Join Chris Croft for an in-depth discussion in this video Negotiating in action, part of Negotiation Skills.
- So here's a little role play where I'm doing a number of key things wrong. See how many you can spot, maybe make some notes, and then after the video, I'll reveal the answers. So this course will cost you $4,000 for the design and then to run it for two groups. - You know, that's a little more than we have budgeted for. Is there anyway you can reduce it a bit? - Well, you are a regular customer so I suppose I could reduce it to 3,500.
- That's not a bad rate and what if we actually scheduled several dates for this program spread over the next two years. How much cheaper would that be? - Well, if you run it for several dates, it would come down to $3,000 per course. - But Chris, it's three courses. I think for that you should be able to give us a bigger discount. Can you reduce it a little bit more? - Well, I suppose I could reduce it to 2,500. - How about 2,000? - Oh, okay then, you got a deal.
Okay, so I hope you spotted a few things that I did wrong. These were the three main things which I hope you noticed. First, I used round numbers which made all the numbers I quoted sound made up. It reduced my credibility and showed I was just playing a game. Second, I forgot to move in small steps. So I gave too much away each time. And this meant that I came down from $4,000 to only two and a half thousand which was a big loss of money for me.
And third, perhaps harder to spot but I hope you got it, was that I didn't trade. I just conceded which was weak and it made it easy for Lily to push me down further and further. So now let's see what it looks like when I do it right. Odd numbers, small steps, and trading. So the course would cost $4,200 and that's for the design and then to run it for the two groups. - That's a little bit more than we have budgeted for.
Is there anyway you could reduce it just a little bit? - Well I think it is a good price. Maybe if we had an agreement that you would have 12 people or fewer on each course, that would save me a little bit of cost. I could do it for 4,100 then. - It's still a little bit high. What if we were to book this date for several programs spread over the next two years? How much cheaper would that be? - Well running it several times would bring the cost down a little bit.
If you booked three, I could bring it down to 3,840, but if you wanted to bring it down a bit more, I had an idea. If you could refer to me on your website, recommend me on there, and if I could refer to you on my website as a customer, then I could bring it down to 3,660. How 'about that? - Okay, what if we were to provide you with all of the printing and gave you a really great lunch every day? What would be the absolute best you could do it for? - Well the lunch would be nice.
The printing doesn't make a lot of difference to my cost but I suppose it would make it a little bit cheaper to run. So if you did the printing and provided the lunch as well, then I could bring it down to 3,620. How 'about we go ahead on that basis? - That's a good deal. Let's do it. - Excellent. In this version, I end up on 3,620 rather than two and a half thousand and I've got some valuable tradables as well. It's a huge difference.
Always make sure when you negotiate that you don't use round numbers, that you move in small steps and that you trade.
- Why we avoid negotiating
- When you should think about negotiating
- Planning your negotiation
- Calculating your opening offer
- Leveraging different negotiation tactics
- How to trade
- Determining if you should walk away