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INTRODUCTION

Everyone needs to negotiate

- It's easy to think of negotiating as a skill that's a luxury that may be purchasing people
need to have, but the rest of us don't really need to get involved with. But actually, it's there
all the time. Whenever you interact with anyone, whether you're buying or selling or
working in a team, whenever there's money involved or time, or when there are features or
extras to be agreed. And you can save thousands of pounds or dollars on cars and houses. If
you learn the simple rules of negotiating. As well as making your organization more
profitable. So I'm Chris Croft. And in this course, I'm going to take you through all the rules
of negotiating. It's a process and you can learn it. I've spent years negotiating with bosses,
people who worked for me, the unions, customers and suppliers. So from lots of reading,
combined with trying out what works and what doesn't, I've got a nice, simple process that
you can follow that will maximize your chances in any type of negotiation, home or work,
large or small buying are selling. And we'll look at all the tactics that you can use and also
that you need to look out for when other people use them on you. So much to tell you, so
let's get started.

DECIDE TO NEGOCIATE

Identify your reasons for avoiding negotiation

- I think there are three reasons why we avoid negotiating, and the first is cultural. In
countries like the UK and the USA, it's just not done, except in a few permitted areas like
secondhand cars and houses. But in most areas of life, it's a bit of a shock if the customer
says, "Can you reduce that price at all?" We don't even think of negotiating, and we assume
it's rude. But I'm going to show you that it's so easy and so valuable that it's worth
overcoming this resistance and that you can negotiate without upsetting the other person.
The second reason we avoid it is that it appears to be unstructured. You don't know what
the other person will do. There don't seem to be any rules. What if it all goes horribly
wrong? What if you end up not getting the thing you wanted to buy or you don't get the
deal that you wanted to make? Again, I'm going to show you that there is a process you can
follow, and that the process will ensure that you can't fail to get the deal. The third reason is
embarrassment, fear of looking cheap or greedy, especially if we have to cave in and say,
"Oh, all right then. I'll pay the full price after all." What if they laugh at us? What if they think
we're a bad person after we've gone? I think wanting to be liked is the biggest barrier to
negotiating, so I'll be looking at this in detail later. But suffice to say, you can negotiate and
still be liked. In fact, maybe they'll think worse of you if you don't negotiate. Mm, we'll come
back to that a bit later. All of these fears are unfounded. In fact, every reason for not

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negotiating is false. Every excuse, every story we tell ourselves, things like, "I don't have
enough time" or "I can afford it, so I don't need to negotiate," "It's already reduced," "The
salesperson seems like a nice person," they're all false reasons. However nice the
salesperson is, do you really want to give them a chunk of your money? Just because you
can afford it, do you want to pay more for it than you need to? I mean, you can give money
to the other person because you like them, but I would expect that you've got charities or
relatives that you'd rather give that money to. And just on the subject of not having time,
negotiating is important enough to be worth making the time for and worth overcoming
your fears to do. If you get $100 off a sofa and it takes you 10 minutes, that's $600 an hour
that you've saved or in a way earned, which seems like a pretty good hourly rate to me. And
if you get $1,000 off a car in 10 minutes, that's $6,000 an hour. So even if the process is a bit
unpleasant, which doesn't have to be the case, but even if it was, I think it would be worth it
for $6,000 an hour, don't you? So what do you think is your biggest barrier to negotiating?
What do you tell yourself as an excuse, and what's your real reason for not doing it? And do
you think it's a good enough reason to lose you a load of money? And how are you going to
overcome it?

Overcome embarrassment and pride to negotiate

- I'm pretty sure that the biggest reason we avoid negotiating is embarrassment. Both at
work and at home, we worry about what the other person might think. So for example, my
dad always pays the full price for his cars. He doesn't want to get drawn into some squalid
haggle with the car salesman, who's probably pretty good at haggling. And my dad has to
have that car, it's the one he wants, and he can afford it, so he just pays the full price. I
suppose his biggest dread is that even though he's trying to get money off, after all that
effort, he'll end up having to pay the full price. This is what I call crumbling. So his fear is that
if he says, "That price is too high, can you reduce it at all?" And the sales person says, "Well,
if Sir can't afford the price, Sir can always have the cheaper model, or go down the road to
the company that sells cheaper cars." Then my dad will have to say, "Ugh, okay then, I'll pay
it." So in this scenario imagined by my dad, he ends up being completely defeated and
humiliated. And because he worries about this happening, the result is that he doesn't even
try to negotiate, but let's just analyze that for a moment. First, if he's defeated half the time
that he tries negotiating and he gets money off the other half, then that's worth it, isn't it?
Once you get over the barrier of pride, you've got nothing else to lose from just having a go.
The worst you'll have to do is say, "Okay then," and pay the full price half of the time, and
the other half, you get a load of money off. But what about the fact that it's humiliating to
lose? The way to get over your pride is to detach yourself from the process and think of it as
only a game. You're just going to meet with that customer, or go into that car dealership
and play a game with the salesperson. Offer him or her a lower price and just see what
happens. Maybe you'll get money off, maybe you won't, but either way, it's just a game.
Even at work, where the sums of money could be very large, you're still playing a kind of
chess game for your organization. It's not personal to you. Your objective is to play the best

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moves and see what moves they play and how you can respond to those. But you are
detached, it's not personal to you. And maybe the time and hassle involved is worth it for
the money you save. Going back to my dad's car, he could easily get $1,000 off and it would
only take him probably 15 minutes. So that's an earning rate of $4,000 per hour, which as
we've already seen, is a pretty amazing hourly rate. I don't think there's any better way you
could use your time. Most of us, even after a year of hard work, don't have $4,000 saved up,
and my dad can do it in 15 minutes. I reckon that's worth a bit of embarrassment.

Negotiate without lying

- The whole idea of negotiating is based on a sort of lie. You're claiming I can't afford it,
when actually you can. You want it cheaper, but you're quite prepared to pay the asking
price. Maybe you'd even be delighted to get it for the asking price but you're still trying to
get it even cheaper. So where does being economical with the truth end and lying begin?
Well, the good news is that you don't have to lie when you negotiate. In fact, I would not
recommend it. I'd like to explain why lying is a bad idea and then I'll cover some alternatives
to telling an outright lie. My first rule is never lie about numbers or facts because first you
never know how much they know. If you say, well, I have to charge a hundred dollars for it
because the materials alone cost me 80. They might know that you can get them for only
20. You don't know how much they know. Second, afterwards they may find out that you
lied. Once you're working with them, they may get to see the figures, or they might just get
access to those numbers at some point for some reason and then they'll never trust you
again. Probably never want to do business with you again. Third, your body language will
give you away if you lie. It's incredibly hard to hide the signs of lying and the human eye and
brain are very good at picking up these signs. So you're unlikely to fool the other person.
They won't be certain but they'll just have an unease feeling about you which is enough to
ruin a deal. The signs of lying, which you'll have to avoid and which you might want to look
for in other people are touching your nose or your face, avoiding eye contact, or too much
eye contact, going red, sweating, shuffling around. There are so many signs and it's pretty
much impossible to avoid them all. The final reason for not lying, is that it reduces your
ability to maneuver. We've probably all experienced this as children when you get more and
more tangled up in your story. For example, if you justify a price by falsely claiming that a
particular part of your product or service is very expensive to produce, say color photos in a
printed brochure, there's a risk, that the customer will say, "okay then, I'll have it without
the color photos," and then you'll have to reduce your price by a horribly large amount. So
don't lie about numbers, but there's a difference between not lying and telling the other
person the truth or telling them everything. It's fine, in fact it's essential to learn how to be
good at being evasive. Especially if they position themselves as your friend or joint problem
solving partner, let's share all our cost information and work out the best deal for both of
us, be very careful. So, five alternatives to lying. Five quick ways to be politely evasive. First
is to use feelings. I wouldn't be happy with that. I just don't feel happy with paying that
much.

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Stop your fear of losing the deal

- Most people would say that if you negotiate there is a risk you'll lose the deal. But actually
that's wrong. There is no way that negotiating can cause you to lose the deal if you do it
right. This is really important to understand. Because once you realize that you have nothing
to lose, you'll either get an improved deal or just make no progress and end up with the
starting offer. Then why wouldn't you give negotiating a go? So let's analyze this idea of
losing the deal. There are only two ways you can lose it. And neither is going to happen.
Either you walk away or they walk away. If we look at the first one, losing it by you walking
away. The answer is don't walk away. Unless you just pretend to walk away in the hope that
they'll come running after you. Or they'll phone you the next day. Which does sometimes
happen. The key with walking away, is to be prepared to come back if you have to. Which I
call crumbling. If they don't come running after you, or if they don't call you. Then you just
have to swallow your pride and call them or walk back into the shop saying, great news I've
just been talking to my boss or my bank and I can afford your price. You can even say, oh go
on then, you're too good at negotiating for me. Or, oh go on then, I mad to be doing this,
but what the hell I'll pay it. They will always be delighted to agree on the price they
originally wanted. And you've still got your deal. You didn't make any progress this time, but
you didn't lose anything either. Just a bit of time and pride. And if negotiating works in half
the situations where you try it, then that's still a result. If you don't ask you don't get. So you
have to try. If you ask and a get no, then you're only back where you would have been
anyway not even asking. And quite often you'll get an unexpected yes. So what about the
second way that you might lose the deal. Losing it by them walking away or throwing you
out. Well, this isn't going to happen if you always make sure that you're nice. The way to do
this is to blame it on yourself, rather than saying your price is a rip off, which might upset
them. It's much better to say, I think the price is probably fine but it's more than I can
afford. You're not attacking them at all. It's all your fault that you're so poor or so mean. Or,
you just haven't dedicated enough budget to be able to afford it. Or your boss will be really
unhappy if you spend that much. Or maybe your customers won't buy the product if you
pay this much for one of the components. It'll put the whole cost up too much. As long as
it's not the other person's fault, you won't upset them. If you do push a bit too far and they
say, right well in that case, forget it. And they look as if they're going to walk away, you can
reel them back in if necessary

Instead of yes or no, negotiate

- There's a common situation where you might not realize that negotiation is an option. In
fact, it's a great option. And that's where you find yourself wanting to say either yes or no.
Instead of a reluctant yes or a definite no, there's always the third option to negotiate and
negotiating is better than a reluctant yes and can also be much better than saying a simple
no. For example, suppose I'm being asked to do a training course I don't want to do. Maybe

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it's somewhere a long way away or somewhere that's not very nice to go to. Instead of yes,
all right, then I'll do it, or no, I'm not doing it, there's a price that will make it worth doing,
even if it's a very high price. So that's what I should do. I should say, I can do it and this is the
price. And then it's up to them to say either yes okay, which is great, or no, which is fine. I
didn't really want to do it anyway. And now it's them, not me, that are saying no. Similarly,
you might have difficult customers or difficult jobs that you don't charge enough for or
maybe a supplier who you don't particularly want to use but maybe if their price was
sufficiently low, you might give them a chance. It's the same with time rather than money.
Suppose I'm being asked by my wife to visit her parents for the weekend. And let's say,
purely hypothetically, that I don't really want to go. I can't really say no, that would be very
horrible of me. And I don't want to just say yes, but how about negotiating to go in the
afternoon rather than the morning and saying that I need to do a bit of shopping while I'm
there and that I'll come if I can take my laptop. There's a bit of work I need to do at the
weekend. This hugely reduces my ILCT, my in-laws contact time and I get a whole lot of
things done, so it makes it quite good for me. And it's still much better for my wife than if I
had just said no or perhaps had just said yes and then being miserable and bored for the
whole weekend. So it's always an option to negotiate. And if you can find yourself wanting
to say no or not really wanting to say yes, then your negotiating light should switch on. Can
you think of a situation either at work or at home, either involving money or time where
you tend to reluctantly say yes or tend to just say no where you might be able to try
negotiating instead?

