dig for more information, they learned things that helped win their requests.
How can you get more information? Research gives you information–dedicate time and effort before the negotiation to research your market. Getting to know the other person gives you information–spend time developing rapport and asking questions.
3 – Take the time you need
As to point 2, you need time to research and time to get to know the other person. You need time to consider your options and time to decide. Too many participants finished the role play early, and the exercise was only a few minutes! The best negotiators used all of their time–investing time in asking questions, developing rapport or going back and forth on the price. If you are consistently underpaid, you might be rushing to a conclusion too quickly, rather than taking the time you need to assess the offer and bring it up to your standards.
How can you take more time in your negotiations? Don’t be afraid to ask for more time, or just take your time in responding. In conversations, get comfortable with silence, so you don’t feel rushed to speak, rather than listen. Be willing to go back and forth, ask questions, and propose new ideas.
4 – Broaden your focus
Aiming high, digging for more information and taking your time all help you broaden your focus. Most participants think too narrowly and focus only on the final price. The best negotiators think broadly. The buyer who paid $0 convinced the seller that having her as a customer now would help her with future customers and future business–she broadened the transaction from price today to lifetime value. The seller who commanded double the price sold the buyer on ancillary advantages and offerings with her product–she broadened the transaction from one item to several.
How can you broaden the focus of the negotiation for you and the other person? With career-related negotiations, remember (and remind your counterparty!) you are not making a single transaction, but rather investing in a long-term relationship.
Negotiation is a process, not any one tactic
Notice that these negotiation mistakes aren’t about who goes first in naming a price or what specific words or phrases are off-limits. Don’t be worried about any one specific tactic or move. Instead, think about your negotiation process. Broaden your focus, take your time, assume there is always more to uncover and aim high. You have room to negotiate–take it!