“It’s learning how to negotiate to keep both sides happy – whether it’s for a multi-million dollar contract or just which show to watch on TV, that determines the quality and enjoyment of our lives.” ~ Leigh Steinberg
My old man was a master haggler; he could strike a deal with darn near anyone for darn near anything. To say I learned a lot about making deals while growing up would be an understatement. From buying a TV at the department store to haggling over a used car in the local classifieds, my dad always ended up with a great deal, and he usually took me along to witness it first hand.
Today, haggling is one of my favorite hobbies, and it has nothing to do with being cheap or trying to “win.” I simply enjoy the exchange between two sharp men that turns a mediocre deal into a great one for both parties.
Depending on where you are in the world, negotiation is either a part of everyday life or an uncomfortable practice that’s consciously avoided whenever possible.
But here’s a truth that many of us, especially those of us living in the Western World, don’t always consider: whether or not you realize it, every interaction you have with another person is a negotiation. From picking a romantic date with your wife to finding an agreeable price for some tchotchke gift with the local thingamajig salesman, we’re navigating a world of back and forth deal-making.
If you accept and embrace that, you can become much better at it, getting what you want from your life and feeling more fulfilled. If you reject it, your other choice is to take what’s given you and hope that it matches what you want. I learned from Dad long ago that the first option comes with better odds.
To become a better haggler and, subsequently, create a better life for you and your family, the first hurdle to get over is breaking down all the myths we’ve come to believe about haggling. Things like:
- Haggling is too argumentative. Only if you’re doing it wrong! Effective haggling doesn’t look or feel anything like an argument, and there’s little or no friction involved. In fact, done just right, it feels like an everyday conversation that you’d have with a friend. Good haggling actually builds respect between two people rather than diminishes it.
- Haggling is for poor people and cheapskates. Ask any wealthy person if they got where they are by taking every deal that came their way at face value. Of course they didn’t! They knew exactly what they wanted and decided how much they were willing to give up to get it. Billionaire CEOs haggle with each other every day over multi-million dollar deals. You only look like a cheapskate when you become petty, not when you work hard to get a great deal on something that’s important to you.
- Haggling is inappropriate. Yes, arguing over the price of a Coke at a 7-11 is probably inappropriate and it definitely makes you look like a cheapskate, but sincerely asking for consideration when you’re pursuing something valuable to you is never inappropriate and no one thinks less of you for doing it.
- Haggling isn’t worth the time or savings. A good negotiation definitely takes time to complete, but it’s almost always worth the outcome. Some of my most successful haggles have resulted in as much as 50% savings on big-ticket items. I don’t usually even bother to negotiate unless I think I can save $100/hour or more for the work.
- I don’t have the aggressive personality it takes to haggle. Good haggling is simply an exchange between two people trying to find a win/win deal. You do not need to be aggressive to do it effectively. In fact, if you’re the domineering type, that’ll often work against you more than it will work for you.
Find Many Paths to Success
“If you come to a negotiation table saying you have the final truth, that you know nothing but the truth and that is final, you will get nothing.” ~ Harri Holkeri
No matter whom you’re crafting a deal with, one of the most fatal negotiation mistakes I’ve learned to avoid the hard way is to get yourself wrapped up in just one possible outcome. If you don’t get it, there’s nowhere else to go. Why limit yourself to such a narrow definition of success?
A great negotiation should be fluid and evolve as you and your partner (notice how I said partner, not adversary) get to know each other’s goals. Setting your sights on only one scenario ruins any chance that your haggle will develop a natural flow that fits both parties.
This is sort of like creating your imaginary perfect girlfriend long before you ever meet someone and comparing any woman you meet to this illusion. One of them is fun to think about but always ends in frustration. The other is the key to happiness, but doesn’t fit the exact mold you’ve created in your mind. You’ll never find the perfect match, woman or otherwise, if you limit yourself to just one set of circumstances.
“It is a bad bargain, where both are losers.” ~ Ancient proverb
I was just a kid in 1994 when the World Series was canceled because the players and owners couldn’t play together nicely.
Owners wanted to institute salary caps to spare themselves from ridiculous bidding wars and players wanted contracts that weren’t subject to renegotiation every season. For months, neither side would consider the other’s argument and the result was hundreds of canceled games and, as I recall, some really pissed off little leaguers.
When the two sides finally came together, they did so begrudgingly and the deal they reached suffered tremendously because of it. The owners ended up losing hundreds of millions of dollars and the players saw an average salary decrease of 5%. A lose/lose deal if I ever saw one.
When you come to the table with as many different options for success as possible, good deals come faster and easier.
Never Speak First
“Let us never negotiate out of fear. But, let us never fear to negotiate.” ~ John F. Kennedy
Just a few days ago, I was hanging out with a friend when he remembered the garage sale drill press in the basement I’d bought a few years ago and never used. We started talking about it and all the great projects I should have known at the time I would never use it on (I spent a few years trying to convince myself I was into woodworking to no avail), when he mentioned that he had just the project he needed it for and offered to buy it.
I was excited at the prospect of getting paid to get rid of something that reminded me of a failed hobby, so I immediately blurted out, “Hey, if you’ve got $20, it’s all yours.” I don’t even remember how much I paid for it, but Paul must have thought it was a pretty good offer because he practically had the money out of his wallet before I could finish the sentence.
Now, between two pals, this is no problem. I was getting rid of a bad memory and Paul was getting a great deal, but it’s a good example of a big negotiation faux pas – never say the first number.
If possible, always defer to the other party when finding the starting number because it gives you a lot of information to work with in determining the best strategy going forward. It’s like having the home team advantage at a baseball game (this’ll be my last baseball reference, I promise). If the first number isn’t close to what you’re looking for, you can immediately decide to either not waste anymore time negotiating or come up with a strategy that draws the deal away from the dollar amount and towards something else valuable to the other party.
This trick I learned from my old man earned me $10,000 a year during my first salary negotiation. Going into it, I’d undervalued myself, but by insisting I couldn’t make the first offer, I ended up negotiating a number much higher than I’d originally expected.
In my example with Paul, I probably left a fair bit of money on the table by making the first move. It was obvious he was ready to pay more if I’d asked for it. No sweat for a friend, but certainly a disappointment otherwise.