In May, I wrote about how to negotiate your salary. I argued that following the advice in Jack Chapman’s Negotiating Your Salary: How to Make $1,000 a Minute is one of the best ways to improve your financial well-being. I still believe it. If you’re looking for work or looking for a raise, you should absolutely read his book.
But negotiation is a skill you can use in other parts of your life, too. In fact, in You Can Negotiate Anything, Herb Cohen says that we negotiate constantly with our spouses, our children, our parents, our co-workers, and our friends.
The three crucial variables
In every negotiation, Cohen says, there are three crucial variables: power, time, and information. You can hold the best hand at the table, but if you lack these three things, you’re still going to lose.
- Power is the ability to get things done. If you can generate competition, for example, you’ll have more power during negotiations. Power also comes from perceived expertise or legitimacy (“she’s a famous financial guru, so she must be right”), empathy (understanding the other person’s side), precedence (“this is how it’s always been done”), persistence, attitude, and persuasion. Your side can gain negotiating power through unity — by having every participant committed to the same goal. Most of all, you gain power when you’re willing to take calculated risks (not stupid risks).
- Time also plays a role. In negotiations, the side with the most time generally has an advantage. Patience pays. No matter how pressed you are, you should always keep your cool, maintaining an appearance of calm. “Your deadline is of your own making,” Cohen writes. Don’t ignore deadlines, but don’t follow them blindly, either.
- Information is the third crucial variable in negotiations. The more you know, the better your position. Do your research before negotiations begin. And during negotiations, act on whatever new info comes to light. Cohen is especially keen on picking up unintentional cues from the other side. Their responses, their questions, and their attitude all convey valuable information.
Power, time, and information are the three main factors during a negotiation. But there are many subtleties, as well. In You Can Negotiate Anything, Cohen gives dozens of examples and offers lots of tips. Let’s look at a few.
Other factors in negotiation
The following are just a few of the many factors and tactics that can be used to negotiate effectively:
Detachment
Care — but not too much. In every negotiation, the side that needs or wants the outcome least has an advantage. Cohen writes: “When you feel you have to have something, you always pay top dollar. You put yourself in a position where the other party can manipulate you with ease.”
Competition
When you’re negotiating, whether it’s to buy a car or to choose where to eat with your spouse, you’ll have more leverage in the negotiation if you have other options. If there’s competition for your attention, you’re less attached to one particular result.
Playing dumb
Ah, my favorite negotiation technique. If you’re negotiating with me, I always know more than I’m letting on. I play stupid. Cohen writes, “In negotiation, dumb is often better than smart, inarticulate frequently better than articulate, and many times weakness can be strength.” When you play dumb, you force the other side to give you more information.
That’s not to say you should be dumb. On the contrary. Remember: Information is one of the keys to successful negotiation. But sometimes it’s better to pretend you know less than you really do. Cohen says — and I believe this is crucial — you should “learn to ask questions, even when you think you might know the answers.”
Asking “what if?”
Cohen says it can be extremely effective to ask the question “what if?”. What if I haul the lawnmower home myself instead of you delivering it? How will that affect the price? What if I buy two cases of this wine instead of one? What if I pay cash instead of using a credit card?
Silence
In Negotiating Your Salary, Jack Chapman says that when you receive your salary offer, no matter what it is, your best response is to “flinch” — to follow the offer with a long silence. Cohen would probably agree. He writes, “Oddly enough, silence, which is probably easier to carry out, can be just as effective as tears, anger, and aggression.” Silence is a powerful tool when negotiating.
Sunk costs
As you negotiate, sunk costs can work for you or against you. The reason the car salesman wastes 3-4 hours of your time instead of making it a 30 minute transaction is because he knows you’ll have a tendency to take the little $100 surprises he throws at you because you’re thinking, “I’ve already spend this long at it — I can’t just leave.”
But you can use the sunk-cost fallacy against salespeople when negotiating. If you’re buying a new refrigerator, you can usually negotiate lower prices and additional concessions if the saleswoman feels she’s already invested so much time in you that she doesn’t want to lose the sale.
