My eight best trading tips
Negotiation is a part of life that we all have to deal with. Being able to do it successfully can make a big difference to our results. Here are eight tips that have helped me.
Be willing to negotiate first
Some people are too shy to talk about money. Others think it’s rude or demeaning. And in many cases they are right. However, when it comes to making a deal, and we all have to sometimes, not being willing to engage in “money talk” can be a very expensive business.
There are many experienced negotiators out there. If you are buying a house or a car, or taking a new job, you can be sure that you will have to deal with that person. If they can see that you are coy about the whole thing, many will take advantage of that fact.
You also shouldn’t be ashamed to turn something that may not immediately seem like a negotiation into one. If I am buying some expensive things in the same store, I often ask them to give me something for free or to reduce the price. Just because there’s no sign saying you can do that, doesn’t mean you can’t. Often just asking for something extra gets me a better deal.
Don’t get emotionally involved
A big mistake many amateur negotiators make is getting too emotionally attached to winning. They yell, threaten and demand to get their way. All of this is counterproductive.
Most deals are only possible if both people feel they are getting something out of it. If the person across the table feels attacked or doesn’t like you, they probably won’t back down. Many people hate stalkers and will be more willing to walk away from a transaction if it is one.
Stay calm, patient, and friendly, even if the other person starts to lose their cool. Make sure you leave any pride or ego at the door. You are much more likely to do well that way.
Don’t get sucked into the “rules” trick
When someone sends me a contract to sign, if there’s something I don’t like, I cross it out. I’m also happy to write things I want to add if I think they should be there. Sometimes the other party comes back to me and says, “You’re not allowed to make changes to our contracts like that.”
Really?
Since I’m the one signing the thing, I’ll make whatever changes I want, thank you very much. There is no law that says they are the only ones allowed to add things to a contract. If you’re not happy with my changes, please let me know and we can fix it, but don’t just tell me I don’t have permission.
This highlights a common tactic used by experienced negotiators such as real estate agents, employment agents, car salesmen, and the like. They know that many people are strict about following the rules. So they make up official-sounding pronouncements and insist that “this is how it’s done” or “you’re not allowed to do that.” If someone starts trying to pigeonhole you by adding rules to the deal, ask them to provide proof that such rules actually exist.
Never be the first person to name a figure
This is an expensive lesson to learn, but a good one. I do a lot of contract work, and one of the first questions I’m usually asked is “What is your hourly rate?” This is a high pressure question and often I found myself blurting out a figure that was lower than I really wanted.
These days, I have learned the importance of getting the other person to say a number first. Now, I answer that question by asking “What is the budget for this contract?”. I am often surprised to find that I am being offered a better deal than I thought.
Ask for more than you expect to receive
Once the other person has given their figure, even if it’s much better than you expected, say something like, “I think you’ll have to do better than that.” Don’t be arrogant or pushy. Just say it calmly.
When asked about your expectations, ask for more than you expect to get. Few people will walk away from a deal once it’s started, and you can let the other person feel like they’re winning by lowering their “unrealistic expectations” little by little.
Make them believe that the final decision does not depend on you.
Once a negotiation begins, most people want to finish it as quickly as possible. May impatience overcome them. A great way to do this is to let them believe that the person they are negotiating with is not you, but some other “authority figure.”
Say something like, “Well, I’ll have to talk this over with my boss/spouse/partner before I can give you a definite yes.”
A skilled negotiator will always want to talk to the person who makes the final decision, but don’t let them do so. Let’s say the person in authority over the deal wants you to work things out, but you still need to have the last word. Tell them you’ll discuss it and come back with an answer tomorrow. Ask them to make sure that this is the best offer you can take to your “authority figure.”
This is also a great strategy to prevent people from rushing you.
Don’t act too interested
Simply giving the impression that you are willing to walk away can do wonders for getting you a better deal. Always play the reluctant buyer or reluctant seller.
Don’t let the other person feel like they’ve been cheated on.
Many people try to get every last drop of blood out of any negotiation. This is a mistake. If the other person feels that they have been cheated, they may come back to bite you. They may not honor their part of the bargain or refuse to deal with you in the future.
Most negotiations should leave both parties satisfied with the outcome. Be willing to give up things you don’t really care about to create a feeling of goodwill. For example, if I am renegotiating my rent lower, I often offer to sign a longer lease. That way, the landlord knows that his property will have longer tenants and I get cheaper rent.