The Art of Negotiation: How to negotiate your next contract

Library | 6/28/2019

Making a dealWhether large or small, negotiations are a fact of life and are happening every day. If the prospect of negotiating makes you nervous, you’re not alone. Many of us are hesitant to negotiate, perhaps out of fear of rejection or confrontation. But that mindset is likely costing you money and opportunities. 

Negotiating is a learned skill, and you can (and will) improve with some understanding of the negotiating process. Get ready for your next contract negotiation with this roadmap to understanding the art of the negotiation. 

Consider all perspectives – When we enter into a negotiation, or any discussion, it’s natural to consider our own perspective. That is easy. But a successful negotiator will put themselves in the other person’s shoes to understand their perspective. Ask yourself questions like: 

  • What does your counterpart need from you? 
  • What are their pain points? 
  • How much budget are they working with? 

Don’t think of a negotiation as a favor they are doing for you. This is a two-way street; you’re both getting something out of this. Understanding their position will help you anticipate their moves and identify the best counter offers. 

Come prepared – Don’t walk into an important negotiation without gathering as much prior info as you can. Know the numbers from both sides of the table. If you’re buying a car, try to identify the MSRP, dealer’s cost, recent sale amounts, and depreciation. If you’re negotiating a salary increase, look into company history, comparable industry salaries, training opportunities, etc. Think about your value to the company, whether they are undergoing any specific stresses or boons, ways you can bring more to the table and improve your value to the company. This is a great time to think outside of the box and consider both “hard” and “soft” value adds. 

Don’t be afraid of rejection – It’s not a negotiation if there isn’t some give and take. Hearing the word “no” may be intimidating, but don’t think of it as failure. In a successful negotiation both sides will have some concessions to make and some hard lines they are unwilling to cross. Hitting these hard lines helps clarify the territory and sets you up for a more successful result. 

Aim high – Know your target goal and hard bottom line before you go into a negotiation. Now examine the opposite perspective and build in plenty of buffer for your starting bid. A little bit of back and forth tends to satisfy people more than an easy yes. This comes down to a bit of psychology. Consider this scenario: if you enter a salary negotiation and your first request is quickly accepted, you are probably going to think you could have gotten more. Even if this was your ideal target, you will leave this encounter dissatisfied and wishing you’d started higher. Anticipate this reaction by aiming high and working down to your target. 

Be mentally prepared to withdraw – Desperation undermines your confidence and your negotiating position. No matter how much you need this job, the car, or the house, you must be mentally prepared to walk away. Even the perfect job isn’t worth it if you won’t make enough to cover your expenses. Keep your bottom line in mind throughout the process and be prepared to withdraw if your needs won’t be met. Chances are it won’t come to that. Good negotiators can sense the confidence that comes from knowing you always have other options, and you can choose to walk away before you take a bad deal. 

Negotiating is an art, not a science. The more you are able to practice your negotiating skills, the more successful you will become. Don’t let fear stop you from getting what you really want out of your next contract. 

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