In the world of negotiating, there’s one very important rule that everyone should abide by, as it has the potential to dramatically change the outcome: Never accept the first offer. Accepting the first offer can be detrimental in a number of ways. Not only will it cause you to question your decision, but it will also leave you wondering if you could have gotten a better deal had you negotiated more. It is always in your best interest to negotiate the first offer and here’s why. 

The First Offer is Rarely the Best Offer

The first offer is more of a gauge than an actual offer. It is the other party’s way of feeling you out to see what you will take. In most cases, it is usually at the lowest end of their range and is used merely as a starting point. For example, if the hiring manager for a new job offers you a salary of $75k, this is more likely to be a starting range than the actual amount they would be willing to pay. It’s always in your best interest to negotiate further and you should assume there is more money in the coffers. 

They Are Expecting You to Negotiate

If you take the first offer, you are likely to leave money on the table. That’s because the other party is expecting you to negotiate. Consider buying a car. People rarely walk up to the dealer and say “I’ll take it and pay the sticker price.” The car dealer is almost always waiting for the customer to negotiate the price. The same is true when negotiating salary or a business deal. It is expected that you will counter the first offer, so go ahead and go for it because you could end up with a much better deal. 

There are Plenty of Opportunities Out There

It can be tempting to accept the first offer at times, especially if you are emotionally invested in the deal. This happens frequently when homebuyers fall in love with a house or when someone is finally offered a job at their dream company. That said, you should never feel pressured to accept the first offer and settle for less because there will always be other opportunities. If one person made you an offer, you can expect that someone else will be willing to do the same. 

You Will Regret It

Imagine you see a car for sale for $10k. You think to yourself, I better snatch this up before someone else does, so you make the seller an offer of $8500. To your disbelief, they immediately take the offer without countering. Do you leave feeling like you just walked away with a great deal, or do you leave wondering why they accepted your offer so quickly? More than likely, you will begin questioning yourself and wondering if something could be wrong with the car. You may also be thinking that you should have offered even less. Either way, you walk away feeling dissatisfied with the deal. Accepting the first offer without uncovering how high or low the other party would have been willing to go will almost certainly lead to regret.

There are several tips and strategies for negotiating successfully, but among the most important is understanding who you are talking to and what their role is within the organization. A key part of the negotiation process is finding out early on if the person you are dealing with is the actual decision maker.  You may have the perfect sales pitch prepared, but if you are engaging with the wrong person, it could be a big waste of your time. Sometimes it’s an intentional strategy used by the customer and other times it’s lack of preparation on the part of the sales person, but either way, dealing with the wrong person can result in lost time and even lost sales. 

How to Find Out if You are Dealing with the Decision Maker

One great tip for identifying whether or not you are dealing with the decision maker is to ask this important question early on in the discussion: How have you handled other similar purchasing situations? You are then listening for a sense of confidence on the part of the customer that they have done this before. They may not come right out and tell you if they are a decision maker, but you can generally get a good idea by paying attention to things like tone, body language, and verbal cues. 

Another way to identify the decision maker is to research the organizational hierarchy of the company. For instance, when dealing with smaller businesses, the decision maker is usually the owner, founder, or CEO. However, when dealing with larger businesses, you may have to put in more work to find out who has the final say. Oftentimes, you may have to speak with a junior staff member or gatekeeper, such as an assistant or secretary, before interacting with a senior employee. You can do some research to find out how the company is organized and you can also speak to contacts within your network that can help you identify the final decision maker. 

What to Do if You Are Not Dealing with the Decision Maker

Be mindful that many businesses have a buying process and it’s unlikely you are directly connected with the final decision maker right away. This doesn’t mean you have to demand to speak with the decision maker nor does it mean you have to terminate the discussion. Rather, be careful with what information you share and do not give any indication that you would be willing to negotiate. Use your time with the “non-decision maker” to learn helpful insights that can assist you when you do finally deal with the decision maker.  

Your objective in any negotiation is to never allow yourself to negotiate with anyone who is not the final decision maker. You can politely inform the non-decision maker that you would love to continue the conversation with someone who has the authority to approve the deal. This saves you from having to negotiate twice. Your confidence and persistence in reaching the final decision maker could ultimately be a key factor in being able to close the deal.

Negotiating is an important part of doing business and naturally we want to get the best deal for ourselves. Therefore, it is necessary to learn as much as you can about a deal before signing on the dotted line. Whether you are dealing with a lengthy purchase or lease agreement to nondisclosure or employment agreements, you need to review and understand the dynamics of the deal before signing the contract. This will help you eliminate risk, avoid confusion, and prevent yourself from making a bad deal. These tips will help guide you in recognizing and understanding the dynamics of a negotiation. 