Spot seven signs that you should negotiate

- There are seven situations or signs that you should think about negotiating. Seven things
that switch on my negotiating light. The first one is when they make an offer really easily
right at the start. It's 10% off today or how about if I gave you 10% off. This shows that
they're keen to sell it. And that they're up for negotiating. So you should definitely not just
take that 10% offer. But you should say, how about 20. Better wording might be, if it was
20% off then I'd buy it. But, the snag with that is that you'll probably get the 20% off and
you'll certainly not get it any cheaper than that. So it would be even better to say, it's still a
bit much for me. Can you reduce it any more than that? Because then who knows how low
they'll go. The second one is when it's a sale. So the stock is already reduced. This is the
same as them making an offer at the start. So, you should immediately consider negotiating
over the prices of the things in the sale. Just because they're reduced, that's not a reason to
pay the price. In fact, it's a reason not to pay the price. Because clearly they're keen to sell
the stuff. My third trigger for negotiating is if the manager is clearly visible. Because they
will have the authority to negotiate. In any shop you should consider asking for the
manager. Since the staff may well not be empowered. But if the manager is right there
selling to you, then that's an invitation to haggle. Next is when you're not a hundred percent
keen. Maybe the product or service isn't perfect. Or you aren't really ready yet, but the
situation has come up. So rather than just walk away, at least make them a bit of an

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outrageous offer. You never know. And what have you got to lose? You weren't going to buy
it anyway. Fifth, is when you have other options. Just one really good alternative makes you
much stronger. Because it doesn't matter, if they don't want to negotiate, then fine. You can
go to your other option. Certainly with this alternative option, you might as well try
negotiating with everyone else. Sixth, is when you're the seller and the customer asks for an
extra. Maybe they want delivery on a Sunday or they want special packaging. This should
switch on your negotiating light. You could give it to them for free as really excellent
customer service.

Set your limit and stick to it

Why do some people avoid negotiating?

*because of the fear of looking cheap or greedy

because of the fear of paying a higher price than expected

because of the fear of being taken advantage of

because of the fear of conflict

The way to get over your pride is to detach yourself from the process, and think of it as a
_____.

way of life

chore

scheme

*game

If you are asked about a price or your budget up front, what is a good response?

What is your budget?

*It depends.

How much can you pay?

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I'm not sure.

If you negotiate and the other person says no, what is the result?

*You will end up back where you would have been if you had not even asked.

You will end up paying a higher amount than your original price.

You will lose the deal, and ruin any future chance of negotiating with that person.

You will have to pay the original price, plus a lot extra to get the person back.

You are asked to do a job that you are capable of doing, but you really do not need or want
this job. What is an optimal way to respond?

Say, "I do not want to do it," and be honest about how you feel so you are not wasting
anyone's time.

Say, "Yes, all right then, I will do it," because you do not want to tell the person no.

Say, "No, unless you meet all of my demands," so you walk away making more money.

*Say, "I can do it," but be clear about the price you will do it for.

If the manager is clearly visible, should you negotiate?

No; this will cause the manager much embarrassment, and he or she will not negotiate due
to pride.

No; just like the staff, the manager most likely does not have the authority to negotiate.

Yes; usually the manager has the authority to negotiate.

Yes; this gives the manager the opportunity to look good in front of other employees.

If the manager is clearly visible, should you negotiate?

No; this will cause the manager much embarrassment, and he or she will not negotiate due
to pride.

No; just like the staff, the manager most likely does not have the authority to negotiate.

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*Yes; usually the manager has the authority to negotiate.

Yes; this gives the manager the opportunity to look good in front of other employees.

Set your limit and stick to it

- When you're preparing to negotiate, the absolute most important thing you must do is to
set your limit, your walkaway point, and then never go beyond it. This means that if you're
buying, you decide the most you'll pay. And if you're selling, you decide the least you'll
accept. Beyond this point, you'll say no and you'll walk away. The reason why this walkaway
number is so important is that it's the root of all of your strength. Having a walkaway point
gives you something to push back from like your back being against a wall. And if you know
you'll walk away at a certain point, it gives you power because the only power you have in a
negotiation is the power to walk away. Put another way, if you don't have the power to
walk away and if the other person knows it, then you have no power at all. Most people are
fine with the bit about setting a limit, but they struggle with the second part which is about
sticking to it. On training courses, I play a little game where I make everyone promise that
they'll never go beyond their limit. And then I get someone to tell me how much they would
pay for their dream holiday. Let's say they would pay $5,000. And then I say that when you
inquire, you discover that it's $7,000, but you negotiate, and the holiday seller eventually
comes right down to 5,010. Would you go over your limit by just $10 and take your dream
holiday which is perfect for you and a bargain? The person on the training course always
does. And everyone else all agrees that they would too. But I wouldn't. I would turn that
holiday down. If they refuse to come down that last $10, I would walk away. I'd rather sit at
home in the rain than go over my limit. Similarly, if my lowest price for running a training
course was $5,000 and the customer could only afford to pay me 4,990, then I'd walk away
from the deal. I'd rather sit at home and earn nothing than go below my limit by $10. Why?
Am I mad? Well, there are two reasons. The logical one and the emotional one, which is the
real one. The logical reason is why would you buy something for more than it's worth to
you? Or why would you sell something for less than it's worth to you? You're making a loss
on the deal. I know in my example it seemed very petty to walk away from the holiday when
they've come down to within $10 of my limit, but it's still more than my limit. Do you think a
person should pay more for something than it's worth to them? But don't worry about that
because here's the real reason. The reason you must never, never, never go beyond your
limit is that it's a promise to yourself. If you ever go your beyond limit, what you're really
saying to yourself is that when you set a limit, you don't really mean it. You'll probably just
go past it because you're weak and spineless. Say after me, I'm weak and spineless. No, you
must never say that. You must say, "When I set a limit, I mean it. I'll never go beyond it."
This does mean that you need to set your limit very carefully. Ask yourself, am I really
prepared to walk away at this point? Would I actually pay a bit more if I have to? And once
you've got the number correct in your mind, set it and stick to it. I sometimes even write it
on a piece of paper and I have it in my pocket so that I can feel it with my hand so I know I'm
not going to go beyond it. I actually rather like walking away when a negotiation reaches my
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limit because it makes me stronger for next time. It proves to me that I can and will walk
when I reach that point. It's not about the other person at all. I probably won't see them
again. I guess it would be a great signal to send if I was going to see them again though, but
it's all about me and what goes on in my head. If I know I'm prepared to walk at my limit,
then somehow they know it too. So I do need to walk away sometimes in order to maintain
my mental strength and I welcome those moments. Of course, I'm a bit sad not to get that
particular deal, but I know that the next one will be better because of it. I once walked away
from a house I really wanted. They came down a bit, but I still just couldn't quite afford it.
And for a week I was quite sad about it. But then I found a house down the road that was
cheaper and better and I ended up buying it. And every day I would drive past the other one
on my way to work. And every day I thought, "Thank goodness, I didn't go beyond my limit
and pay too much for that place." So it's fine to walk away. There's always another one
down along the road, another house, another customer, another supplier, another job,
another job applicant that's different, but just as good, maybe better. So have the strength
to walk away and hang on for the right one.

Determine your limit vs. your opening offer

- There are two numbers that you need to know before you go into a negotiation, your limit
and your opening offer. The limit is the most important number. And you set this first. And
then there's the opening offer, which is your second most important number. And you set
this second. Let's just explore the difference between these two. First, they are at opposite
ends of the scale. If you're buying your limit is the highest number that you'll go to while
your opening offer is going to be a low number, an optimistic attempt to get a bargain. I'll
come to the details of how to set this later, but you can see that it has to be low. Nobody's
ever going to say that offers a bit high, I'll send it to you cheaper than that if you like. So it
has to be as low as you might get, completely different to your limit, which is the most that
you'll pay. If you're selling it's the same, but the other way around. Your limit is the lowest
that you'll go, probably just above your costs while your opening offer is the most that you
might get in the optimistic hope that your customer is really rich and absolutely loves you or
your product. There's also a subtle difference between the limit and opening offer which is
that your opening offer is externally based. It comes from the market and should be based
on what you can perhaps get away with based on other deals you've seen. While your limit
is internally based. It comes entirely from your opinion, your feeling about how much you
want to buy or sell the item. You decide at what point you'll walk away. And that's got
nothing to do with the market. And it's important to understand this point because
otherwise, if you're not careful, your limit become contaminated by real life. You'll let it get
affected by the market, by the going rate. You'll start saying things like, well the going rate
for Ferrari is a million dollars or the going rate for a Caribbean Cruise is $10,000. Yes, but
that doesn't mean that you should pay that much. You might only value the Ferrari at 20K or
the cruise at three K, and beyond that, you should walk away from it. So your walkaway
point is an internal thing. It comes from within you. And it's got nothing to do with the

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market rate. This means that there are lots of things you can't afford or other lots of things
that you could afford if you wanted them enough. But as it is, the price is set higher than the
amount that you want them. I can't afford the Ferrari. So that's an easy decision. But I could
afford the cruise but I don't want it enough to pay the 10K for it. So I haven't been on one
and I'm fine with that. I decide what the cruise is worth to me, not the market. By the way,
where does the going rate come from? The answer is that the going rate is whatever, a few
people will pay. Just the people who really want it. If there are a thousand places on the
boat, then the going rate is whatever the thousand keenest cruise people will pay. And the
whole rest of the world, including me, aren't prepared to pay it because we have our own
personal limits. And that's fine. So your walkaway point is internal and it's best to set it even
before you even look at the asking price. Think about what you'd be prepared to pay for
that house or holiday or car before you find out the price. And then stick to it when you find
out the price and get either the good or the bad news, that you can either easily afford it or
probably can't. But either way, you're going to try and negotiate it down. Then your second
number two plan is your opening offer which is based on the market price. It needs to be
lower than the going rate if you're buying and higher, if you're selling. Otherwise, you'll
never get a good deal. If you open too high when you're buying, they'll just say great, I'll sell
it for that. And then you've just paid over the odds. So you do need to do some research
before you set your opening offer. How much might some sellers come down to? Similarly,
if you're selling, say a house, you do need to know how much some people might pay. And
price it for them at least to start with. So for the negotiation that you have in mind, what's
your walkaway point based on your internal feelings? And what's your opening offer based
on the amount that you might get from the range that you know is out there in the market?

