To Negotiate, You Need Choices

The economy is in the dumps, advertising sales are down and budgets have been slashed. That's the bad news. The good news is that times are tough for broadcast equipment makers too and there are bargains to be had.
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(click thumbnail)In order to negotiate, you need to have a choice. The economy is in the dumps, advertising sales are down and budgets have been slashed. That's the bad news. The good news is that times are tough for broadcast equipment makers too and there are bargains to be had.

I can remember during boom times, when I'd try to dicker with an equipment salesman for a discount and hear, "I'm selling every one of these we make; we're back-ordered six months." Don't confuse those times with now. Now, you can negotiate.

If there's one rule for negotiating – above all others – it's that to negotiate successfully, you need to have a choice. Where you have no choice, your only chance is to bluff and that usually doesn't work too well.

If you have two or more manufacturers that make basically the same product, such as videotape, you certainly have a choice. If there's only one manufacturer but several dealers, you've also got a choice. In both cases, you can play them against each other in trying to get the largest discount.

But if only one company makes the XYZ you want, and you can only buy it from one source, what choice do you have?

First, you have the choice to buy or not to buy. This may sound simple, but from the standpoint of the manufacturers, it's a huge point. Making the best wombat in the world is worth nothing if they can't sell it.

IS THE PRICE RIGHT?

Before you start the negotiation, know your "price limit" and your "goal price." Work these out with your boss, or whoever holds the purse strings for the company. You've got to come in under the price limit or you can't buy the item. Come in near your goal and you're a hero.

Don't begin the negotiations by offering to spend your goal price. Just let the salespeople know you're on a strict budget and ask them what kind of discount you can get. Who knows, they may offer the product for less than you ever dreamed. That's why you want them to give the first dollar figure.

You know and I know that you don't usually get a low offer right off the bat. You need to turn it down. You don't have to sound like a professional wrestler making the threat not to buy. You can always say, "We don't have that much money to spend on an XYZ, and my hands are tied." After all, that's the truth.

This may lead to the question of just how much you DO have to spend on an XYZ. You SHOULD know how much you can spend but the longer you can wait before letting go of that information, the better for your negotiation. This is where you can bring in the "higher authority" tactic.

Car salespeople do this all the time. They let you beat them down on the price, then tell you they have to check with the sales manager. After disappearing for a decent interval (say, about 10 minutes), they come back to tell you the sales manager won't let them sell the car for that price. Worse yet, they turn you over to the sales manager, who beats you up until you buy the car at sticker price.

That's not quite what I have in mind. When asked what price you COULD pay for the XYZ, you can give a price range, which might begin at a ridiculously low amount and end around your goal price. Let the salesperson know you're going to have to clear the purchase back at the office. After all, that's true, although you've agreed to what you have in the budget.

Now, let's suppose the salespeople say their hands are tied too. They can't go any lower than a certain price and that's above your goal but within the amount you actually have to spend. Is that the end of the negotiation? Doesn't have to be.

There are pressures on you that the salespeople don't know about and you can bet there are hidden pressures on them too. Is the sales quarter about to end? Is the salesperson behind on quota? Is the salesperson a sale or two away from a bonus?

You don't have to know exactly what's going on in the salesperson's head to work the time element into your negotiation.

‘I'LL THINK ABOUT IT'

If you can afford to wait, suggest that, at the price quoted on the item, you might have to put the purchase off for six months.

Even if the salesperson isn't behind on quota, that person knows a lot can happen in six months. Another, better product may be introduced by another manufacturer.

You may get a further price concession to make the purchase now. If not, ask the dealer to lock-in the price that was offered for the next six months.

Sometimes, when the price of the XYZ itself is set in stone, you can save money in other places. Are the people who are going to use the XYZ going to need training? Can the salespeople get their company to throw that in? Are there peripherals or options that you can get a break on? What about software updates? How about a longer warrantee period? All of those represent real cash savings.

But, hey, don't be a pig. If you've reached your goal, don't beat the poor salespeople up. Remember, you're going to have to do business with them later on, when it might not be as much of a buyer's market.

A friend of mine put together and managed the real estate operation in China for a company listed on the Dow. His employees once brought him a deal to review where it was clear the other party was going to take a financial bath. "I want you to go back and make this fair," he told them, "because I want to do a dozen deals with him."

There WILL be a tomorrow, and you'll have to deal with the company and the salespeople again.

And finally, if you've read into my column that I'm saying you need to lie, you've misunderstood. There's a difference between lying and failing to turn over all your cards. That's part of negotiating.