Ask for Things in Writing

It is always important to have a negotiated deal presented in writing. This allows you to read over and fully understand each aspect of the deal. Unlike a verbal agreement, a written contract helps to eliminate misunderstandings and confusion by spelling things out more clearly. It also makes it easier to take your time considering the deal because you have all of the information presented to you directly. 

Read and Understand Each Provision

Be sure to always read and understand each agreement and or provision and make sure it accurately reflects the negotiated agreement. You never want to sign a contract or agree to a deal without fully understanding every aspect of the negotiation. If there is anything that you don’t understand, this would be the time to ask for clarification. 

Consider You Goals

Before agreeing to a negotiation, consider how well the deal meets your goals. Are you getting most of what you asked for? Are you comfortable with any concessions that were made? Do you feel confident that this is the best deal for you? Any skilled negotiator will enter into a negotiation with clear goals in mind so you definitely want to consider how well this deal aligns with those goals. 

Be Objective

Don’t allow yourself to get carried along because you are anxious to close the deal. Likewise, don’t be held back by pessimism. Make a realistic and objective assessment of the deal before making any final decisions. It is important to think through every aspect of the deal and consider both the short term and long term effects before signing on the dotted line.

As with all good negotiation preparation, you should always have a Plan B before walking into a meeting. It is common knowledge that you should plan in advance of any negotiations in order to get the result you want. Do you know the single most effective way to remove the other party’s power? It may surprise you that the answer is having a plan B, otherwise known as a BATNA- Best Alternative to a Negotiated Agreement. Having a good BATNA increases your negotiating power. If you know you have a good alternative, you won’t feel pressured to concede as much, because you won’t care as much if you get the deal. Likewise, it allows you to push the other side harder, because you won’t feel compelled to accept their demands. A BATNA gives you something to fall back on if the negotiations prove unsuccessful. 

Having an alternative, or plan B up your sleeve, can also have a positive impact on your performance during a negotiation. It gives you the confidence to push a little harder because it eliminates the feeling of desperation. For example, imagine you are in dire need of a job and you have just been offered one. Chances are, you aren’t going to want to jeopardize the job by negotiating for more pay and you will likely feel compelled to accept the job as is. Now imagine you have two separate but equally attractive offers on the table. Knowing you have an alternative option gives you the courage and power to ask for a higher salary. 

How to Determine Your BATNA

It may not always be easy to identify your best alternative but the following steps can help clarify the process: 

1. Make a list of all possible alternatives you would like to consider if the negotiations do not go as planned. 
2. Evaluate these alternatives based on value.
3. Select the alternatives that would bring the highest value.
4. After you have determined your BATNA, calculate the lowest value deal you would be willing to accept. 

A strong BATNA can help you walk away from any offer that is less valuable to you. It can also help you to make an informed decision about whether or not to accept an offer. 

BATNA Tips

You want to prepare as much as possible before entering into negotiations. You will need to consider all possible options and develop a strong BATNA in advance. You should expect that the other party will do the same, so be prepared to remain strong in your stance. It is also important to prepare multiple BATNA’s. In fact, the more BATNA’s you have, the more cards you have to play at the negotiating table. Finally, remember that successful negotiators do not allow themselves to get too invested in a successful outcome. A skilled negotiator knows there are bound to be times when you simply need to walk away. 

A strong BATNA acts as a backup plan in case all else fails at the negotiating table. It also improves the likelihood that some kind of agreement will be reached.

Negotiations can be fraught with emotion. After all, both parties want to get what they want out of the deal while still walking away with a good relationship intact. Believe it or not, that kind of outcome is possible. So, how exactly do you drive a hard bargain while also remaining polite and well-mannered? How do you advocate for what you want without offending the other party? The answer is simply to negotiate with confidence while also remaining a nice person. Most people think that negotiation only involves hardball tactics and heated debate. However, there are plenty of ways to negotiate with respect. Here are a few tips for staying professional and well-mannered while negotiating to get what you want. 

Establish a Rapport

You never want to walk into a negotiation and immediately start talking business. Instead, you want to spend a little time making small talk before the negotiation begins in order to build a relationship with the other party. It can be personal such as talking about sports or a favorite hobby you might have in common. It can also be professional, discussing your experience at the company and asking about theirs. Ultimately, people who engage in small talk before a negotiation are more likely to reach an agreement. 