Prepare your tradables

- [Presenter] An important part of preparation that often gets forgotten is to think about
your tradables. These are all the extras all the things other than the price. So they can be
things like how long you have to wait, packaging, payment terms, other services that you
can offer or that you might want to buy from them. Does the car have a sunroof and the
extra powerful music system, does the gardener take away the clippings. You get the idea.
Some of these things might have more value than any changes you can get in the price so
they can make a big difference to how good the deal is overall. And the great thing about
tradables is that they make it possible for both sides to win. If there's something that you
can easily offer for example extra information, knowledge and help or a recommendation,
this could be something extremely valuable to them. And you might exchange this for
something that you really want, that's easy for them to give you. And something like
ordering a year's worth all upfront might be better for both the buyer and the seller or
maybe trying a new product might also be great for both parties. The thing is that
everything except money has a different value to both parties and that's how trades
become possible. So it's tradables that make it possible to get a win-win deal. If you're just
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haggling over price then everything you gain they lose, everything they gain you lose. You'll
never both win if it's only price. So it's a great idea to prepare a big list of tradables in
advance. You don't want to be improvising on the fly and then you can have them ready to
play like a pack of cards exchanging either a small one or a large one when you need to. And
so when you're buying and you agree to pay a bit more than your opening offer, you either
ask for some more tradables or you reduce the tradables that you're offering them. So
tradables make it possible to move. And in fact, there are five advantages of planning and
using tradables during the negotiating process. Number one is that you make sure you get
the tradables you want. How annoying it would be to do a deal and then realize that some
detail of the contract that would have been easy to get agreed and which really matters to
you just happen to get forgotten. Maybe something like a good delivery date or good
payment terms or the location of a training course. And these could be more important
than the overall price. Number two is that you potentially get a better price because you
can give them tradables instead of money, things that are valuable to them but easy for you
to give. I'd rather give you a training course worth $1,000 than 1,000 actual dollars because
the training course doesn't cost me that much to give. So if you come down in price by 750
and I give you a day of training and exchange, we both win. Third, is they allow you to move
from your opening position by trading without looking weak. So it's so much better to say I
can come down in price if you give me x rather than, okay, I'll come down a bit which just
invites them to keep pushing. Which takes me to number four. It stops them pushing you
down repeatedly. If you ask for tradables in exchange each time they demand a price
reduction then they won't like conceding those tradables. So after they've given up a few
they'll start to feel more reluctant to push for a further price reduction. And finally, number
five, very importantly, tradables make you look reasonable once the deal is done. Imagine if
you come right down in price with nothing traded what will they be thinking about your
opening price? If you start with a higher offer and come down a great deal, they might think
that you were just trying to rip them off. Instead if you've got a whole lot of tradables back
in exchange for the price reduction, even if the other person is thinking, these are easy to
give I have no idea why he or she seems to value them so much. The main thing is that it
justifies your reduction in price. So I'd like you to make a list now of all the tradables you can
think of for the negotiation that you have in mind. To help you to do this, there are four
questions to ask, what do I want? What do they want? What can I offer? And what could
they offer? Make a big list, maybe compare notes with some colleagues in order to get your
list even bigger. Go ahead, start it right now.

Prepare their weaknesses

- The final thing you need to prepare is really easy and really powerful, and that's to think
about the weaknesses of the other person. Doing this will make you feel much stronger in
the negotiation. And how you feel has a massive effect on how good the deal is that you
end up getting. Imagine if you could believe somehow that you had all the time in the world,
11
or that you had lots of other customers queuing up for your service, you'd be stronger and
get a better deal, wouldn't you? And it may sound a little harsh, but the best way to make
yourself feel stronger is to focus on the weaknesses of the other person. Usually, we focus
on our own weaknesses, rather than the person we're negotiating with. This is because we
are only too aware of our own and we have no idea of what theirs might be. For example, if
you're buying a house, you know that you've looked at loads and can't find any apart from
this one. Maybe your partner's fallen in love with it and you have to have it. Maybe you're
only too painfully aware that you're living with your in-laws and are desperate to move into
this new house, any new house, as soon as you can. All this stuff weighs heavy on you,
weakening you as you go into the negotiation. You might as well just pay the asking price
and get the house. But what you don't know is that the seller has lots of weaknesses, too.
There are probably things wrong with the house. Maybe it's overpriced. Maybe it's been on
the market for months. Maybe there's been almost no interest in it. And the person selling
it is under desperate time pressure to sell it. It's important to be creative here and come up
with as big a list as you can, because A, you'll feel stronger, and B, you're more likely to hit
on one that's correct. So keep going. What other weaknesses might the seller have that
would make them more likely to come down in price? Maybe they've lost their job and can't
afford the mortgage anymore. Maybe they're commuting miles and miles to their new job.
All these things that you can't see that might be happening. Of course, they may not be the
case. They probably aren't all the case anyway, but I bet some of them are. I bet the other
person does have some weaknesses, and speculating about them will make you feel so
much stronger. As you walk up that path towards your dream house, don't be thinking, "I
must get this house at any price," but instead tell yourself, "I bet they're desperate to sell
it." And if you're selling, and at last someone's coming up your path, tell yourself, "I bet
they're desperate to buy my house. They'll probably try to get me down in price, but I bet
they're prepared to pay the full amount if they have to." How much stronger does that
make you feel? So I do this for my customers. If I get asked to speak at a conference, let's
say, I immediately push out the weak thoughts, "I haven't got any work, I'd really like to do
this conference, it could lead to lots of other work," by forcing myself to think, "I bet they're
under time pressure to find someone, I bet they really want me, I bet they can't find anyone
else, I bet they have a huge budget." So now I feel much stronger. So for your negotiation,
what weaknesses and fears might the other party have? Can you make a great, big list of
them and then look at this list just before you go into the negotiation? It'll make you feel
much stronger.

Don't open first

Where does the going rate come from?

from an analytical-based algorithm that is tried-and-true

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from whatever the majority of people will pay

from an even split of people who will and will not pay

*from whatever a few people will pay

How do trades become possible?

because it justifies your reduction in price to make the deal work

because you start off with a great offer, and then come down on the deal

because it eases tensions between parties, and allows for a win-win negotiation

*because everything except money has a different value to both parties

The best way to make yourself feel stronger is to focus on _____.

the strengths you possess

the strengths the other person possesses

the weaknesses you possess

*the weaknesses the other person possesses

Why is the walkaway number so important?

*It is the root of all your strength.

It protects your pride and ego.

It shows that you are a nice and reasonable person.

It shows that you mean business.

Don't open first

- When you first go to see someone to negotiate there's a period called the preamble which
is where you're kind of talking around the subject before either person makes an opening
offer, how is business, have you had the car loan? That kind of thing. There's no need to
rush through this phase. In fact, ideally you want to wait until they decide that the preamble
is over and make their opening offer. So avoid making your opening offer first and

13
encourage them to open. Just ask lots of questions and listen, because this is where you'll
get information on their weaknesses. Maybe they'll tell you that they've looked at lots of
houses and yours is the only one they like. In which case you think aha but you don't say it.
And maybe they're the seller and they tell you that they're emigrating to Australia next
week, aha. In some situations you have to open first. If you're selling something in a shop,
for example or putting a house on the market, but if you possibly can avoid opening first,
then you should. It's extremely beneficial to avoid opening for three reasons. Number one is
that if they open first it might be good news. You never know. They might quote you a really
cheap price if they're selling and if they're buying they might say how much they're planning
to spend and it might be a nice large amount perhaps more than you were planning to ask
for. Number two is that if you open first you might put your foot in it. If you're selling the
price you quote might be stupidly low. And if you're buying and you tell them how much
you want to pay, it might be higher than they were expecting. So they'll immediately put
their asking price up. There's always this risk because you just don't know their situation.
They may have a completely different view of the value of what you're offering or of what
they're offering than you do. So play safe and let them open first. And the third reason is
that you learn from their opening offer whether it's good or bad, it's key information and
you can then change your position particularly if say you're selling and they mentioned a
bigger budget than you expected then up goes your price. And if you're buying and they
mentioned a cheaper price than you expected then down comes the amount that you might
get it for. Of course the opening offer might be bad news but then it's just game on as usual.
And if you get great news, maybe 20% of the time then getting them to open first is
definitely worth doing. But what if they ask you to open first, what do you do? The answer is
to chuck it back to them at least once. I'll show you how this might go both for when you're
buying and when you're selling. Here's a short scene of me selling a training course and
trying to avoid opening first on price. - Chris, do you think it would be possible for you to
create 100% brand new course specifically designed for our company? - Yeah, I could do
that. It would be tricky, but I could do it, yes. - Great, how much do you think that would
cost? - Well, it would depend a lot on what you want to, what level of tailoring and things.
Do you have a budget in mind for that? - Not really, I was just hoping we could start with
you and find out exactly how much you would need. - Okay. Yeah, it's difficult to predict.
Have you done similar courses to this in the past? What did they cost? - The previous ones
were a little bit different so I'm not exactly sure if we could compare them. - Okay. Just out
of interest, those previous ones, was there a kind of range from the lowest to the highest
cost, what did they come in at roughly - Chris, I'm not exactly sure if this is the way we
should approach it. I'd rather find out from you exactly how many hours you think you
would need to design this and therefore get a cost from that. You think you can do that for
me? - Yep, I could certainly do that. So this would be the price As you see I didn't succeed
that time, but it was worth a try because sometimes it can work really well. I had a
customer once who was let down by their existing training provider at the last minute and
they were asking me for a price to help them out at short notice. And just before I quoted
them a price increased a little bit because it was last minute and quite difficult. I remember
this rule about not opening first. So I asked them how much the other person had been

14
charging and they told me and it was far more than I was going to ask for. So I just said,
"Well, I suppose I could do it for that." Trying not to jump up and down shouting yes. So
they were happy and so was I. So do you tend to open first at least sometimes? Could you
try pushing it back to them saying I'm not sure what do you think? Or do you have a budget
in mind? Make sure you remember to try it when you next negotiate.