Cohen adds: “If you have something difficult to negotiate — an emotional issue, or a concrete item that can be stated numerically, such as price, cost, interest rate, or salary — cope with it at the end of the negotiation, after the other side has made a hefty expenditure of energy and a substantial investment of time.”
You Can Negotiate Anything has tons of other tips, from the effects of attitude to the importance of “increments of concession”. Cohen is an experienced negotiator, and he’s happy to share everything he’s learned.
Thinking win-win
Most negotiations are adversarial or competitive: Each side is trying to get the better end of the deal. But Cohen says this doesn’t have to be the case. Many times, the two sides would be better off moving from a competitive mode to a cooperative one; they should look for win-win scenarios. This requires a different way of thinking and a different style of negotiation.
“Successful collaborative negotiation lies in finding out what the other side really wants and showing them a way to get it, while you get what you want,” Cohen says. To get to win-win, you need to:
- Establish trust. Strive for cooperation from the start.
- Gather information. Be empathetic — learn what the other side wants and why.
- Build on the other side’s needs. Use them as a platform for constructing a solution.
- Ask for help. Get the other side’s involvement and commitment to create a solution they support.
Moving from competitive negotiation to cooperative negotiation is especially effective during conflict resolution (as opposed to when you’re simply trying to buy something). As I wrote last summer at my personal blog, too many times traditional approaches to conflict create lose-lose situations, but with creativity and patience, you can achieve wins for both sides.
Playing the game
Whether you like it or not, your life is filled with negotiations. You negotiate your salary, for the price of a car, for the cost of a couch. You negotiate with your wife about where to spend your summer vacation, with your husband about what color to paint the baby’s bedroom, with your daughter about what time she should be home from the football game.
Cohen acknowledges that some people hate negotiating and don’t want to participate. “Certainly that’s your prerogative,” he writes, “but remember that in order to achieve a collaborative result in a competitive environment, you have to play the game.” [Emphasis his.] If you don’t want to pay the game, your only options are to build complete trust (which takes a lot of time) or to just accept the terms you’re given.
By becoming a better negotiator, you’ll not only save (and make) more money, but you’ll also become better at conflict resolution. Of all the books I’ve recommended at Get Rich Slowly over the past four years, I think You Can Negotiate Anything and Negotiating Your Salary are two of the best. Their lessons can have a huge impact on your life.
For more on this subject see:
- Get Rich Slowly: How one reader uses haggling to save big bucks
- Get Rich Slowly: Negotiate once, save thousands every year
- Experiments in Lifestyle Design: How to negotiate like an Indian
- Foldedspace: Win-Win vs. Lose-Lose: Two approaches to conflict resolution
I’m a recent convert to the power of effective negotiation. I’ve learned a lot about it this year, and it’s paid off in a big way. Perhaps that’s why I’m so passionate about the subject. I’ve seen first-hand just how much money you can save — and earn — by taking the time to negotiate. I think learning to negotiate could improve your life, too.
Update! Thanks to The Writer’s Coin, who suggested I check for Herb Cohen videos on YouTube. Here’s a part of a talk he gave ten years ago:
Cohen takes a couple of minutes to get going in this video, but once he does, he’s entertaining and informative. I’d love to see a complete presentation from him sometime.
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Great Post!
I highly recommend the book “Ask For It: How Women Can Use the Power of Negotiation to Get What They Really Want” by Linda Babcock and Sara Laschever.
This book gave me the confidence to get tens (!) of thousands more than I thought I could get in a salary negotiation — fantastic and a must-read for women.
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I’m surprised you didn’t link to this video of Herb doing his thing on stage. Very entertaining!
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Playing dumb is SUCH a useful strategy, not just for getting what you want but also for identifying the best people to deal with. We’ve particularly used it when looking for contractors to do renos/repairs on our home. We research the area so that we are well informed, then get in a few contractors and pretend that we have no clue about it. The ones that will patiently explain what needs to be done without talking down to us are usually the ones we want to work with. If the contractor won’t explain his quote carefully, or worse yet tries to convince us that we need more extensive work, he’s out.
