How to Master Your
Money Negotiation Skills in Real Life
As we all know, money doesn’t grow on trees. In order to make the most of our hard-earned cash and get good value for money, the ability to negotiate the best deal in any context, private or professional, is a great life skill to have.
Some people seem to be born with innate negotiation skills, but for those who need a little help, this article is intended to provide some useful advice.
Mastering good negotiation techniques can be hugely beneficial in a wide range of situations that we all experience in our lives. Here’s a basic explanation of what we mean by negotiation: “Negotiation is a method by which people settle differences. It is a process by which compromise or agreement is reached while avoiding argument and dispute.”
Whether it’s buying and selling goods and services, getting a pay rise or moving house, savvy financial skills can be one of the most valuable assets you can have to help you achieve successful outcomes. We’ve put together a tried and tested 5-point strategy for approaching any negotiation you may be facing with confidence:
1. Aim for a win/win
It all starts with a clear understanding of how you and your negotiating partner approach the idea of a ‘deal’. The best outcomes are those that achieve a win for both parties, based on equitable and friendly negotiations that leave some goodwill in the deal. Building a rapport with the other side to reach an agreement based on mutual respect paves the way for developing positive long-term relationships and the likeliness of many more deals being struck. If, on the other hand, hard bargaining techniques are used to back the other side into a corner with no option but to capitulate into agreeing to an unfavourable position, it will lead to hard feelings and a very slim chance of any future deals being done.
2. Make the first offer
They say the early bird catches the worm, and one of the best ways to get your negotiation off to a good start is to seize control of the bargaining table. This gives you the advantage of being able to set the initial terms of the debate and steer the discussion towards a favourable outcome for you. For instance, if you announce the optimum price you wish to achieve for the sale of an item, it is then up to the potential buyer to propose a lower price, and the bargaining can begin. This can be applied to a professional sales role as much as, say, a private car sale. Research has shown that it is to the seller’s advantage to take the lead, with 85% of negotiated outcomes aligning with the person who goes first, while prices tend to be lower when the buyer makes the first offer.
3. Talk in precise numbers
Negotiate in concrete figures rather than proposing a range. Why would you inadvertently tell the other side how low they can go in their offer? You may know in your head that you would accept £2,000 as a possible outcome, but by stating that you’re looking for £2,000 - £3,000, you’re likely to get the lower figure. Say you’re buying a property and the survey has flagged up serious issues. In this case, you can go back to the seller and ask for a price reduction equal to the cost of essential repairs. “While the seller is, of course, under no obligation to reduce the price, neither are you obliged to proceed with the purchase, which is a motivator for both parties to find a compromise that keeps the sale on track,” advises one seasoned expert in the field.
4. Silence can be golden
One of the savviest negotiation tactics is simply to talk less rather than more. Far from sounding silly, there is plenty of scientific evidence to suggest that harnessing the power of silence is a clear psychological device that many experienced business negotiators use to great effect. Maintain eye contact without speaking and your counterpart might start to get flustered and make concessions they wouldn’t otherwise have made. Situations where this may have strong significance are for example within job interviews or general salary reviews. Recent research indicates why three seconds of silence can be golden. When reviewing the effect of silence within employment negotiations, it was found this actually offered more recognised opportunities by both the recruiter and the candidate, giving way to a situation where “breakthroughs were more likely to occur after silent pauses than at any other point in the negotiation”.
5. Ask open-ended questions
Asking questions is a great opportunity to obtain valuable information that can inform your negotiating strategy and help keep the discussion going. Avoid asking binary ‘yes’ or ‘no’ questions since they cannot enable an ongoing dialogue. Instead of saying “Is this your final offer?”, you could try to reposition your question along these lines: “What would you say if I told you that I simply cannot make that price/salary work for me?” By opening up the conversation, you are putting psychological pressure on the other party to come up with a solution that is more palatable to you. There are different types of open-ended questions you can use to help you achieve the outcome you are looking for.
Confident money negotiation skills go a long way towards helping you manage your budget and achieve financial success, both in your private life and in business. Whether you are running a start-up or a large company, or are managing your own personal finances, remember to try to be partners with the people you negotiate with and approach any dealings with honesty and integrity.
Rather than going down the path of cut-throat behaviour that will alienate the other party, you should develop your listening skills and understand their body language to help you negotiate a deal where both sides get something they want. If you approach each transaction ethically and respectfully, you will put yourself in the best position for a lifetime of beneficial partnerships.
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About the Author
Dakota Murphey is a writer based in Brighton, specialising in management training, HR and effective talent acquisition. Having authored pieces for numerous online and print magazines, Dakota has undertaken independent studies to discover how managerial styles and practices can positively impact business productivity.