Calculate your opening offer

- So maybe they've put an opening offer on the table, or maybe they haven't. But now it's
your turn to make an opening offer. What should that number be? The simple rule is that
whether you're buying or selling, your opening offer should be beyond your best hope. If
you're buying, it should be lower than the lowest you think you might get it for. And if
you're selling, it should be higher than the most you might get for it. Let's look at it from the
seller's point of view first. How should they come to their asking price? Their opening offer?
The sellers difficulty is that they don't know how much you're prepared to pay. If you're
prepared to pay a $100 for something, let's say it's some sunglasses or headphones or
something, and you ask a price and the seller says $65. You're delighted. And this means
that they've got their opening offer wrong. They've given away the extra $35 that you would
have paid. The only way they can avoid giving away money that you would've paid is to
open higher than your limit, maybe at $120. And then they have to slowly and reluctantly
come down to the $100 that you're prepared to pay. Of course, they don't know that you're
prepared to pay a $100, because everyone has a different amount that they will pay for
those sunglasses. So, what if they think you'll pay between 75 and $120? What must they
ask for? And the answer is, more than 120, isn't it? Because otherwise, if you are the 120
person, and they open lower than that, they've blown it. Now, you've probably noticed that
I said more than 120, not just 120. And that's because if the other person's prepared to pay
120, and you ask them for a price of 120, you'll probably have to come down a bit. And then
you won't have got the most you could. If they're prepared to pay 120, you do better to
open on 150, and then come down reluctantly to the 120. So they would still be happy. So
you have to open on more than the most you think you might get. And it's the same with
buying. If you think the lowest a house seller might come down to is a reduction from say
500 to 420, then you have to offer them less than 420, maybe 405. They won't like it, but
that's the only way you'll get them down to the 420. But what if there are a range of house
sellers out there, some want 500 and won't budge. Most will come down a bit, let's say to
480. And a few desperate sellers will come down to 420. What must you offer the seller
when you have no idea which type of seller they are? Clearly, it has to be below the 420,
just in case they're the 420 person. But as you can imagine, the 500 and the 480 people
aren't going to be happy. But it's okay, because we're going to be nice and we're going to
blame it on ourselves. We're not going to say, huh, 500 grand for this part of rubbish, you've
got to be kidding. No, no, we're going to be nice, and we're going to say it's a really nice
house, but I'm only a badly paid engineer and I can only afford 405. We only got 250 for our
house when we sold it last week. I'm really sorry, I'm probably out of my depth here really.

15
But is there any chance that you can maybe reduce the price a bit? So extreme opening
offer is vital, because in some cases you'll actually get it or near it. Imagine if you offered
450, and they were thinking I would have taken 420, you've just said goodbye to $30,000
before you've even started. And the other reason why the extreme opening offer is good is
that it rocks their foundations. Suddenly they're thinking, wow, only 405. Gosh, maybe my
house isn't worth 500 after all. That estate agent probably lied to me. Hmm well, I hope I
can get at least 450 for it. Maybe you've just got him down by $50,000 by using that
opening offer. So how are you for opening office? Do you push them to the point where the
other person is likely to be upset? Can you overcome your fear of losing the deal there and
then, and push for an extreme starting point, and then reel them back in from there? Next
time you're buying something, look at the asking price, and then think, what do I expect to
get off this? Maybe it's 10 or 20%. And then, what might I get it for if they're really keen to
sell it? And then, make sure your opening offer is even lower than that.

Watch for the flinch

- An important little thing that happens when opening offers are being made is the flinch.
This is a body language signal. In fact, a collection of body language changes that might
range from what I call the English flinch to what I call the Italian flinch. The English flinch
looks like this. (sighs) That's not going to work. How many things can you remember from
the flinch I did just now. We had five things, the intake of breath, the looking unhappy, the
turning away, maybe crossing your legs away from them or moving away from them if
you're sitting down. The words of disappointment and finally the one that you couldn't see
the putting the pen down, I really liked this one because it's an easy way to signal that it's all
over, there's no point in going on. The Italian flinch looks more like this. What, (grunts) you
got to be joking, agh. So should you do a flinch and what should you do if they do a flinch.
First, should you always do a flinch when the other party first puts their opening offer on
the table? And the answer is definitely yes. I know you may not want to get into play acting
but you must. Even if you're delighted with their offer, maybe you can't believe how low
their price is. You must react and appear unhappy. Otherwise they'll think you're happy and
then it'll be really hard to get them to move. Remember that, even if you're delighted you
still want to them to come down lower if you can. But what about the idea of being a poker
player and not revealing your hand or maybe being the kind of poker player who bluffs or
double bluffs? The answer is that in negotiation, most people aren't as sophisticated as
poker players who pretty much bluff for a living. If you say nothing it's likely that you are
happy with the deal but trying to hide it which is what you should do if you're happy. But is
it possible that you might be unhappy but hiding it? Well, why would anyone not say so if
they're unhappy with the deal. So saying nothing always sends the signal that you're happy
and that's not a signal you want to send. So you must do a flinch as soon as they come out
with our opening offer. Now, what about if they flinch when you make your opening offer
and the answer is fine, you want them to, it means you've opened beyond their acceptable
range rather than inside it which is fine. More of a problem as if they don't flinch that means

16
that they're happy with your opening offer and that you didn't go far enough, oh dear and
it's too late to go back and ask for more. The best you can do now is to not move from
where you are. Don't give any more away. Watching to see if they flinch means that as you
make opening offer, you look them in the eye, you don't mumble it looking down at the
table, it's $1,000. You have to look them in the eye and say, it's $1,000. And then you watch
for their reaction. An example of no flinch would be when you say the price is $1,000 and
they say, Hmm, that's a bit more than I wanted to spend. I don't suppose you can reduce it
at all, could you? Did you see it was all words. There was no body language at all. No
emotions in there. So we don't need to worry about it, we can just say I could Sabrina but I
just can't, I'm afraid. It's easy. If they do flinch then fine, it's just game on. You have to say,
well, maybe we can find a way to get a deal. How about if we looked at the price for this
year and next year combined and then off we go. So the rule is always flinch. And when you
open watch for their flinch, hope there is one. And if there isn't don't move from your
starting position. So what's your flinch like? Do you do it at all? Could you do it? And from
now on, how do you feel about looking for their flinch? Enjoying seeing it rather than
worrying about it and not moving if they don't do a flinch at all.

Don't use round numbers

- A very simple and important rule for opening offers is that they should not be a round
number. What's your first thought when someone quotes you a round number, say a
builder quotes you $500 or a supplier quotes you 20 grand or a customer tells you they have
a maximum budget of 20 grand? You know it's made up, don't you? You know it's just a
number they plucked out of the air. If they want 500,000 for a house, you know it's just
something that they're trying for. It's not based on facts. It can't be because it would be an
amazing coincidence if that was the exact amount that all the calculations came out to. So
it's obvious that for your offer to be credible, you have to use non-round numbers. And this
applies to your opening offer and then all your numbers from then on. Why don't people do
this? I suppose it's because basically they are making numbers up and it's quite hard to
make up numbers that aren't round, but you must do this, practice it, prepare it, and then
you'll be able to do it. So when someone wants 500,000 for their house, don't offer them
450. Offer them 442 or 447 because that sounds as if you've either very accurately valued
their house, in which case you must be right, or you've scraped together every last coin in
your piggy bank and that really is all you've got, in which case they're going to have to come
down to your price, or at least you can only come up by a very small amount. And that's the
other benefit of non-round numbers. As well as sounding more credible, they imply that
you're only going to move by small amounts from there. 450 sounds as if you're going to go
up to 460 and then 470, 480, or even from 450 to 475 and 500. But 447 implies maybe 450,
455, 458, 460 if they're very lucky. Of course, you could go from 450 to 451, but nobody's
expecting that and it'd be kind of odd if you did. The great thing about 447 is that already,
they're expecting that they will have to do most of the moving to come down to meet you
in that area. By the way, I like fours and sevens, 227, 640. Nines are a bit obvious. Ones and

17
twos aren't worth bothering with and they sound a bit petty. No, it's got to be fours and
sevens, I think. But whatever numbers you're happy with, and clearly you don't want to go
too far and put your house on the market for $563,281.24. But instead of 570,000, do
consider 567 or 567,400. So this is a really easy rule to use, especially for written
negotiations. I know someone who adds the date in pence to his quotes. So if it's January
the 17th, he adds 17 pence or in the US it would be 17 cents to his quote, $286.17. It's a bit
of fun, but it also makes the quote more credible and it gets them an average of another 15
cents each time. And also, it means he can see what date he sent out the quote. But more
seriously, I know another guy who always used to quote round numbers and always got
people questioning his prices and negotiating him down by maybe 5%. And now he's
quoting irregular numbers and he never gets anyone questioning the price. So that's
equivalent to a 5% increase in price which had doubled his profit. So have a look at your
prices now. What have you quoted recently? And in your last negotiation, did you use round
numbers or irregular ones? And if you've not done this before, then please do try it. You'll
be amazed at how well it works.

Why would you ask a lot of questions, and encourage the other person to open first?

to get inside information about the company

*to get information on his or her weaknesses

to give you time to think of a good negotiating tactic

to tire the other person out so you get the best deal

If a seller thinks a buyer will pay between $75 and $120 for a pair of sunglasses, which
amount must the seller ask for to avoid losing money?

exactly $75

more than $75

less than $120

*more than $120

When must you do a flinch?

after the other party has finished speaking, and is waiting for your response

*as soon as the other party comes out with an opening offer

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right after the other party flinches

before the other party has a chance to flinch

Why do you need to use precise numbers versus round numbers in your offer?

to make your negotiating figures more profitable

to make your negotiating figures more appealing

*to make your negotiating figures more credible

to make your negotiating figures more fair

TACTICS
Try the vice technique of negotiation

- A tactic that's easy to use if you're buying is the vice. This is where you say, "Well, you'll
have to do better than that," or words to that effect. A variation could be, "It's still too
much for me, I'm afraid." Or, "Can you reduce it a little bit more, please?" Like a vice, you
can keep turning the screw for as long as you can get away with it, especially if they come
down by quite a lot very easily and quickly, then you just have to give it another turn. But be
careful. Don't say if you came down a bit I'd buy it because then you'd have to settle at their
end of the playing field. You'd have paid a figure at the high end of the scale. Your aim is to
get them down as much as possible and then say, "It's still too much. I can only afford X,"
and put down an opening offer down at your end of the scale, the low end, because then
you can move up from there. But what can you do if someone's using the vice on you?
They're saying, "You'll have to reduce your price," and you're thinking, but if I do that, they'll
just keep asking for more and more. The answer is to say by how much exactly? The
keyword is exactly because this forces them to come out with a number. And once they've
done that, once they've put an opening offer on the table, you can then say, "Oh no, I can't
possibly go down to that. I could only come down to X," or even better, "Oh no, I can't
possibly get onto that, but if you gave me why, then I guess I could come down to X." Just
putting some numbers to this, which I think will make it clearer. Suppose you're selling a
service, say it's to fix someone's computer, and you want $300. And they're saying, "You'll
have to do it for less than that. We can't afford that much." It's clear that they're using the
vice. And if you say, "Oh okay, how about 250?" They'll just say, "That's still too much." And
who knows where the vice will end? So quite a good reply will be to say, "Well, if you gave
me cash up front and a recommendation to your group of companies, then I could do it for
285," a small reduction and getting two tradables in exchange. But even better would be to
say, what price do you think is reasonable then? To which they will either open or if they're
canny, they might say, "Well, a lot less than 300, that's for sure," to which you need to

19
answer, "Well, how much less exactly?" Now they pretty much have to say, "Well, we would
expect to pay about 240 for this." And at last, they've opened. It's important to get into
open because they might open it, say 280, which would be good and worth knowing. In fact,
even their open of 240 could have been worse. So we then continue with, "240," with a
flinch, "Oh no, I couldn't possibly do it for that. My materials alone will cost more than that.
I could maybe come down to 285 if you prepared the machine for me in advance," or
whatever tradables you want. So that's the vice, easy to use, mainly for buying, and how to
combat it by asking them to open. Have you used the vice yourself ever? Could you think of
situations where you could use it? And can you think of times when it's been used on you
and how about trying the how much exactly response the next time you encounter it?

