Negotiate Once, Save Thousands Every Year

This article was written by Jason, who is the author of World Fitness Network, a blog that will teach you how to lift weights, live strong, and change the way you look and feel.

Sometimes a few simple actions can save you money year after year. The negotiation process is definitely one of those times.

Negotiating works especially well when you deal with a salesperson who is paid by commission. These salespeople often have the ability to give you a better deal (and thus earn a lower commission) in order to earn your business. Situations where you can successfully negotiate a better rate include:

  • Signing up for a gym or health club
  • Discussing your initial salary
  • Buying a car
  • Locking in an interest rate on your home loan
  • And many others

As a blogger about fitness and weight lifting, I have managed to cut my gym membership costs by $20 each month. A friend of mine negotiated an extra $10,000 in starting salaries at a new job. Perhaps you can negotiate a better rate on your home mortgage to save thousands of dollars every year. Each situation presents different and unique opportunities.

Here are the steps to successful negotiation:

1. Do your research: Have an idea of what to expect before you walk in the door. If you understand the market rates of what you are negotiating for, you will be able to avoid getting ripped off, but more importantly, you will be taken seriously when you ask for a better deal that is still reasonable. Set your limits ahead of time, and do not cross them.

2. Use capitalism: Use the principles of competition to your advantage by checking the competition first. There is nothing wrong with having several people compete for your business. The companies you negotiate with use capitalism to become rich, and there is no reason why you shouldn't be able to do the same. Having more options gives you leverage.

3. Save the best for last: Go to the company that has the best chances of giving you what you want last. You will then be more prepared when you arrive, and knowing what their competitors offer will give you leverage to seal the deal. Don't be shy when talking about what you liked about their competitors.

4. Don't be pushy: Nobody likes to have their arm twisted. In the same way that we are turned off by all the tactics that pushy salespeople use, you must be careful to avoid coming across as overbearing.

5. Don't get too excited: Yes, be a likable person. But if you are jumping up and down with excitement when you go to buy a car, your chances of talking them down are shot.

6. Show interest: Ask lots of questions and let them see that you are a real customer and that a sale can be made. If a salesperson sees this, she'll be much more likely to invest the time into finding a good deal for you. Again, don't become excited or emotional, but let the salesperson see that some extra effort could help her to earn a commission.

7. Accumulate face time: Put the time in with the salesperson and have plenty of face-to-face interaction. The more the salesperson invests his time in making a sale to you, the more he feels a psychological desire and commitment to close the deal. Require them to invest their time into you, and you will become a more valued customer in their minds.

8. Plan to walk out: Don't go into a negotiation with a plan to close the deal on the same day. You may be offered a great deal that you want to accept, but remember that any offer made to you remains legally valid and can be accepted the next day (unless otherwise specified). Making a plan to not finalize the deal on the same day helps you to avoid making an emotional decision, and you can negotiate from a greater position of power by showing that your sale must be earned.

9. Have a confidant: Don't walk out in anger if you don't get what you want. Make it clear that your terms have not been fully met, and tell the salesperson that you need to talk to a friend or spouse before making a final decision. But don't fake it — really find another person to help you think through the transaction.

This also helps you to save face if you need to push for better terms later. The salesman won't be as upset at you personally if you can say that your spouse, parent, or friend isn't happy with the deal. If you later decide to take their initial offer, you can simply inform them that your friend/spouse changed their mind.

10. Give a deadline: Before you walk out, let the salesperson know that you are very interested in their offer, but you need some time to think it over and that you will make a final decision on a certain date in the near future. If you let the salesperson know when you will make that decision, you just might end up receiving a phone call with another offer very close to that date or shortly thereafter.

11. Use the fairness argument: This one is very difficult to argue with. Frame your needs in terms of fairness whenever you possibly can. If you are negotiating for a higher salary, find out what the average salary is for your skill level, and then explain why your skills are better than average. Then explain that because of your added skills, you are only asking for a higher salary so that you can receive fair treatment. You will find that it is much easier to ask for fairness than for special treatment.

How about you? I'd love to hear your tips about how to improve your negotiations.

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