Lets face it, with times getting tougher, companies need to do all they can to save money and cut costs.
Its not only important to find the best deals on new contracts, but never fail to look at the renegotiations of your current commitments things like Leases, Business Contracts all the way to parking spaces, office supplies, or printing materials anything and everything can and should be negotiated to save money.
Here are a few tips to get you started with negotiating:
Develop a Flexible Negotiation Plan:
Negotiating is like a game of Chess. You need to have strategies in place for each phase of the negotiation process: the opening, middle game, and end game. Here are some questions you can ask yourself in order to get started.
What do I want?
Where do I start?
When do I move?
How do I close?
You need to start off by doing your homework- be knowledgeable about the product or service youre purchasing. Know what the going rates are and what competitors are willing to offer. Its so easy to continue using the same vendors youve been working with for years but if youre going to get the most out of your money you need to do the research.
Have Several Offers on the Table:
If possible have more than 1 offer on the table as this will give you leverage during negotiations. Make the suppliers compete for your business.
Make Counter Offers:
Dont say yes to the first offer- come back with a counter offer. Even if its something like renting a venue for a conference youre hosting or purchasing office equipment, always make a counter offer.
Statistics show that cooperative negotiators are more effective than competitive negotiators. You dont need to be tricky or rude to be a good negotiator but you do need to be alert and prudent. The best negotiators ask a lot of questions, listen carefully and concentrate on what they and the other party are trying to accomplish. Having said that, here are a few tactics to consider when negotiating:
Dont appear too enthusiastic- If youre planning on acquiring another business avoid saying things like: This is exactly what Im looking for. Instead say: This is not exactly what I was looking for but if the price is right I could be interested. Take your emotions out of the formula and be willing to walk away from a deal. Sometimes the best deals are made when you are willing to walk away.
The Good Guy/ Bad Guy tactic- lets say youre negotiating the renewal of your service contract and the contractor gives you his proposal. Youve already given it to your Managing Director and he complains about the price. You sit down with the contractor and say look, Id like to work with you but my Managing Director refuses to pay this price. If you can give me your very best offer, Ill see what I can do.
This is a good tactic as it takes pressure off of you and this puts you in the middle as you try to find a solution for both your Managing Director and for the contractor.
How to Close a Deal:
Use of Higher Authority-can be an effective way to reduce pressure in the negotiation by introducing an unseen third party and can also be effective in bringing the negotiations to a close.
For example you could say I need to get final approval by my Board of Directors for this LOU. If they agree to the terms we have discussed, do we have a deal? This tactic can help close the deal, however, be careful as you dont want the other party to think that you have no decision making authority yourself.
Ask for Extras:
Negotiations can be a tiring process and both parties will want to finalize the agreement dont be afraid to ask for a few extras like: Oh, by the way, this does include free delivery doesnt it? Or Oh, by the way, the price of this printer includes a few ink or toner refills right? This tactic is best used when the items you are requesting dont really affect the final outcome and the request is made at the right psychological moment, which sometimes can be a few minutes before the final contract is signed.
In conclusion: Though there are naturally gifted negotiators, I think anyone can develop these skills. By making negotiating a part of your everyday business you will save your company money. Not only that but when you go on vacation to Istanbul you could come home with 3 rugs for the price of 1 and thats a pretty good deal!