During my travels in Uzbekistan last month, I came across a market stall selling traditional handwoven textiles. After deciding on three silk coats, I struck up a conversation with the vendor.
I didn't immediately get out my wallet, though. Instead, I paused and crafted a plan to get all three coats for much less than the seller was asking--and I did.
A lot of people think an item's price, whether it's a silk coat or a piece of software, is set in stone. But in more cases than you'd realize, an item is only worth what you're willing to pay for it, so it pays to know how to effectively talk to a vendor.
That said, no one is born a master negotiator. Some folks are even too shy or reserved to try when the opportunity arises, even when it could save hundreds or thousands of dollars. But you never know what you can gain by making a lower offer. Over the years, I've developed some tricks that have helped me get past my reservations and learn how to negotiate my way towards a better deal in all kinds of settings, from Middle Eastern bazaars to sales meetings in Silicon Valley.
Here are three of my top negotiation strategies:
1. Take a moment to understand the seller's environment.
As a buyer, you're on the seller's turf, so taking a little time to learn about that setting can give your confidence the boost it needs for a successful negotiation.
First, determine how badly the vendor wants to make a sale. For example, an extremely busy stall in a marketplace could mean they don't have time to haggle with you. On the other hand, an account executive getting desperate to hit their numbers will often negotiate just so they can get some sort of deal out of the meeting.
You can gather clues about the vendor and their environment by asking yourself a few questions:
Is it a slow day or month for business or are there lots of potential customers around?
Is it towards the end of business hours, or are they just starting for the day?
Is the product you want extremely popular or is it les prominent?
The silk stall I visited had customers milling around, but not so many the vendor didn't have time to notice me. While the vendor was busy with other customers, I had time to observe their interactions as well as find the pieces I really wanted to buy. As a result, I felt extremely prepared when it was my turn to make a transaction.
2. Know exactly what you want to buy.
Separate the products you want into two categories: the must haves and the ones that are enticing but not absolutely crucial. Don't necessarily name every item on your list; you'll need to put new items "on the table" during the negotiation process, and it helps to have some already in mind.
It also helps to know your options and voice them if necessary. Combine that knowledge with a little bit of flattery: "I noticed Vendor X has similar coats for $Y, but I'm more interested in doing business with you." At the Uzbekistan bazaar, there happened to be a few stands around selling similar coats. I was able to use this fact to my advantage when it came to negotiating for the three I really wanted.
You can do the same thing in a sales environment. Makes sure you study and understand the competition before you go into the meeting, and don't be afraid to mention them. If you arrive at the meeting knowing nothing about other companies and products, chances are, you'll lose the negotiation.
3. Have a number in mind from the start.
Before talking to the vendor, decide on the price you want to pay. It also helps to determine the difference between that number and the one the vendor is asking. Don't reveal this final price until you're ready. Show them your money and say, "This is all I have." If you're really interested in what they're selling, you could offer to go get more cash if they'll lower their price for you. They can take it or leave it at that point.
In a business-to-business setting, explain that your price is all you have to spend right now, but that you plan to give the vendor more business in the future. You always want to signal your desire to become a long-term customer who will refer others to that store or company.
After a few minutes of haggling, I negotiated the cost of the silk coats from $60 each to $100 for all three.
However, keep in mind that not every negotiation will work out in your favor. It takes a lot of practice to carry each of these tactics out successfully and build up the kind of confidence that sways the other person. Stay persistent. When it comes to negotiating, that may be the most important strategy of all.