Identify your Goals
Why are you negotiating in the first place? Are you constrained by a budget or a deadline? What do you hope to achieve at the end of the negotiation? This will help you know what concessions to make and when to walk away.
For example: You need to replace your broken down car before you go on a roadtrip with your girlfriends. If you can’t drive your new (to you!) car off the lot today, there’s no deal.
Identify the Other Party’s Goals
Try to step into the other party’s shoes and look at the negotiation from her or his point of view. What does s/he hope to get out of the negotiation? This will help you understand what concessions you can make that are no big deal to you – but mean a lot to the other party.
For example: If the seller needs payment in cash and the buyer wants to pay the lowest possible price. If the buyer brought cash to the negotiating table, then she can offer cash in exchange for a discount.
Are you comfortable sitting across the table from someone and not saying anything? If not, this is an important skill to practice. Give it a try sometime – wait to fill the silence after the other party is done talking and see what she says. She may start doubting her position and start undermining it for you.
Another reason why silence is important is because you should take a moment to understand what the other party said and formulate a thoughtful response.
When you counteroffer, you are doing your opponent a favor. Everyone – you and the other party – is likely to get buyer’s remorse unless you counteroffer. I hear about this happening all the time.
For example: You want to sell your car for $10,000, so you list it on craigslist for $12,000. A buyer offers you $10,000 and you are so relieved to avoid a protracted negotiation that you accept. You may have met your goal price, but as you see the buyer drive away in your car, you may think, “I wonder if I could have gotten $11,000?” The buyer, too, may drive away thinking, “I wonder if I could have gotten $9,000?”
Know When to Walk Away
What is your best alternative to a negotiated agreement? When you identify your other options, you will know when walking away is better than finding agreement simply for the sake of finding agreement.
In the first example, the car buyer believes she needs a car for a roadtrip the next day. But if she can’t find something within her budget, her best alternative may be to rent a car for the trip and buy a car when she returns. If she researches the best rental price for a car that meets her needs before she shops for a car, she will know when it’s OK to walk away.