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I’ll negotiate on anything that’s generally considered negotiable in our culture (US) and I am all about the win-win negotiation tactic.
In a sales situation, I usually try to set it up by picking one salesperson and trying to get to know them a little bit.
It’s interesting how far just a few exchanges can get you in learning what’s important to the person you’re working with.
Sure, most of the time it’s just money, but sometimes it’s more than that. Sometimes they just need to move a certain # of items. Sometimes they need to offload a specific product.
By learning what’s most important to the other person in your transaction and being clear about what’s most important to you, it gets easier to find creative win-win situations where both parties walk away feeling like they got a good deal.
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These variables also apply for the person you are negotiating with. Particularly when you are negotiating at big box stores where sales clerks aren’t directly impacted by a change in the price you often have the upper hand right there so long as there is a policy in your favor.
You can negotiate at Lowe’s for clearance items. I have successfully negotiated at Wal Mart for an iron. Etc.
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Negotiations are as unique and complex as the people involved, the key to successful negotiations is making each party feel like a winner.
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A book I would highly recommend (in addition to Ask For It, already mentioned) is Bargaining for Advantage by Richard Shell.
This is a short and well-written book. The chapter on Leverage alone is worth the purchase. He conveys important points extremely well.
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I feel differently about a business negotiation than a personal one. Many of the tactics here seem a bit manipulative, so I would feel more comfortable using them with a contractor or car salesman than someone I care about.
Having said that, I guess it’s obvious that the “win-win” scenario is my favourite. That’s what capitalism is supposed to be about. I offer something useful. My customer benefits. I benefit. Others are encouraged to compete and make something even more useful. Those who are willing to put in the effort win and we all benefit.
I also agree with your comments about the government. I am Canadian (as you can see by my spelling of the word “favourite”) and I can tell you that our political system is also plagued with unproductive lose-lose bickering.
Thanks for letting us know about the book. It sounds like an interesting read!
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I tend to become too emotional in ALL of my financial decision-making.
One example was when I needed a car due to our family van being totaled. I felt bad for the seller. She is the mother of our brother-in-law (so sort of like ‘family’) and the vehicle was her husband’s (who had died exactly one yr. ago on the day we looked at the vehicle). She needed to sell it since she needed the money for medical bills and had no further use for it. She also had cancer and was still recuperating from chemo treatment which was obvious by looking at her swollen face and tearful eyes.
We gave her the asking price and overpaid for the car (dirty, sat for a year, needed all new brakes, had a dent and damage to all four corner of the bumpers, etc.). We also found out AFTER purchasing and driving it that it averages only 14 mpg, which is abysmal. We are now forced to sell since we can’t afford the gas!
Thanks, J.D. for your post…I wish I could have read this a month ago! Moral of my story…always do your research and weigh your options! It’s very important to never rush into any major purchases. Also, remember to negotiate, negotiate, negotiate!
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As far as politics goes, JD –
A lot of what politicians do is bipartisan and win-win. Every week, fifteen or so uncontentious bills pass through Congress, sometimes with a major impact, without so much as a word of argument. It’s just that conflict makes the news.
Of course, it might seem like there’s lots of room for bipartisanship on the things that are controversial – and that room might actually exist – but keep in mind that what you see on TV is just a tiny, controlled portion of what’s actually going on – the real conflicts usually run much deeper and wider than they’re presented, and politicians are weighing a lot of factors when they decide to work together or not.
Don’t get too discouraged – it’s not fun to watch, but it’s actually not a bad system.
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My husband likes to tell about the time he was looking for a car and asked the price of a particular vehicle on the lot. The salesman quoted him a price well beyond what he was willing to pay, so he said “Okay” and turned around to walk off. This was not at all what the salesman expected and rapidly followed making other offers and trying to talk to him. P. just shrugged and said “You told me what you wanted for it but I won’t pay that. I found out what I wanted to and now I’m leaving.” The salesman couldn’t believe it but my husband walked away without looking back. … There are times when you just have to set your internal limit and not be willing to go beyond it — and to not care, as you say.
