Negotiation tactics in business

Did you ever notice that some people just seem to have to negotiate every transaction - big or small? You might even tell them that the price of your product or service isn't negotiable and yet they persist. Why don't they get it?

The answer is simply "cultural differences." There are two types of countries in the world - negotiating and non-negotiating. The United States is a non-negotiating country where we only regularly bargain over large purchases such as cars and houses. Here money is relatively plentiful while time is a scarce commodity. Americans are disinclined to negotiate for an hour to save a few dollars because it just isn't worth their time.

Yet, much of the world is composed of negotiating countries where money is scarce but time is relatively plentiful. For example, the per capita gross domestic income for Yemen was $1,000 in 2006, according to The World Factbook (published by the CIA). For the United States, that number was $43,800. In places where saving some money can make the difference between a family eating or going hungry, negotiating is not only important - it is essential. In places where people negotiate over almost everything they purchase or sell, it is part of the cultural norm.

Negotiating is an essential part of the purchasing process to the point where some might feel cheated if there's no opportunity to haggle. Americans regularly walk into stores and pay the sticker price without ever thinking of asking for a discount, whereas in negotiating cultures this is unheard of. For example, American retailers who won't negotiate the prices of their products will often find that people from negotiating cultures are reluctant to buy because without an opportunity to bargain, they feel they will pay too much. If you want to attract business from customers with a negotiating mind-set, you'll need to learn to bargain more effectively.

If you're in sales, you may have an advantage in learning negotiating techniques. Regardless of your existing skills, though, there are many ways to improve your negotiating skills. You can read a book, take a class or just go out and practice. Start by going to garage sales and becoming comfortable with the process then graduate to flea markets where the sellers are more experienced. Next, visit establishments where prices are not set in stone, like antique or collectibles stores, and practice your new skills.

Negotiating a car or house purchase price is commonplace in the United States, but the stakes are extremely high. Try your skills at places where prices are seemingly fixed such as department stores or clothing boutiques to really test yourself. As you hone your negotiating skills over time remember the three basic rules of master negotiators:

    A retail clerk who is being paid an hourly wage has neither incentive nor authority to give you a break on price to make a sale. However, most managers have the authority to give at least a 10 percent discount to keep a customer from walking out the door without making a purchase.
    Once you name a price there is only one direction you can go from there: up. As a buyer, try to get the seller to make the first offer by saying something like, "I really like this but it's just not in my budget. How much could you really sell it for?" As a seller, you can simply say, "Make me an offer."
    If you're the buyer and are forced to state a specific amount, make it much lower than you think you could ever get it for. If you're selling an item make it a princely sum just to get the talks started. The worst thing a good negotiator can hear when stating a price is "OK," which means you could have done better.

Even if you don't plan to become a negotiating person yourself, your clients may be negotiators. Walking a few steps in their shoes can only help you understand that segment of the market and deliver the goods and services they seek.

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