Be Firm but Respectful

It’s perfectly acceptable to be firm when speaking about your subject and you can do without coming across as rude. Demonstrate your knowledge on the topic and speak with confidence, without belittling or insulting the other party’s position. Keep your argument focused solely on you and back up your argument with facts and logic. This will help you to come across as an expert in your field rather than rude and arrogant.

Ask Questions and Listen

Great negotiators understand that listening is even more powerful than speaking. They ask careful questions that allow them to better understand the other side’s interests. They avoid rhetoric  and only ask questions that serve a purpose. They also wait for the answers and listen attentively with genuine interest rather than arguing their own perspective. 

Keep Emotion to a Minimum

It’s easy for things to get heated during a negotiation when two parties do not agree. However, you should never allow your frustration to get the best of you. Take a deep breath and remember that remaining calm, collected, and professional is your best bet to reach an agreement. No one wants to work with someone who is pushing them too hard to agree or who is showing outward signs of frustration. While showing some emotion is only natural and shows that you are human, be cautious about getting overly emotional and even call for a short break to collect your thoughts and diffuse the situation if needed. No matter how difficult the situation becomes, you should always remain calm and courteous.

Avoid Criticizing, Correcting, or Interrupting

You never want to make threats, criticize others’ opinions, or interrupt the other party when they are speaking. All of these behaviors come across as rude, selfing, and unprofessional. It can be unpleasant to be on the receiving end of these behaviors so it’s important to remember your manners and listen carefully, show empathy, and consider where the other person is coming from before jumping to conclusions. 

Every good negotiator understands the value of compromise. Compromise is a basic negotiation process in which parties will have to give something up in order to reach an agreement. In compromise situations, neither party gets everything they want, but both parties make concessions in order to find a solution that is acceptable to both. Compromise can be a powerful negotiation tool, but you have to know how and when to use it. If you want to use a compromise strategy to your advantage, you need to understand how to do so effectively. 

When to Use a Compromising Negotiation Style

So, how do you know when it’s time to pull out the compromising strategy during negotiations? There are a few different times in which a compromise might be needed in order to reach an agreement:

• When an urgent decision is needed and you need a temporary solution
• When a decision must be made quickly due to lack of time
• When both parties cannot come to an agreement despite lengthy negotiations
• When the other party cannot meet with you because of an unforeseen circumstance or if the decision maker is unable to be present during the negotiation meeting. 
• When you want to ensure a positive, lasting relationship with the other party. 

Strategies for Negotiating a Compromise

Take Your Time

Some negotiations may be time sensitive but that doesn’t mean you have to rush the process to reach an agreement as quickly as possible. Finding a mutually agreeable compromise may take a little longer than either party anticipated, but doing so will lead to more favorable outcomes for everyone involved. 

Prepare in Advance

You should always have concessions prepared in advance just in case the negotiations do not go as planned. It’s safe to assume that most negotiations require a bit of give and take so preparing your concessions in advance will prevent you from giving up too much too soon. Prior to negotiating, gather as much information as possible about the other party including their desires, motivations, fears, and concerns. You need to find out what is most important to them. On that same note, you also need to prioritize your own list of needs and wants. Make a list of which items are of most value to you and which you are most willing to concede. This will help you know which items to compromise on first. 

If You Give, Be Sure to Get Something in Return

An important rule of compromise is you should never give anything up without obtaining something of equal value in return. Compromise is all about ensuring that both sides are satisfied with the outcome. Again, determine what you are willing to concede beforehand and have an idea of what you want in return.

Aim to Minimize Your Losses

Compromise is all about give and take, and that means in order to gain something, you will have to give up something of value. With that in mind, remember to stay focused on your priorities and never give up too much too fast. Find out how you can concede to the other side without giving up your most valuable assets. You want to have a good understanding of which items you are willing to give up so you can mitigate your losses.

Searching for a job, interviewing, and getting the position is a stressful process, so it’s not surprising that many people are nervous about asking for more money once they have an offer in hand. The last thing they want is to jeopardize their offer. However, people who negotiate their salary typically increase their starting salary by an average of $5,000. Moreover, most employers expect salary negotiation after an initial job offer. If you have specialized skills or an impressive resume, you could be leaving money on the table. So, consider these helpful tips for negotiating the salary you deserve. 