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Good post. I bet a few million folks in the U.S. alone could use these negotiation skills to gain $300-$450/month or so in income — by voluntarily having a housemate or roommate. We tend to think our privacy is too precious to consider it — yet with good negotiation skills we’d retain the privacy we needed, and gain a supplemental income that’s actual cash in hand, not ‘maybe-income’ that’s dependent on the stock market or real estate values. These tips offer a supplement to J.D.’s advice; hope they are helpful.
http://www.diamondcutlife.org/top-ten-tips-for-living-with-others-part-i/
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I don’t use silence enough when trying to negotiate. I feel antsy when nothing is being said. This is a weakness that I’m working on. I will try it out next time I’m at the farmer’s market. I live in TX so they go on almost all year long.
I love that Herb explains how negotiating is about emotion. If we can take our emotion out of the deal then we can really get the best deal possible.
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I want to reiterate Bon’s suggestion above – “Ask for It” is a fantastic book. One downer the author’s research revealed is that women are often in a double bind – they will be looked down upon for not negotiating but are less likely to be met with counter offers, etc – and looked down upon for being too “aggressive”.
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The right mindset can make a big difference. Having fun with negotiations helps make things happen. My husband hates negotiating anything. He will walk in, look at the price quoted and either pay or not pay. He finds negotiating embarrassing and emotionally charged, so he avoids it like the plague – but then he misses out on opportunities, and the salesperson misses out on the sale. I have gotten some of the best deals for our family – including a super deal on our minivan – by having fun with the salesperson and enjoying the process. In the end, if both parties want the transaction to happen, negotiating can make everyone happy.
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An incredibly useful addition to your resources, from the Stanford entrepreneurship series:
The Art of Negotiation – Free hour-long podcast on effective negotiating.
Stan Christensen also preaches win-win, but goes even further into the human relationship side of negotiation with simple, practical tips. How to not only get what you want while giving them what they want, but building a positive foundation for improved future negotiations (you’ll rarely “never see them again”). He uses insightful real-life examples he was involved with.
Hope you find it useful. It’s been eye-opening for me regarding negotiations.
Best,
Oleg
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I like that you have a part on collaborating. I don’t think anyone should walk out of a negotiation thinking they’ve been cheated. I think both parties should walk out happy about the deal they made.
Just because you want something from someone doesn’t mean they’re your enemy or your prey. Surely there is something you can give them that will make them equally happy without resorting to dirty means.
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oy I HATE negotiating. I know there’s a cost but I can’t see it being worthwhile to make myself do it.
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JD,
Another key component in effective negotiation is being aware of some of the persuasive tools others may use. Dr. Robert Cialdini’s earlier books on the psychology of persuasion are also a great resource. Being aware of these tactics often renders them useless against you.
I know you’ve written before about the influence of marketers trying to part us with our hard earned money. You might revisit the concept in a few posts based on Cialdini.
Thanks!
s.c.
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I’m already mentally rehearsing the negotiation I’ll need to do whenever I decide to trade in the 1995 Accord on a less-elderly used vehicle. All tools I can add to my set are appreciated!
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LOL! You [unintentionally] made me laugh with your politics comments. Often I feel that politics isn’t contentious enough, people get stuck on their kumbaya bipartisanship and don’t stand by their principles. They think they need to get SOMETHING done, so they do something stupid.
IMHO typically the government doing nothing and letting citizens work things out themselves is the best course of action, but politicians and bureaucrats feel the need to justify their existence. Hence our tax codes and endless forms in order to do anything.
Yeah, sometimes people grandstand and hold things up for the sake of the spotlight, but in a political context what’s wrong with conflict? Seriously. No one gets hurt. No one walks away crying. Let em duke it out.
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I second (third?) bon’s suggestion, and will also add a recommendation for the book that preceded Ask For It, Women Don’t Ask.
Ask For It is the practical guide, with “negotiation gym” exercises to help you get comfortable negotiating. Women Don’t Ask is an excellent and highly readable analysis of why and how women sometimes struggle with negotiation.
As KS indicated, they don’t go for the simplistic solution of telling women to just be tougher. They discuss how to deal with the special problems that women can face, including the fact that some people react negatively to negotiating with a woman.
