I’ve spent the majority of my career negotiating and training people to negotiate. Along the way I’ve made plenty of mistakes and learned that negotiation can often be improved by actually doing the opposite of what I’d originally think to do.
Mistake #1: Providing too many options
- Conventional wisdom: offer as many options as possible when negotiating. The other guy is bound to agree with one. The more choice you provide, the better.
- Tip: Limit options to 2-3. The paradox of choice dictates that the more choices you provide to someone the more they like aspects of each option. Therefore, they over-think and believe they can find the perfect solution. If you go to the store and see 20 T-Shirts in your size you are likely to be more frustrated than if you just see 3. People like easy, quick solutions. They are less likely to second guess and will make a decision more quickly if you restrict the available options.
Mistake #2: Falling for the bluff
- Conventional wisdom: When someone gets passionate and appears overly confident, you generally believe them. When they vehemently protest that your price is too high and they are going to walk, you take their confidence at face value and cave.
- Tip: People who bluff generally overcompensate. In my experience the people who screamed and yelled and made the biggest fuss about walking out on the deal, actually didn’t mean it. They were just trying to intimidate me. And it worked, until I noticed the pattern. Rather it was the guy who was not confident and was actually hesitant, who walked. When a person is actually closing the door, they generally regret that it has come to this, and do not feel the need to scream. They are done. The more someone protests that the price is too high, and makes a fuss, generally the more wiggle room you have. Fear the quiet negotiator who isn’t concerned with how he appears. The more someone is trying to impress you with their confidence and how serious they are, generally the more they are bluffing.
Mistake #3: Playing games & bluffing yourself
- Conventional wisdom: Negotiation is adversarial, the more you let the other guy know what you want, the more he’s going to use it to his advantage and exploit you.
- Tip: If you are not clear about what you want, you are unlikely to get it. I’ve found that focusing on the outcome, and not on how you appear leads to successful outcomes. State what you want and focus only on your intended goal and not on your ego. Relay your position in a simple, straight-forward, and confident way. You’d be surprised how many people respond. Most people don’t react well to distracting game playing and once you’ve been discovered, it’s hard to regain your footing.
Mistake #4: Dwelling on sunk costs & time spent
- Conventional wisdom: The more time and money you’ve spent on a deal the closer you are to closing it and the better deal it’s going to be. All that work has to pay off eventually, right?
- Tip: Most of my best deals were quick deals because they were simple. Sadly, the deals I spent the most time, agony, and lost sleep on died. They died because they were too complicated. Generally, the more complicated a deal is, the less likely you are to close it. Focus on deals that make sense, because time is your most valuable asset. Do not spend time dwelling on the time and money you have ALREADY spent. It is gone. Opportunity costs are too high to continue beating a dead horse.