Familiarize Yourself with Industry Trends

You need to arm yourself with as much information as possible when it comes to salary negotiations. In order to get a current, realistic view of compensation in your field, do some homework and study trends. Job listing sites such as Glassdoor, PayScale, and LinkedIn are a great resource for finding salary ranges. You can also reach out to recruiters to gather insight about average salaries for similar jobs. In addition to finding out average salaries, you should also pay attention to the most in-demand skills for jobs in your field. 

Know Your Value

In order to get the pay you deserve, you must first know what you’re worth. Make a list of your strengths, accomplishments, skills, specialized training, certifications, experience, and any other details that set you apart from other candidates. Have a keen awareness of how your skills can benefit the company’s bottom line. By tying these strengths to your initial offer, you can build a solid case for a salary increase. 

Ask for More Than You Hope to Get

Once you have a salary range in mind, it can be tempting to ask for something in the middle so you don’t come off too forward. However, you should always ask for something toward the top. First off, you should assume you are worth the higher amount. Second, your employer will almost certainly counter the offer so you want to leave a little wiggle room to come up with a salary you are willing to accept. 

Consider the Entire Compensation Package

Money is certainly a huge incentive, but there is often more to a job than just the pay. Before entering into the negotiation, you need to think about what other benefits you would be willing to accept in lieu of a lower salary. Some of these potential benefits would include:

-stock options

-paid vacation days

-flexible working hours

-tuition reimbursement

-professional development

-signing bonus

-remote work opportunities

-opportunities for promotion

Practice Your Delivery

Once you have all the information needed to negotiate, it’s always a good idea to practice the conversation ahead of time. Consider practicing with a colleague, professional mentor, or other business-savvy person who can tell you what to expect and can help coach you through the process. 

It has been said that “failing to prepare is preparing to fail” and this saying certainly applies to negotiation. When it comes to negotiation, there is no guarantee that you will achieve your desired outcome, but not preparing is a recipe for failure. Although many people think of a negotiation as a win/lose proposition in which two parties must fight for what they want, it is actually more of a communication process where both parties work to achieve a mutual result. This can only be achieved through research and preparation. In fact, over 80% of a negotiation outcome is achieved in the pre-negotiation phase, and preparation is the key. While preparation is commonly overlooked, it is vital to success. Here are a few steps to help you prepare for your next business negotiation.

Identify Your Goals

You can’t negotiate if you don’t know what you want. Your first step in preparing for a negotiation is to identify your goals. Are you seeking a good deal? Are you looking to improve your relationship with the other party? Define your goals and know what it is that you want to achieve. Only then can you develop a plan to get there. 

Gather Information

Not only is it important to understand your own goals, but you also need to learn as much as you can about what is motivating your counterpart. Find out what their goals are and identify their pain points. You also want to familiarize yourself with other competitors that might hinder your ability to negotiate with this other party. Instead of focusing solely on yourself and your own goals, be sure to gather insight into the needs of your counterpart so you can improve your chances of reaching a mutually beneficial agreement. 

Brainstorm Options for Mutual Gain

Novice negotiators make the mistake of viewing a negotiation as a discussion that ends with a winner and a loser. One side will “win” and get what they want while the other party will “lose” and give up more than they wanted. However, this mentality does not lead to long-term relationships and success. Instead, it is far more beneficial to seek a mutually beneficial agreement in which both parties end up as “winners.” Therefore, you need to prepare ahead of time by brainstorming options that would be mutually beneficial. Anticipate where you and the other party might come together and be ready to offer these suggestions. 

Identify Your BATNA

Unfortunately, negotiations don’t always go as planned. That’s why every negotiator should prepare a BATNA in advance. This refers to the Best Alternative to a Negotiated Agreement. Simply put, it’s like a Plan B. This is what you will need if the negotiations fail to produce your desired outcome. You need to know this ahead of time, so you can live with it should it happen. 

Form a Trading Plan

Negotiations are all about give and take and it’s likely that you will have to give a little in order to get what you want. That’s why you should always prioritize your interests ahead of time and think about what concessions you would be willing to make. In other words, what can you trade and what can you get in return? Always start by trading your least valuable concessions and always make sure you receive something in return. 

Prepare Yourself Mentally

The right attitude towards negotiation can mean the difference between success and failure. Get into the right frame of mind beforehand. Negotiations don’t come easily to most people, so leave spontaneity for the pros. Keep in mind that negotiations can also be stressful and emotional so think about what tactics you will employ to avoid frustration and stay focused on your goals. Finally, know your walk-away point. Bluffing works in poker but it’s quite different at the bargaining table. Be sure you have laid the groundwork for your negotiation ahead of time.