Try knocking the product

- The next tactic to look out for is again used mainly by buyers, and it's called knocking the
product. Where you find some kind of flaw in what's being negotiated. You can imagine how
it goes. In the case of someone buying a car, they might say it's a bit rusty or it's not quite
the color I'm ideally looking for, and in a work situation you might say, ideally, we'd use a
bigger or a smaller or a more local company or it's a bit different to what we normally use. I
like this last one because you're not insulting the person. It's more just you. Not the right
color is good too. The color is fine and it's not the vendor's fault in any way, it's just not
quite what you're looking for. If they say, then why did you come to look at it? You could
say, well, I was hoping that seeing it in real life that it might be okay, but to be honest, I'm
still not quite sure. It is pretty bright. The idea is to appear not keen even though you
probably are perfectly happy with it. So what can you do when faced with a buyer saying it's
a bit rusty or it doesn't do everything I need? Well, the classic reply is to say, that's already
reflected in the price or that's why the price is so reasonable. And I must say it does annoy
me when I'm selling a really old car and people complain about wear and tear or a tiny dent.
Well, what do you expect? If it was brand new and immaculate, it will cost 10 times as
much. That's why it's so cheap. So rather than get annoyed, you just calmly say that's why
it's such a bargain. The other thing to tell yourself is that this is almost certainly a tactic.
When they point out the rust or complain about the color, tell yourself that they actually
love the car. They're just trying to find something, and if you hold firm, they will pay the
price you want. Look for clues. Do they keep touching it? Does their body language look
happy? In fact, you can even ask them, What do you think about it apart from that? And if
they say, oh, well, it's great apart from that, then you know you've got them. Stick to your
line that it's reflected in the price. That's why the price is so great, which it is. Do you think
that in your negotiations, you're sometimes too nice? You sometimes show that you like the
product or even say so and that you might benefit from mentioning something about it that
isn't perfect for you, something that's different to your ideal specification? And how about
when this tactic's used on you? Could you benefit from using the line, that's why the price is
so reasonable, and telling yourself that they really do want it so that you can then feel
stronger when you hold the line.

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Try the reluctant buyer technique

- Next is a tactic that does amuse me. I don't know, I just find it funny when I use it or see it
being used. But it is pretty effective, and it's known as reluctant buyer. Also, occasionally, it
can also be reluctant seller. A bit like knocking the product, the idea is that you claim you're
reluctant to buy the product or service. You might claim that you're not quite ready, or that
your boss or husband or wife won't like it if you spend the money; you've already got five
tennis rackets and you really shouldn't be getting another one, or you're not very keen to
face the upheaval of getting a new website, and you quite like your old one. Whatever you
want to come up with to not look keen, your general line is, "I don't really want to buy it,
"but okay then." If the price is really, really enticing, then you might be tempted, even
though you shouldn't. The reluctant seller is a bit more tricky to justify, but I do it with
training courses. I shouldn't really be telling you this. I do it by saying that my diary is
already really full and that I'm trying to give up working on Fridays, or that the travel is
further than I really want to go, or that I've already been on three flights this month, but
okay then, if you'll pay me a really good price, then I'll fit you in. By the way, my diary really
is full. But if it wasn't, I would consider pretending it was. Last year, I even sold my wife's
birthday and our wedding anniversary. And I did tell the client each time that I really
shouldn't be booking that date, but okay, if they paid enough, I'd do it. I think it would be
wrong to always claim it was your wife's birthday every time you sold a course. But if it
happens to be true, then why not use it as a point of leverage? I remember, once, wanting
to buy a pottery castle nightlight for my little daughter. It was about this big and it had lots
of little windows with lights inside. It was really nice. And the guy had about six on sale at a
market. And when I asked the price of one of them, he said, "Oh, no, I don't want to sell that
one. "That's the demonstration one. "It's my favorite one." And I thought, yeah, right, I bet
he says that about whichever one you choose. But it was a clever tactic. And it did mean
that when I finally got him to give me a price for that particular one, I wasn't surprised when
it was pretty high. It nearly worked on me. So that's the reluctant seller. So, what can you do
when faced with a reluctant buyer or seller? Well, the answer is to realize that it's probably
a ploy. Tell yourself, "It's just a tactic." Whether or not it's true, and you'll never know for
sure, just tell yourself that they're probably desperate to buy your product or service.
They're probably desperate to sell you that training course. And don't be influenced by their
apparent lack of interest. Do you use reluctant buyer or seller at all? Could you? And can
you think of any times when it's been used on you? Do you think that, from now on, that
you'll be able to tell yourself, "Ah, he or she's just using reluctant buyer on me? "I know
they're keen, really."

Try hiding the value of tradables

- The next tactic is a step on from the reluctant buyer or seller, and it's about hiding the
value of all tradables. The rule is that if it's something you really want, then claim you don't

21
really want it. And if it's something that you don't really want, then claim that you do really
want it. I know this sounds utterly perverse, but there are good reasons for this, as I'll
explain. First, the things that you do really want, why would you want to claim that you
don't want them? Well, I think the answer is obvious. If the other person discovers that
you're keen to have something, then they'll make you pay for it. So never say, "I must have
the red one," because they'll say, "Ooh, those are really hard to get. If I can get one at all,
you'll have to pay extra and reserve one." Much better to ask what colors they have and
then say, (sighs) "I suppose I could live with a red one. It's not ideal, but if the price was
good." Never say, "I must have it by the end of the week," because they will say, if they've
got any sense, "Ooh, that's not going to be easy. We'll have to work overtime to get you
that. We can do it, but it won't be cheap." So it's much better to say, "When can I have it?"
You never know, they might say, "The day after tomorrow." But in the worst case, if they
say, "Next week," you might have to casually say, "And what would it cost to have it this
week?" Or better would be to say later in the negotiation when you're talking about
something else, "I could agree to a different color if you could deliver it this week rather
than next." So just sneak it in as a tradable rather than making a big thing of it. So ideally
you wouldn't blurt out your main requirement straightaway, but save it up for halfway
through the negotiation. And even then, just mention it casually as a question or as a
tradable. Now, what about the things that you don't really want? You remember I was
saying that you should pretend that you really want those? Why on Earth would you do
that? You might end up actually getting them. The answer to this is that it distracts the
other person from the things you really do want, and also you can reluctantly trade these
away for more money or tradables if you've claimed that you value them. For example, if
you really want quick delivery and you don't care about a well-documented handbook, you
can go on about what's the handbook like, what does it contain, how much is it, how your
boss always insists on a comprehensive one, and then later you can casually ask about
delivery. And then at some point awhile after that, you could say, "Well, I would quite like it
sooner. If you could do it by the end of the week, I could settle for just the ordinary basic
handbook. How about that?" Or alternatively, you could trade the book for money, saying,
"If you make me a really tempting price, I could think about not having the special
handbook." You could see how you could make it into a big tradable when you don't really
value it. And at any point, even right at the end, you could still trade it away with, "That
price is still a bit high. How about if I let the handbook go? How much more could you come
down?" And remember that this inflated handbook that you don't care about might be
really expensive for them to make, so they might well come down a lot in exchange for not
having to make it, but only if you claim it's something you really want. So that's the
principle. If you want it, say you don't. And if you don't really want it, say you do, easy. And
just applying that to your own situation, what's the thing that you want most? And have you
hidden it well enough? And can you think of one or two tradables that you don't really care
about that you could maybe build up and say that you're keen to have and then reluctantly
release at the last minute?

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Try the salami technique

- The next tactic is the salami. This is a slightly more complicated tactic with a bit of an odd
name, but it can work really well if you plan it. And you certainly have to be very careful that
it's not used against you, as it can be very expensive. It's called the salami because people
eat salami in thin slices, and the person using the tactic takes thin slices off the other
person, just asking for small concessions, one after another, and gradually, bit by bit, most
of the value is taken off the other person before they realize. And even if they realize, it's
hard for them to object, because the slices are only small each time. So they look almost
mean not letting the salami slicer have just one more thin slice. Here it is in action. I'm being
well and truly salamied by Lily. Note how she attacks on multiple fronts. And then each
thing I concede, she takes, but then she still wants concessions in the other areas. She
swaps between areas, asking for more and more, and all I do is concede. - Chris, the course
looks great, but there's a few things we'd like to change. First, we'd like to add an evening
session. Next, we'd like to add an additional 10 people on the course. Oh, and everybody
would like a copy of your book. - Okay, well, it's great they want a copy of the book. Just
dealing with those in order, evening session's difficult for me, but I could finish at 5:30
rather than 4:30, maybe. 10 extra people is not a problem. That's fine. The book, I would
love to provide a copy of the book, but I think it would be reasonable to charge you the cost
price, which is $5 per book. - Okay, thanks for letting the extra people come on the course.
As far as the finish, I would need you for more than an hour extra. We'd like to add an
evening session with you finishing around 9:00 PM. And the books, Chris, you're charging us
$900 for training, surely you can throw in a copy of your book. - Well, okay then. Put like
that, I would like them to have a copy of the book, so, okay, let's throw in the free copies of
the book, but the 9:00 PM finish, that's difficult for me. That's quite a chunk of time. I would
need to make some sort of a charge for that, nothing big, maybe $350 for that extra-- - $350
for an evening session? Chris, you're going to be here anyway, surely you could do it for a
little bit less. - Okay, maybe a little bit less then. - what's the price? - So how can you combat
the salami tactic? Suppose I'm using it on you. There are three methods you can use, which
I'll just cover briefly. The first, and probably best, is to counter attack, trading one slice for
another. So if you've already agreed to say quicker delivery and then I ask for better
packaging, you can say that if I want that, I'll have to wait for longer delivery. If I ask for
quicker delivery, you can say, "Well, in that case, there won't be time to do the special
packaging." This works, even if you've already given some slices away. In fact, it's almost
better if you have. You could say, "Well, if you want the special packaging, then the delivery
will have to go back up from 10 days to 14." And this is a real killer, because in my mind, I've
already got you down to 10. I really don't want to give back something I've won from you.
This will stop me in my tracks, and I'll have to say, "In that case, I'll keep the 10 days, and
let's just forget the packaging." The second method is to counterattack on a completely
different front. We can do the packaging and the weekend delivery, but it'll cost you extra,
or we can do the packaging, but only if you order a larger batch. You have to order 100
before you can have the fancy box. You can see the power of this. You get something back
for all those slices you're being asked to give away. But of course, you do need something

23
you can ask for in return, and that may require some planning. The third method is to take
all the slices back off the table. If you realize that you've been salami sliced, you suddenly
think, "Hang on a minute, I've just given away a quicker delivery, better packaging, and
weekend delivery, all for nothing in return." You can say, "I just need five minutes to do a
few calculations, or to check with my boss." And then you can come back in and say, "I've
realized that this deal is no longer working for me. I can't give you all the things that we've
just been discussing. I could do the packaging, but only if you can agree to a longer delivery
time, and the weekend delivery would mean a slightly higher shipping charge, I'm afraid." If
the salami slicer says, "But you agreed to it all just now," you could say, "Well, we were only
discussing it, And I've realized now that the deal is not worth doing from my point of view."
They should have taken it while they could, but they were too greedy and now it's all back
off the table. You always have the power to take it back off the table if you realize it's no
good for you. So that's the salami and how to deal with it. As always, you might want to
think about how to use it yourself.