They also note that many women have a natural tendency towards cooperative, win-win negotiation — and that’s a good thing. It’s a strong, creative, flexible style of negotiation, as discussed in this post.
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Good post JD.
Negotiation by Lewicki, Barry and Saunders was the book we used in my MBA negotiations class. It’s $90 or $100 but the book is amazing and more than worth the cost. I’ve both earned and saved thousands of dollars using the techniques learned.
A less expensive option is Getting to Yes by Fisher.
One crucial thing missing from the article combines the Power and Time variables. Always know your BATNA before you start the negotiations! If you don’t know your BATNA you need to do more information gathering and assessing of your situation before even thinking about talking dollars and cents, or whatever you happen to be negotiating if it is non-monetary.
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It’s all about leverage. Whether its cars, salary, girls, it’s all about leverage and how you present yourself. If you are serious and highly touted, you can get what you want.
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Great Post.
You truly can negotiate anything. I have been able to get some great rates on cell phones, cable, internet. You can even walk into a department store and make an offer. Worst they can say is no.
Has anyone ever tried the “honey I’ll do this is you do that” approach. This can work on more than dishes, lol.
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Hi JD, “Getting to Yes” by Fisher, Ury and Patton is a great option for a negotiation book, IMHO.
The BATNA concept is very useful when trying to strike a win-win agreement. I personally think that knowing my BATNA helps me being cool-headed in the midst of a hot, complicated negotiation.
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I negotiated my salary for a new job in a career field that I had no experience in. Five minutes later I had a second offer from the company for $6,000 more than the first! All I did was ask.
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Dear J.D.:
This is powerful stuff! You can negotiate everything. It is a skill that I am yet to master, but I know that my dad has mastered it completely.
Somehow he is able to drop the price by as much as 50% in some cases. It’s fantastic! He definitely uses many of the techniques described here.
Funny things is that he tries negotiate absolutely everything: jewelry, tires, computers, cell phones, cars, TVs and so on.
I am sure he has saved a ton of money by doing that. Seems like most people do not even care to negotiate because most of them are not aware of that it is possible at all!
But just like this article has showed, negotiating is powerful in any situation. The thing that I liked the most about this article is that it mentioned win-win situations. Too many people focus on getting their way no matter what.
If we all focused on win win situations, we would live in a truly rich society.
Thank you for sharing!
Best,
Tomas
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Thanks for the awesome tips. As I read them, I was reminded of how closely related negotiation skills are to the general communication skills we need to be successful in all areas of our lives.
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This is a great post. Negotiation makes a huge difference in people’s lifes at so many levels. The silence technique is often used in business and it is incredibly effective. People are just uncomfortable with silence so much so that if there is an extended period of it, the other side sometimes caves.
I have had to defend this a number of times in sales. When training salespeople we would always go through this. A seasoned buyer would often use this technique to get sales people to cough up a discount. I have seen it happen dozens of time while sitting quietly and letting salespeople react to it. The best one’s will don’t take the bait. It’s very uncomfortable, but when you know it is a technique, you are less likely to be taken by it.
If your company is large enough to have a negotiation trainer, it pays to show up to that training. We used a guy that paid for himself in less than a week in cost savings to the company.
Important post.
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That’s a well written article, and I know, having been a sales manager in a large New York auto dealer for 10 years.
John DeFlumeri Jr
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That pretty much sums it all up–quite concisely too I might add.
Great post
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The “win-win” strategy can leave a lot on the table. One should develop a cooperative negotiating strategy in which both sides are maximizing the results leaving nothing on the table when negotiations are finished.
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Great post. Timely information as I’m getting ready for a few interviews.
Also,
SO TRUE: “Instead, it’s adversarial, and we end up with a government that’s lose-lose for everyone. (This problem is just exacerbated by the idiots on radio and TV who insist on stirring the pot.”
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I”m going to give the silence idea a try at my annual review/salary meeting. I”m not sure how much negotiating can be done there- I work for a nonprofit that has been getting hit with budget cuts from the state. Besides that we have a salary scale AND a set scale for raises.