There are several strategies and tips for negotiating and every negotiation is different. However, there is one rule that is helpful in any negotiation and it’s simple: Be prepared. According to negotiation expert, Marc Lockley, 70% of negotiation is preparation. If you are underprepared for a negotiation, the process can drag on with tempers flaring and a long series of back and forth arguments. On the other hand, research and preparation can help you identify opportunities, recognize attractive offers, and help you avoid hidden disasters. To improve your chances of success as well as your relationship with the other party, it pays to do your homework first. 

What Information Should You Know About Who You Are Negotiating With?

Doing your homework means researching as much as you can about the other party beforehand. For instance, if you are negotiating with another business, start with some basic fact-finding such as their website and social media feeds. Look up the company to see who the top executives are and what their company vision is like. Determine their pain points and what is motivating them to negotiate with you. This will help you come up with viable solutions. Finally, find out what they are like to do business with so you can better prepare your strategy. 

Understand the Other Side

Before any negotiations begin, you always need to understand the interests and positions of the other side relative to your own interests and positions. This will help you to spend some time in advance seeing things from their perspective. The more you know about what’s going on in the other person’s mind, the better you will be able to reach an agreement that works for both of you. 

Know What They Want

Much of your preparation will revolve around making them feel like they have “won.” That’s because a truly successful negotiation involves a mutually beneficial relationship. Therefore, you need to find out what is most important to your counterpart beforehand. Are they looking for the best price? Are they interested in service levels? Are they most interested in quality? You should be prepared to cover these points during the negotiation and show them that you can provide their must-haves. 

Learn About Your Competition

Do your homework to find out who your competitors are and what they can offer. Then, determine what sets you apart from them. You should be prepared in case your counterpart brings up a competitor during the negotiation. You need to be ready to show how your offer is different from your competitors. 

Prepare a BATNA

Finally, you need to prepare a BATNA or Best Alternative to a Negotiated Agreement. Even when you do your research, negotiations don’t always go as planned so you need to be ready for the unexpected. Prepare a BATNA ahead of time so you have a Plan B in place if needed. Doing this beforehand ensures that you have a deal you can live with and it also prevents you from making important decisions on the spot.

When most people think about a negotiation, they probably imagine a group of people sitting around a table and arguing until one side finally gives in. However, there is a whole lot more to negotiation than talking. In fact, listening is one of the most overlooked, yet important parts of any negotiation. Active listening is one of the most important skills to learn if you want to succeed in negotiations. Skillful listening can calm tensions, break a deadlock, and get you the information you need to reach mutually beneficial agreements. 

What is Active Listening?

Active listening doesn’t mean simply paying attention while someone else is speaking. It requires an active mind as well as a degree of empathy to help you fully understand what the other person is saying. Active listening is actually a more involved process that can be broken down into three different behaviors: paraphrasing, inquiry, and acknowledgement.

Paraphrase: When someone speaks, it is important to listen first and then repeat it back to make sure you fully understand what was said. For example, you might say something like, “ It sounds like you are happy with the price but you need me to reassure you that this price will not change over time.” Paraphrasing allows you to demonstrate an understanding of exactly what the other person is saying. 

Inquire: After listening to the opposing party, be sure to inquire about how you can reach a solution together. For example, “You mentioned that pricing was an issue. Help me understand why you feel this way and what you think would be reasonable.”

Acknowledge: Finally, let the other person know that you hear them and you genuinely care about their concerns. For example, “It sounds like you have some concerns and I would like to help address those concerns.”

Why is Active Listening So Important in Negotiations?

Active listening is an integral part of negotiating. In fact, it is even more important than talking. Negotiations are based on give and take and an exchange of information so active listening plays a key role in ensuring that all parties understand the information clearly. It is only through listening that you gather pertinent information about the other party such as their needs, problems, concerns, and motivations. Therefore, listening is necessary in order to gather all of the information needed to reach a mutually beneficial solution. 

Listening also helps to create a level of trust and respect with the other party. Imagine a car salesman pitching the newest model to you. He may know all of the specifications and features of the vehicle and really know how to talk it up. Now, imagine a different salesman asking you about your needs and why you are looking for a vehicle? Which salesperson are you more likely to work with? Chances are you would prefer the salesperson that asked about your needs. That’s because listening to the needs of others shows a deeper level of understanding, empathy, and genuine concern. You are more likely to trust someone who is putting your needs first rather than someone who is only looking out for themselves. Listening is the key to developing that trust and building a more solid professional relationship.