Myth No. 5 — Negotiation is an Art

Sometimes a negotiating session seems like you are destined to be lion food in the Coliseum — you get eaten alive, while the other side winds up with almost everything. Why do some companies seem to consistently get a better sale or deal?

I have heard negotiating called an art, and while it never hurts to be a little creative, there is nothing artsy about good negotiating skills; they are learned, practiced and applied, and they work.

Parts of negotiation

Both sides to any issue bring the same things to the negotiating table — their own agendas. That makes two agendas for one meeting. The only thing less productive might be having two handles on one hammer.

Both agendas have the same things — needs, wants and wishes. A good negotiator must first determine what those things are for the other side. Then he also must know the priority the other side places on each, or in a nutshell, what the other side is willing to settle for.

The need is definable — an upgraded bathroom or a new kitchen. The want is a sweetener that is important but not vital.

There may be more than one want. One needs to know the priority of the wants and if they have to set one aside, what is their order of ranking them?

Consider an example where a family needs an additional bedroom because the they’re expecting another child — clear enough. When we dig, we find out about wants, such as an upstairs laundry room instead of the one currently in the basement. Other wants may include a guy’s workbench and cabinets in the garage or a dressing table added to the master bath. These wants may be a lower priority than moving the laundry.

A wish might be to have a front loading washer/dryer or even one of the quiet stackable brands.

We should know all the particulars by the time we are negotiating the job so we have a cost of all of the components. Let’s consider the unusual circumstance that the proposed cost is higher than the client wants to pay. The needs have to be met or there will be no deal, but you must maintain the attitude that unless we find common ground, there will be no deal. That is very difficult for the unseasoned salesperson — OK, the old pro, too — but you have to do it to be credible.

Beginning negotiation

As remodelers, our need is for the business; their need is the bedroom, period. Our wants include things such as a decisive client who will pull the trigger on choices so the job will move quickly. We are tight on production, and a job with a shorter schedule and a sale that can be closed without having to wait for bank financing is a plus for us. We know the marked-up cost of the fridge and the washer/dryer. We also know the addition of the laundry room to the upper floor construction is affected directly by size and that a stacked washer/dryer uses 12 sq. ft. less than a top loader. This should be viewed as 12 sq. ft. at the average of $200 per sq. ft., which will largely pay for the stacking washer/dryer.

All of the wants should be priced individually so that you know how much you are giving away when you offer alternatives. The same is true of the wishes.

There are terms such as win-win, level playing field, the spirit of fairness and all that sort of feel-good stuff, but we are in business and the better deal we can negotiate, the better position we are in to give good service and still make our numbers. Bear in mind, in most negotiations, one side will concentrate more on what they want than on determining what the other side is willing to give beyond the minimum.

If time is important to you, offering an incentive for early choices or selections can be a real value for both sides, but it appears that you are doing more of the giving, so trade it for something. The psychology of the negotiation is to determine the facts, which include the perceived priorities of the other side, then to use that knowledge to test the resolve of the other party. Sometimes one can give a little on the front end knowing, that as the job progresses, the client is very apt to add something back that will help or more than make up for the gift.

Whatever else, while the negotiation is ongoing don’t confuse it with selling. Selling and negotiating are going on at the same time, but selling is getting a nod on the product you offer over that of a competitor, whereas negotiating is what they will pay for that product and the smaller issues around the sale that create an agreement.

Remember, if you are the winner in your eyes and the client says OK with a smile, then they are the winner in their eyes as well — the difference is how much above the “must have” did each side negotiate? While you’re here...