Try time pressure

- Time is only one tradable of many, but I think it deserves a section on its own, since it's
always an issue. Ideally, you would have time on your side. You would make sure that you
have plenty of time and you would look for any signs that the other person doesn't. If
they're under more time pressure than you, it weakens them massively, because you can
just wait until they run out of time and they have to agree to your position. I think there are
three types of time pressure, and with all of them, you want to make sure that you have
plenty and see if the other person has a shortage. The first one is time within the meeting.
How much time do they have to discuss? Do they have to catch a train or a plane? Are they
keen to get home? Are they tired? Are they just an impatient person? Some people just
want to get an agreement and get out of there. You'll be able to see the signs, and your
attitude should be, "I like this meeting. It's a fun game. I'll play it all day if necessary." And
obviously don't book another meeting straight after. The second type of time pressure is
pressure to get an agreement. Does their boss want it agreed by the end of the week, or the
month, or the quarter? Is there a constraint like a shipment that leaves in a few days time?
A grant that runs out? A price rise that's coming up next month, or a lease that's about to
run out, or a budget that has to be spent by the end of the financial year, anything like that?
And by the way, if you have any of these pressures on you, there might be nothing you can
do about it, but certainly don't let on to the other person that you have it. It's amazing how
often people will say, "I have to spend this money by the end of the month," and I think,
"Mm, I can probably help with that," or they say, "I really need one more sale to reach my
target," and I think, "Why would he have told me that?" The third and final type of time
pressure is when it's one of the tradables in the deal itself. They need the machine delivered
by Christmas, or they need the software ready for the exhibition. So it's not the deal that
has to be done by a date, it's the job itself. Sometimes, time can be more important than
the price. Again, you're looking for any signs that they have to get it delivered by a deadline,

24
or perhaps, if they're selling, that they need to be paid by a certain date, so that you can
then say, "It'll be difficult to get payment quicker than usual out of our financial system, but
I guess if the price was very competitive, I could see what I could do." Houses are a great
example of this. Sometimes the seller really wants to get out of the house quickly, maybe
they can't afford the mortgage anymore, maybe they found another house they want to buy
before someone else gets it, and this will make them settle for a lower price. Sometimes the
buyer really wants your house quickly. Maybe they have to get out of theirs very soon,
maybe they're living with their in-laws, or about to be a divorced partner, and they're not
happy. And this will put pressure on them to pay a bit more to get your house as soon as
possible. So, as always, you're looking for clues as to this time-based weakness and you're
hiding any weaknesses that you might have. Don't tell them that you're living with your in-
laws, or that you can't afford your mortgage anymore. So that's time as a particularly
important tradable. Think about it for every negotiation. How can you make sure that you
have plenty, and what time pressure might they have at the meeting, to get a deal, and
within the tradables of the deal itself?

Why should you respond to the vice technique by asking, "How much exactly?"

*because it forces the other party to put an opening offer on the table

because it shortens the length of the negotiation

because it makes room for an equal playing field between both parties

because it eases tensions between parties, and allows for a win-win negotiation

If a buyer is knocking a product you are trying to sell, what should you say?

That's the firm price, and it's a good product.

What can I do to get you to buy it?

*That's why the price is so reasonable

If you don't like it, why did you come to see it?

Why would you pretend to really want an item, when you actually do not?

to draw attention to the features you dislike about an item

to attract attention to an item's flaws to lower the cost of the deal

to distract the other person from the one major item you do not want

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*to get more in exchange for it when you "reluctantly" agree to trade it for something else

If the other person discovers you really want a certain item, what will happen?

The other person will lower the price for you.

*The other person will make you pay more for it.

The other person will try to reel you in with a pitch.

The other person will raise the price.

How is the salami technique used as a negotiating tactic?

to timely slice the item's value in half, so the deal seems fair

to heatedly pile on concessions to the other person, until that person is overwhelmed

*to gradually shave multiple concessions off the other person

to lightly add on concessions to the other person, until the item's value is almost doubled

If Tom is under more pressure than you, how does this weaken him?

because he will agree to your first offer, which is often high

because he will pay full price as quickly as possible, to close the deal

*because you can wait until he runs out of time, and then he has to agree to your position

because you can add concessions to your asking price, and he will not notice

TRADING

Get to win-win with tradables

- The ideal objective of a negotiation is to get a win-win outcome, one where both parties
are not just happy, but one where both parties are actually better off than they were before
the negotiation. This happens when you find tradables that are easy for one person to give,
but valuable to the other person. If it costs you almost nothing to recommend my training
course to a friend, but it's valuable to me, and I give you some money off because of that,
then, between us, we've created some value out of nowhere. We've both gained and it's a
win-win negotiation. Other examples might be you booking training further ahead, which

26
makes your life simpler and my future income feel more secure, and I'd give you money for
that, and we've both gained. Even you providing curry for lunch on a training course could
be a win-win. It's my favorite food. It makes my life significantly better to have it, and it
costs you no more than any other option. In fact, it might even be a bit cheaper. So maybe
we could both gain from that. You can see that win-win is all about the tradables. When you
start thinking about it, pretty much everything is a tradable. Mentions on websites, payment
terms, where meetings are held. You might not care about this, and it might make a big
difference to me, and it could be things like always being asked to quote or being a
recommended supplier or exclusivity. So the key is not to be scrabbling for trading ideas
under pressure during the negotiation, but to have planned ahead with a nice big list of
tradables, and then explore lots of those when you're actually in the negotiation. Then,
when you open wide, and there's a big gap to be made up by using lots of trades, you can
make lots of those trades so that when you finally reach agreement in the middle, you've
just got all the things you wanted and given away quite a few of the things that you can
easily give. Why do you want to give away those tradables that you can easily give? Well,
because they're easy for you to give, and if they have value to the other party, then you can
get money or other tradables in return and end up gaining by that exchange. So when you
negotiate, do you trade or do you just fight them over the money? Could you try a bit of
trading? Thinking about what you can easily offer them and what you can ask them for that
would be easy for them to give you. Can you imagine having a negotiation where you
actually came out of it better off than you were when you started while also doing the same
for them?

Use trading to get a better deal

- Once you both have your opening offers on the table, the challenge is how to get to an
agreement somewhere in between the two positions, ideally nearer to your starting point
than the other persons. But certainly, it's unlikely that you can get away with not moving at
all from your opening position. In fact, if you open at your limit, so you can't move at all, it
was probably not a very good choice of opening position. For example, if the most you can
afford is a $1,000, and you open with that, they'll expect you to reluctantly pay a bit more.
And will find it weird when you refuse to go any higher. You'll look obstinate and unhelpful,
not prepared to do your bit in getting to a deal. And you may lose the deal because of it.
You should certainly start with some room to maneuver. So start at 800 or 500, and move
up from there towards your 1,000. There are only two ways you can get from your starting
position to an agreed finishing point. And those are either to concede unilaterally, which
means to just say, okay then I'll pay more, or, okay then I'll sell it for less. Or to trade, which
means to say, okay then, if you give me X, then I'll move a bit. Trading is much better than
conceding unilaterally, for three reasons. First, conceding makes you look weak, and invites
them to attack you further. If you give a bit, then they'll just ask for more. Second, with
trading, at least you get a bit back for your movement. In fact, you might get more back
than you've given. You might come down by $20, but get something worth $50 back for it.

27
Because the thing that's worth $50 to you is easy for them to give. Maybe it's an order for
the whole year, or a recommendation, which they can easily give you. So you might actually
gain by trading. And whatever happens, you lose less if you get something back. The third
reason why you should always trade is that you have a reason for coming down in price if
you're selling. Or for paying a bit more if you're buying. If you just concede unilaterally, you
just look dishonest. I was quoted 18,000 pounds for getting my whole house doubled
glazed. And I got the guy all the way down from 18 down to 6,000 pounds. And I was
thinking, so what was that 18 all about? Did you think I was stupid? I mean, he's got a right
to try it on, but it's still pretty insulting. And even if he had just come down from 18 to 16,
I'm still thinking, so what was the 18 then? You pretty much lied to me. But if he'd said, I'll
come down from 18 to 16 if you'll let me put a photo of your house before and after on our
website, I'd be thinking, okay then, that's obviously got some sort value to him, I can see
why he's come down. It's much better. And the exact words you use when you trade are
important. Offers to trade should always be in the format if you, then I. For example, if you
reduce the price by 10%, then I could pay you up front. Not, I could pay you upfront if you
reduced your price by 10%. And this is because the subliminal message is you have to
concede first. And that then makes it possible for me to move. I'm only able to move
because of this trade. Without the trade, I can't move. So it has to be, if you reduce the
price by 10%, then I could pay you upfront. Let's look at an example of trading in action. -
Chris, so about this price for this series of training courses, 4,200, unfortunately we can't
afford that. Is there any way you could come down a little bit? - Well, if you booked several
courses in advance, then I could reduce the price by $45 per course which would save us
$180. So I could come down to a 4,020. How about that? - I really can only afford $2,800 on
this course. But if you did some tailoring to our company, I'm sure that I can convince my
boss to pay 3,200. - Yeah. I can't come down to 3,200. But, what I'm thinking is if you kept
the numbers per course to 12 people or fewer, then I could bring it down from 4,020 to
3,840. How about that? - It's still a little bit high, but maybe you could write some specific
role plays for our company that we could use internally after the program? - Yeah. - And if
you could include a copy of the happiness book which I hear is brilliant, we could do an extra
$5 a head. And I think that would bring us to 3,650, which is what we can afford. - 3,650. I
tell you what, if we could make the third day a half day rather than a full day, that would be
useful to me, and I could still make sure we covered all the material you need covered. So if
we could do that, then I could come down to your figure of 3,650. - Perfect. All right, you
got yourself a deal. - Great. - Thank you. - So I've gained a booking for several courses in
advance, the numbers are below 12 people on each course, which saved me on materials,
but also means they'll probably have to book more courses in order to get everyone trained.
And I've got one of the days to be a half day, which is great. I've had to give away some
tailoring, which I probably would have done anyway. And I'll have to write those role plays. I
don't mind them using the role plays internally, that costs me nothing to give away, but I
can see it's valuable to them. I'm selling some copies of my happiness book for $5, but that's
cost price. So it's no loss for me really. So overall, we've got a deal, and we've both gained
some win-win tradables, all by using the format if you then I, in order to gradually move
from our starting positions to a finished deal somewhere in the middle. So you must

28
promise me you're never going to concede unilaterally. And then in your next negotiation,
try some trading.