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While this was a worthwhile article, your note about the political situation is not only unnecessary but unwise. There are countries where everyone “agrees” – they’re called dictatorships!
The last thing we need in our government is everyone to agree. Agree on what? Have you ever studied the American Revolution? The founders of our nation had some very strong disagreements and debates out of which our nation was formed. That has been the state of our nation from the beginning and it always will be that way unless (God forbid) we do end up giving ulitmate power to one party or one man.
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Timely post. I just learned a couple days ago that I will be offered a different role that I am in currently. I will have more responsibilities but the job role isn’t too far off from what I’m currently doing in some aspects. Essentially this is a promotion.
However, I think that it’s harder to negotiate during this scenario as opposed to when you are interviewing for a new job/company. Does anyone have any good tips?
Thanks a ton!
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I had a client who considered himself to be the world’s greatest negotiator. I dreaded every interaction.
I finally informed him that he should find another developer. I feel sorry for them, whoever they are.
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Well done. Robert Ringer is another great resource on negotiations. My bet is that you have already read his books, such as To Be or Not to Be Intimidated.
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anon in new role – I actually think you are in a great position to negotiate. You’re a proven asset and your past accomplishments are good evidence for future performance. You can also justify increases because of increases in your responsibility – try to find comparable job listings that show salary ranges and if you can find some that are in your favor use them as market data (if you have a college degree then their career office may be able to assist you with data as well).
If you are in a company that has grade levels, definitely try to move up one (or more!) for it to really work out as a promotion. There are often considerable benefit increases, and it opens up the high end of the salary range for the future.
Mostly, don’t be afraid to ask, but also make sure you are going in with arguments about what you bring to the company/role and what the market values, not what money you need to buy a house, car, etc.
good luck!
Jenn
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@Terri
I know what you mean.
Being a “world’s greatest negotiator” does not require negotiating everything, much as being “world’s greatest boxer” doesn’t require turning every interaction into a brawl.
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@ Jenn (40)
Thanks for the reply. I think that I’m not in a position to negotiate because if I’m offered something lower that I expected but higher that what I’m currently making, I feel like I have no choice but to take it.
I don’t really have an alternative to taking the higher paying position. Not having any alternatives is not good for negotiating. I lose the upper hand because I can’t walk away and go with another company/etc. My only option would be to stay at my current position, which would be pretty stupid.
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@Anon
I understand you would take it anyway, but if you have good reasons for asking for more, it does not hurt to ask (in most companies- of course you should know your company culture and go from there). Having alternatives increases your ability to walk away, but isn’t the only form of leverage.
Positive leverage – what you are bringing to them to make them better. Are there items besides salary that you would mutually benefit from you getting because it would make you do your job better (e.g., external training, conference travel, new laptop, cable modem expenses). Could you offer to take on another responsibility to justify an increase?
Normative leverage – what’s “fair” given the market data. If you have evidence that you are not being offered pay at market levels, they may have an interest increasing your salary to prevent you from looking at other alternatives in the future (note – you do not suggest that you will be doing this, but you can say that in your research, which you have organized and able to share with them, the offered salary is below similar positions in your industry/region and you wanted to see if they could match those levels).
The whole time you keep a positive and enthusiastic tone about your new role (this is not a context where you should use negative leverage – e.g., threaten to walk away). If you ask for something reasonable and they say no, then you say you thought it was worth asking and take the job with a smile. If being rejected is going to color your view of the job, then it may not be worth asking.
My husband had a lateral move and got a $5k increase in salary and grade upgrade because he was a high performer and offered to do some extra responsibilities his boss hated doing. Both sides knew he wouldn’t walk away, but both sides also had a vested relationship and wanted him to get ‘fair’ compensation for the long-term.
Your choice. I don’t know your job situation so can’t advise anymore than that. My advice was coming from the assumption that you intended to negotiate. Sorry if I misread that.
Good luck – if not negotiating then in your future position.
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When people “play dumb” or try to hardball negotiate with me, I get up and walk away – and avoid those people in the future. I have no interest or desire to have people who use those kinds of tactics in my life.
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Informative article as per usual. I will be seeking to get a copy of this book.
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