“I will give you half of that.”
Whether you are haggling someone for a car or negotiating your base salary, learning how to negotiate is an invaluable skill that can help you in many areas of life. In my line of work, I have the unfortunate or fortunate privilege, depending on how you look at it, where each deal requires some good old back-and-forth negotiation. Unlike product based industries like selling books on Amazon, the ability for myself or someone on my team’s ability to negotiate determines how profitable the business will be.
While stressful, I learned a lot in the process and found that universally there are are ten questions you need to ask yourself during a negotiation process. By asking these ten questions you will have a much clearer idea of where you wiggle room is and most importantly, avoid having regrets after the negotiations have finished.
Question 1: What is your BATNA?
What is a BATNA? Answer: Best Alternative to Negotiated Agreement
It is essentially what happens if you fail to come to an agreement with the other party. As known as worst-case-scenario. Your BATNA will determine how low can you go in agreement .
For instance, let’s say that you are negotiating the price for a car that you are buying. Your car just broke down, you need to be at a wedding in 4 hours and it’s a 3 hour drive, and there is only one person selling the car within 100 hundred miles.
What is your BATNA in this situation? Probably not buying the car, getting a taxi cab, or calling your grandmother who lives down the street to borrow their car. But what if nothing of those were possible options and your BATNA is just not going to the wedding? If its someone very important, your circumstance change, if its someone you don’t care about, you won’t pay that much for the vehicle. By uncovering the BATNA you have a better understanding for how low you should go in the agreement.
Question 2: How low will you go?
Now that you have your BATNA and determined all possible outcomes that if the deal does not go through, you will be able to give better thought to how much leadway will you give in compromising. If there are no alternative options, you can afford to go quite low, while if you have tons of options you don’t have to give up much wiggle room.
The important thing to keep in mind about this step is that, you will need to find a number or a result that you feel comfortable walking away if you cross that line. If you don’t, you could end up with having negotiation regrets after an agreement or worse, just end up with the short end of the stick.
Question 3: What are the bargaining points in this negotiation?
These are the parameters that you are negotiation. For buying a car, it would be the price and any featured that could also come with the car. In the case of a house, there are hundreds of different issues such as having certain work done before buying, buying the furniture with the house, buying the house with the car, the list goes on and on. These ‘issues’ can be thought of as parameters in an equation. The more ‘issues’ in a negotiation, the more area for complexity and uncertainty. Great negotiators often thrive in complexity and are able to find areas where they can end up in the better end of the deal.
Question 4: How important is each point to you?
With the landscape clear on what the parameters or bargaining points are in the negotiation, you will now need to ask yourself what are the deal breakers and what you value most. Usually in bargaining for a car, each issue can be miles, warranty, paint job, etc, amounting to what you think the price of the car is worth. By finding what you value in a negotiation you can get a much better understanding for what you need to push for and what you can let slide.
Question 5: What do you think the other party’s BATNA is?
In other words, what is the other party’s option if they don’t move forward with you in this deal? Will they sell to someone else? Are you the only person on the market willing to buy their product? Is there a long line behind you waiting to purchase the product. Based off of understanding the other party’s BATNA, you will understand if you are in the power position or do they have the leverage in the negotiation. Knowing the answer here can also influence how hard you can push someone initially in a negotiation.
Question 6: How low will the other party go?
Probably the biggest question that regardless of what level of negotiator you are, you have probably thought about. How much can I push them in this deal. If you know the answer, it’s all of the cards on the table for the other party. One of the things that I do during negotiations to uncover this answer is asking a potential client “do you have a budget for your speakers?” More often than not, the client would say yes and then proceed to tell me what they have paid for speakers in the past years. When they give me a range, I have a better idea of where their boundaries are in this agreement.
Question 7: What does the other party value in this agreement?
Now that you know, or maybe just brainstormed where the other party’s low point is, you will need to look at all of the parts of the agreement and consider which one’s do they consider most important? If you are buying a car from someone, what parts of the car do they think support the price that they are asking? Miles, maintenance, custom additions? Usually different parties speak different languages of negotiations where they value different parts at different rates. Due to this uncertainty, make sure to continuously be asking yourself what the other person values in order to negotiate effectively with them.
Question 8: Are there anything that you can trade to create additional value?
Sometimes, you can create value by adding random things into a negotiate that the other party values and can turn the conversation in a better direction. Going back to the car example, one person who I was talking to about buying a car, said they will throw in a set of new tires for the car at the price they were asking for. As a buyer, this is additional value of probably $500. For the seller, if they sold the car without the tires, they would be left with the task of removing the tires in some way. By throwing in the extra tires, the seller created a win-win agreement.
Question 9: Is there agreement about what will happen in the future?
In many negotiation conversation, there are questions that arise in regards to the future of the transaction. For a house, it could mean that the house does not have flood insurance and the buyer is worried about their being a flood while the seller is confident their won’t be. Another loop that takes place during negotiations is being able to come to a consensus on what will happen in the future of the transaction. A great follow up question to ask is, what is motivating this thought process?
Question 10: How will you uncover information that you don’t already know?
Information is key in negotiation and learning how to uncover imperative information is the root of understanding how much can you negotiate. Asking the other party questions, looking online, or even talking to someone who is an expert in the space you are in are all great ways of uncovering necessary information. Through learning this vital information the previous question answers will be much better to answer to ensure you are getting the best deal possible.
Jeff Butler Internationally respected speaker and consultant, Jeff Butler helps bridge generational gaps between Millennials and companies looking for their talent and patronage. Butler has quickly built his reputation as a memorable presenter with tangible solutions for attracting, retaining, and engaging Millennials as employees and customers. Within just the past three years, he has spoken at two TEDx events and multiple Fortune 500 companies such as Google, Amazon, and LinkedIn.