This article was originally posted on Forbes.com
By: Tamara Schwarting
Approaching a vendor to negotiate a deal or sitting down with your boss to discuss a pay raise can be scary, but sometimes there’s no way around it. Whether negotiating the cost of leasing a space or your corporate benefits package, there will come a time when all professionals need to haggle a bit for a lower price or higher value. When money is on the table, it pays to keep your cool. So, how do you maintain your composure when it’s time to negotiate?
For many, negotiation does not come naturally. Sometimes, we’re not certain it’s worth the risk. (In fact, The Atlantic reported earlier this year that men and women negotiate differently based on their perceived value of themselves and the risk involved.) While boldly asking for what we want or need is a learned skill, the art of negotiation is necessary if you want to really be the one in control of your business or career.
The best way to avoid the fear and anxiety that comes with professional negotiations is to have a solid plan in place. To that end, Here are five quick tips for creating your negotiation plan, getting the best deal and knowing when to walk away:
Don’t expect you’ll always agree on the value of your (or their) portion of the deal.
In a perfect scenario, each party brings something to the table (either a service, product or payment) and both parties agree to a fair trade of value. But if you feel like things are imbalanced, it might be worth asking the other party to reconsider their pricing or the value of their product or service. Don’t worry about offending them. There is a chance they are new to the market or no one has ever told them that they are overpriced. Costs add up and you can’t afford to accept a deal that isn’t reasonable.
Consider value over price.
A potential vendor may not be willing to reduce their price, but may be willing to add extra perks to increase the value of their service. Quality and service matter — delivery, efficiency, frequency, etc. These all factor into the value of a good or service, yet do not always increase the cost to the vendor. When it comes to added perks, it never hurts to ask. You should also go into every negotiation with a plan of what concessions you are willing to make on your side to move a deal along. If you give something up, ask for something in return that is of value to you.
Emotions play a role in negotiation, but they can’t guide the deal or your response to it.
You need to be able to stay clear-headed about the business at hand and not be emotional about a difficult negotiation or a deal that falls apart. Sometimes things don’t work out, and it doesn’t need to ruin a friendship or the potential for a future partnership. A good deal is one that is best for both parties. If the details aren’t coming together and you can’t reach mutually beneficial terms, be willing to say “no” and walk away without any hard feelings.
Never walk into a negotiation without a viable second option.
Sometimes it feels like you don’t have any other option and your success hinges on this one deal, but that is rarely the case. Come to the table with a BATNA (“Best Alternative To a Negotiated Agreement”) in mind. If you know the cost of other comparable services, you can use your BATNA as a negotiation point or as the motivation you need to walk away from a deal that isn’t going anywhere. Do research before negotiations begin and don’t ever threaten to walk away without a backup. Make certain your BATNA is a viable plan B, or you could walk away from a decent deal and into a bad deal out of necessity.
If you reach an agreement, don’t forget to document it.
Make notes and save messages. Keep email chains, even if they seem insignificant now. Once negotiations have ended, put something in writing within hours or days, while the decision is fresh in your minds and you are both less likely to forget something important. Not all written agreements need to be in the form of a complex contract; simple contracts should be sufficient for most situations. If deals require a more formal contract, you’ll have notes to depend on when writing it. The point is that the basic terms of your agreement are in writing and can be called on if there is a discrepancy later on.
Mastering the art of negotiation will translate in all areas of your life. Continuing to refine your ability to create deals that bring value will also help to maintain and grow relationships.
If you want to read more on the topic, I recommend the following books: The Shadow Negotiation: How Women Can Master The Hidden Agendas That Determine Bargaining Success (Kolb & Williams) and Bargaining for Advantage: Negotiation Strategies for Reasonable People (Shell).
Tamara Schwarting is the CEO of 1628 LTD., a curated coworking community of independent professionals and the professionally independent in Cincinnati, Ohio. She is also an executive level consultant in business processes and supply chain purchasing.