Use small steps

- One of the easiest and most commonly broken rules in negotiating is move in small steps.
When I run exercises with people in pairs on my training courses, it's amazing how often
someone will have a starting point of maybe $4,800, and then their first move will be to
come down to $4,000. They've just given $800 off and they didn't need to. They could have
come down from four, eight to four, seven or four, six fifty. And it's not just the amount that
they've given, but also they've sent a signal that they will come down a lot further. I have a
rule which is mostly reliable that if someone first reduces the price by certain amount,
they're likely to reduce it by the same amount again. So if someone comes down $800 you
can expect to get another $800 off eventually. So I'm now aiming to get it for $3,200. The
reason for this rule is that people usually half the distance between where they are and
where they're planning to end up. So they'll come down 800, and then another 400, and
then 200, and then 100, which ends up being another 800 approximately. Of course, it's not
totally reliable. Sometimes people come down one big jump and then that's it. Or they
come down a small amount, but in fact, they have lots more movement than that still to go
if they have to. That's me, by the way. That's what I do, and what you should do. Move in
several small steps. You come down by just a small amount, trading something for it as well,
by the way, and that doesn't cost you much. And also, it signals that there isn't going to be
much more, but actually you're prepared to make about maybe 10 more steps like that. 10
more small reductions in exchange for tradables that you want. As many as are necessary to
get you to an agreement. So that's the simple rule, only move in small steps Just a final
thought to add to this, though, a small step from where? Let's say you're buying, it's just the
same but the other way around if you're selling, and you've made a low offer, and they're
asking for a high price. So you have to somehow get to meet in the middle by making small
steps. Do you come down from their price saying, "I can't pay that, but I could offer you a
little bit less than that if you give me a tradable", or do you ignore that price and say "I can
only offer you my low price, but if you gave me a tradable, I could come up a bit." Clearly,
it's the second one. You move from your starting point, slowly upwards, trading as you go.
And hopefully moving up as little as possible. You would be mad to go up to nearly their
point, and get just one tradable, and end up settling for a price nearly as high as the one
they wanted. So there you are, move in small steps from your starting point, ignoring theirs,
trading as you go. Think about some previous negotiations that you've done. What was your
first jump? Either downwards if you were selling, or upwards if you were buying? Did you
move by too much looking back on it now? What's going to be the size of your first step
next time you negotiate?

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Learn from an example of poor negotiation

- This is a little story, a true story that happened to me. And I want to tell it to you because it
illustrates a number of the points I've been covering so far, especially the fact that you
never really know what's going to happen next. I've got a front garden in between my house
and the road, and I've got a hedge, and the hedge is out of control. I hate cutting it, it takes
all day, and it's just grown and grown. And I'm too mean to pay someone else to cut it. And
one day a man knocked on the front door. My wife answered, because I'm always out doing
training courses. And he kind of barked at her, went, trim your hedge madam. And she
went, whoa, how much would that cost? And he said 40 pounds. And she said, well, I'm not
authorized to spend 40 pounds without checking with my husband first, which by the way,
it's not true. She said, I'll have to check with my husband. And he said, all right, I'll phone
you this evening. And off he went. So when I got home, the first thing my wife said to me
wasn't welcome home, darling, I've missed you, or anything like that. It was, this man's
knocked on the door and he wants to cut the hedge for 40 pounds. What do we do? So I
thought about it, and rule number one is always set your limit. So I decided to set myself a
limit of 30 pounds. I decided if I could get him down from 40 to 30, I would be prepared to
do it. 30 pounds, I'm so mean. And I thought, it doesn't really matter 'cause he's probably
not going to phone back. They never phone back. But he did. He did phone back. My wife
answered. So he's on the phone going, right, what about this hedge then? And my wife said,
well, my husband says 40 pounds is too much. And the hedge man said, right, put him on
then. So she passed the phone over to me, and the bloke said, 40 pounds is too much, is it?
Okay, I'll do it for 30. How about that? Now, should I take his offer of 30? Or should I push
to get him down further? Now, remember, first of all, 30 is the highest I'm prepared to pay.
It's the worst deal that I'll accept, so I don't really want that. And also there's my rule which
says there's the same amount again. So he's come down by 10 pounds that means he's
prepared to come down by another 10. So I'm thinking of trying to get it for 20. So I said to
him, I think 30 pounds is still a bit much. And he said, well, you can. In fact, I better not say,
but he told me to go and do something really rude, and then he hung up. So I'm going,
hello? And the wife says, so what's he saying? And I'm going well, he's gone. So I'm thinking,
shall I phone him back and just accept his offer of 30? What do you think? And I decided
because he was so rude and horrible, I decided I don't really even want him cutting my
hedge, even though there is a deal to be done at 30 pounds, I'm prepared to pay that, he's
prepared to come down to that. So I didn't phone him back and I had to cut the hedge
myself as usual. It took me all day, it was a complete waste of a day of my time. I could have
had it cut for 30 pounds. And let's look at some of the things that he did wrong. Well firstly,
he came down too much. He came down from 40 to 30. He came down straight from his
opening offer to his limit. And that sent me a very confusing signal, because I thought there
was more than that. Who goes straight to their limit? So that was the first thing he did
wrong. Secondly, he didn't persist. So when he's come down to 30 and I'm saying, well, I
think 30 is too much. He should have said, well, I just can't go below 30. And I would have
said, well, can you go to 25? And he would now I just can't. You know my costs, I won't
make any money on it at all. And I would've gone, oh all right then 30. He just had to persist

30
a couple of times and I would have agreed to it. So that's really important he didn't do that,
he just told me to get stuffed, only in a rude away, and he hung up. Also, he used round
numbers. His 40 and his 30. So if you think about the 40 he quoted. If he quoted me £42.70,
I would've thought there was a reason for that, I would've kind of believed that was a good
price. But because he said 40, I immediately thought, right, well it's just a negotiation. And
similarly, his 30 just seemed like a made up number. So, he shouldn't have used round
numbers, he had no credibility in his numbers. Also, I think I already mentioned, but he was
rude. And that was definitely a bad thing. I didn't want to do a deal with him. So always be
polite, even if you think the other person is very annoying or difficult, always be nice. And
then the biggest reason I wanted to tell you this story, is what about that 40 pounds he
quoted my wife? And then suddenly he goes, how about 30? I'm thinking, well, what was
the 40? Why did you quote my wife 40 if you're prepared to do it for 30? And how could he
have got from the 40 to the 30 without looking bad? Because, you know, why not try it on
for 40, maybe half the people he quotes would have paid it. So he's got to have a way to get
from the 40 to the 30. And of course, he should have traded, and he didn't trade. He
should've said, I'll come down if you take away the clippings. I'll come down to 37 if you take
away the clippings. I'll come down to 35 if you book me three times the rest of the year. I'll
come down to 33 if you give me tea and biscuits. I'll count down to 31 if I can borrow your
ladder. I'll do it for 30 if I can put up a sign, or if you suggest to your neighbors that I do
theirs at the same time. There were so many trades he could have had. So he could have
come down to 40 to 30 and had all those extra things, and looked honest. But he didn't
trade. Now, I could have suggested those trades. I could have said, how about, you know, if
you could do it a bit cheaper, I could give you tea. Or if you do it cheaper, I'll book you
regularly. Or if you do it cheaper, I'll take away the clippings. I could have suggested those
trades, but firstly, I didn't get time. I just didn't have a chance, he hung up so quickly. But
also, it's his job, not mine to think of the tradables, because he knows hedge world. He lives
in a hedge world. I don't know about hedges, I've never really even thought about the
tradables. So all he's got to do is spend some time once, and plan a list of tradables, and
then he can use it forever. So he should have done that and he didn't. So, although being
nice would have made a huge difference to the whole negotiation, I think the biggest
takeaway from this story is that he should have traded in small steps, and then I would have
understood why he came down from 40 to 30, and we could have had a deal at 30.

Identify weak spots in negotiation

- So here's a little role play where I'm doing a number of key things wrong. See how many
you can spot, maybe make some notes. And then after the video, I'll reveal the answers. So
this course will cost you $4,000 for the design and then to run it for two groups. - You know
that's a little more than we have budgeted for. Is there any way you can reduce it a bit? -
Well, you are a regular customer so, I suppose I could reduce it to 3,500? - That's not a bad
rate. And what if we actually scheduled several dates for this program spread over the next
two years? How much cheaper would that be? - Well, if you run it for several dates, it would

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come down to $3,000 per course. - But Chris, it's three courses. I think for that you should
be able to give us a bigger discount. Can you reduce it a little bit more? - Well, I suppose I
could reduce it to 2,500. - How about 2000? - Oh, okay then, you got a deal. So I hope you
spotted a few things that I did wrong. These were the three main things, which I hope you
noticed. First, I used round numbers, which made all the numbers I quoted sound made up.
It reduced my credibility and showed I was just playing a game. Second, I forgot to move in
small steps. So I gave too much away each time. And this meant that I came down from
$4,000 to only two and a half thousand, which was a big loss of money for me. And third,
perhaps harder to spot, but I hope you got it was that I didn't trade, I just conceded, which
was weak. And it made it easy for Lily to push me down further and further. So now let's see
what it looks like when I do it right. Odd numbers, small steps and trading. So the course
would cost $4,200 and that's for the design and then to run it for the two groups. - That's a
little bit more than we have budgeted for. Is there any way you could reduce it just a little
bit? - Well, I think it is a good price. Maybe if we had an agreement that you would have 12
people or fewer on each course, that would save me a little bit of of cost. I could do it for
4,100 then? - It's still a little bit high. What if we were to book this date for several programs
spread over the next two years, how much cheaper would that be? - Well, running several
times would bring the cost down a little bit. If you booked three, I could bring it down to
3,840, but if you wanted to bring it down a bit more, I had an idea, if you could refer to me
on your website, recommend me on there and if I could refer to you on my website as a
customer, and then I could bring it down to 3,660. How about that? - What if we were to
provide you with all of the printing and gave you a really great lunch every day, what would
be the absolute best you could do it for? - The lunch would be nice. The printing doesn't
make a lot of difference to my costs but I suppose it would make it a little bit cheaper to
run. So if you did the printing and provided the lunch as well then, I could bring it down to
3,620. How about we go ahead on that basis? - That's a good deal. Let's do it. - Excellent. - In
this version, I end up on 3,620 rather than two and a half thousand and I've got some
valuable tradables as well. It's a huge difference. Always make sure when you negotiate that
you don't use round numbers, that you move in small steps and that you trade.

Why should you move in several small steps, trading as you go, from your starting point?

*so the trading does not cost you too much, and it also signals there is not going to be much
more to be negotiated

so the other person receives a fair deal, and you always come out the winner

so you build up stamina to draw out the negotiation, while piling on small concessions

because you always have to give away more than one tradeable

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Using round numbers in a negotiation _____.

*reduces your credibility

improves your chance of a win-win outcome

increases your credibility

makes you sound well informed and serious

When does a negotiation have a win-win outcome?

when your gain exactly equals the other person's loss

when both parties are happy to deal, and both come out financially ahead

*when you find tradables that are easy for one person to give, but valuable to the other
person

when both parties are happy to deal, but you come out financially ahead

Which format should you use to gain some win-win tradeables?

When you...then I...

*If you...then I...

Well yes...but then...

If I….. Will you…?

Avoid final offers

- I just wanted to say a little bit about final offers. As with many of these tactics, there are
two parts to it. Should you say, "And that's my final offer," and what if they say, "And that's
my final offer?" And there's an additional angle which is, what about asking the question is
that your final offer? Should you ever ask that? And what if they ask you that question? So,
you've got statements and questions and you've got you saying it and you've got them
saying it. We need to look at all four of the combinations. So to start with, there are the two
things that you might say, and the first one is, "And that's my final offer." And the second
one is, "Is that your final offer?" I'll come back later to what to say if they make either of
these statements. But first, let's just think about you saying either of these. Is it okay to say,
"And that's my final offer?" No, definitely not. Never say it. And that's because if you say it
and it's not true, what happens when you then have to move further from that point? You'll

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either look like a weak liar or you really will have to walk away from the deal when you
didn't want to. You dig yourself into an unnecessary hole if you say it when it's not true. And
if it is true and you really have reached your limit, then that's not so bad, except that next
time you negotiate with this person, they'll just push you and push you until you reach your
final offer and tell them. The whole point about negotiating is that at any point, you're
implying that you're at your final offer when really you aren't. As soon as you give them any
way to determine whether your position is really your final one or not, you've allowed them
to push you right to that final point, which is your worst finishing point, the worst deal you
can get. So never say, "That's my final offer," even if it is. Instead, just say what you always
say, "I can't go lower or higher than that. I really can't." What about asking them, "Is that
your final offer?" This is also a really bad idea because they can't really say, "Oh no, I've got
loads more still to give you. I'm just pretending that this is as far as I can go." So they will
have to say, "Yes, that's my final offer," and then you've made them dig in to a position
where they can't move. They can't give you any more without looking like a liar. Now, why
would you want to do that? And finally, what about if they say it's their final offer or ask you
that question? And the answer is that you don't want to get dug into a hole and tradables
are your way out. If they say it's their final offer, you can say, "Well, maybe we can find a
better combination of tradables in order to find a deal." This allows them to continue to
move without losing face. And if they ask you if it's your final offer, you can say, "Well, with
this combination of tradables yes, but I'm hoping we can find a deal somehow. What else
can you offer me?" And off we go again. So the simple message from all this is never
mention the phrase final offer. Don't ask them if it's theirs. Don't say it's yours. And if they
ask you, then waffle out of it using tradables.

Avoid splitting the difference

- One of the commonest negotiating phrases is split the difference. And I'd like to say that
you are allowed to say it, you can give it a go, and it will probably work. But don't let anyone
say it to you and get you to do it. I'll explain why. As always, we have buying and selling,
which are the same, really, just opposite sides of the same coin. So let's say, in this situation,
that you're buying. So you're offering, say, $800 for a $1,200 sofa. Maybe your first offer
was 600, and you've come up to 800. And the sofa seller has come down from 1200, and is
now on 850. And then he or she says, "How about splitting the difference, say, 825?" It's
tempting to accept it, particularly since they've come down a lot. And let's assume that you
love the sofa, you can easily afford it, it's the last one they've got, and you really don't want
to lose it. But no, you mustn't. You must say, "Thanks, but I just can't. "I really can't go over
$800. "My wife would kill me," or husband or boss or bank manager. "I just can't go over
800." And then wait for them to say, "Oh, all right, then," which they will say. How do I
know what they will say? Because when you say split the difference, what it really means is
that you've given up. You're prepared to go to their figure, but you're just giving it one more
go, just in case you can get a bit more. So in my example, the sofa seller is prepared to come
down to 800, but they're just giving it one more feeble effort with, "Split the difference?"

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And you know this. If you think of when you've used it, you know you'll agree to their price,
really. But what if, very unlikely, they say, "Well, in that case, the deal's off. "I'm not selling
it for 800. "You can stuff your sofa." Well, all you do then is reel them back in with, "Well,
let's just think about this. "It would be a shame not to get a deal when we're so close. "So
you're offering to split the difference, "which would be 825. "Hmm, I just can't, it's too
much. "My husband," et cetera, "won't be happy. "I really shouldn't go above 800. "I'll tell
you what, "how about meeting in the middle at 813?" So this is splitting the difference of
the difference. And it may sound petty, but you've got yourself another $12. And in some
negotiations, this might be $12,000 or $12 per hour. And you might be buying or selling
thousands of hours. Or it might be $12 per item with thousands of items. And of course, if
your profit is only $10, and you get another $12, you've more than doubled your profit. So
the first answer is, "No, I just can't." And the fallback position is to take their offer to split
the difference as just another offer, and then offer halfway between that and your position.

Watch out for the nibble technique

- As you reach the end of a negotiation, you can tell that you're close to a deal. And at this
point, it's important not to become weak in your keenness to get it finished. It's very easy to
let a significant chunk of money slip away at this last stage and undo all your good work and
possibly lose any profit you were going to make on a contract. The main way that a chunk of
money or any other tradable can slip away at the end is by something called the nibble. This
is where the other person asks for something additional right at the end. And like a fool, you
say, "Oh, all right then," because you're just delighted to have gotten the negotiation over.
You've perhaps got quite a good deal, so why not give some of it away? The unexpected
thing about the nibble is that it happens after you've agreed the deal, when you would think
you're pretty strong. After all, they can't change it once it's agreed, can they? But that's
exactly what they do. For example, you've agreed the price and the delivery date, perhaps
even shaken hands on it. And then when you're feeling all happy and friendly and relieved,
they say, "You can deliver it on a Sunday, can't you?" Or, "Oh, I just remembered. Is it okay
to have a second copy of the handbook?" It's so easy to say yes, but you mustn't. You must
stay strong and say, "Oh no, that will be quite difficult for us to do. We could do it, but there
would be an extra cost, I'm afraid." If they imply that unless they have this extra nibble then
the whole deal's off, stay strong and call their bluff. No, it's not what we agreed. You can't
add something else on now, unless you pay for it. There's no way that they actually will walk
away from the whole thing over this little extra point. It's just a tactic that they're using. I
got nibbled on a sofa once. I got a bit of a bargain. And then after we'd shaken hands, the
salesman said, "Oh, by the way, do you want feet with your sofa?" The feet at 10 quid each.
Look, it says in the tiny small print on the sign. Price does not include the feet. Apparently,
some people want sofas without feet, I don't know. And I was thinking, I did get a bargain
and it's only another 40 pounds. It's still a bargain. You can see the power of the nibble. If
he'd mentioned the feet earlier, I would have worked them into the deal. Something like
starting with a really low offer, moving up a bit and then near the end saying, okay then, if

35
you include the feet for free, I'll take it at that price. As it was, my best answer would be to
say, "Oh no, I thought it came with the feet. If it doesn't have feet, then I want 40 quid off,"
but I've already decided to buy it and he knows that, which brings me to the other thing that
you can do about the nibble. When it happens, you have to try saying no, or rather yes, but
I'd want more money or money off depending on whether the nibble is asking for an extra
or to take away something at the last minute, like the sofa feet.

Learn to manage the quivering pen technique

- There's a tactic that you can use right at the end of the negotiation, which I think is a bit
cheeky, but I think it's okay to use it, and this is the quivering pen, and as with all of these
tactics, even if you don't feel comfortable using them, you still need to know about how to
deal with them when other people try to use them on you. It's a bit like the nibble, which
you'll remember was when the other person suddenly introduces something else after
you've agreed the deal. Well, the quivering pen is similar in that, again, you ask for
something extra just at the end, but the big difference is that you ask for the extra before
you sign the deal, before you shake hands. In fact, just before. So you say, I don't suppose
you could throw in an extra copy of the handbook just as you raise your hand to shake, or
just as you're about to sign, you lift up your pen, maybe quivering slightly and say, oh, you
can get it to me by Sunday, can you? The style has to be friendly and a bit cheeky. I don't
use it very often. I don't really like doing it to be honest, but I think it is fair since the deal is
still being done. And sometimes that one extra can really make a big difference to the
profitability of the whole deal. Remember that a good tradable is easy for them to give, but
valuable to you, so why not ask for it? And if someone tries the quivering pen on you, the
best answer is to view it as a cheeky tactic verging on dishonest, which should not be
allowed to succeed, and say something like, no, I'm sorry, I just can't give anymore. This
really is the best deal I can do, and 99% of the time they'll say, oh, okay. I just thought it was
worth asking. In the 1% of times when they say well, in that case, the whole deal is off. This
goes for the nibble as well. You can always reel them back in with something like, I'm sure
we can find a way, we've come this far. It'd be a real shame to lose it all now. Maybe if you
gave me X, then I could agree to this extra thing you're asking me for, and just get one more
trade out of it. It's good to know that you can never lose a deal. You can always reel them
back in. You can even completely concede if you want to, if you have to, and just say, oh,
alright then, you have that extra thing. So once you know that you can crumble, you've
nothing to lose by initially saying no to the quivering pen or the nibble. So just thinking
about your recent negotiations, have you been nibbled or quivering penned and did you let
them get away with it? Could you imagine having said, sorry, but no to them? And do you
think it's likely as I would predict that they would have then let their attempt go and still
agreed to the deal? And maybe, perhaps, you might want to consider using the quivering
pen to sneak one more concession out of the other person when you next negotiate.

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Know when to walk away from a deal

- Now what if it looks as if you're not going to get a deal, maybe you're a long way off or
maybe you're just so nearly there but the other person just won't budge. And it really does
look as if you just aren't going to get a deal. What should you do? Well, basically there are
only three options. The first is to try one more time to find a combination of tradables that
works. Remember, there is something you don't really value that you could easily give them,
it might be incredibly valuable to them and make everything possible after all or something
that you really want might be easy for them to give you. You won't know until you ask. And
if you can get it then you can give them money in return either by coming down in price or
paying more for what they're selling. And this might be enough to make the deal profitable.
But if you really have run out of trading options then there are only two choices left. Either
pay up or walk away. Those are the buyer's options. The seller's options just the same really
are either to come down in price or walk away. And this decision is easy since you have set
your walkaway point, you have, haven't you? Either the deal that's on the table is within
your limit or it's outside it. So you either agree to it or you walk away. It's a simple choice.
Well, it does take the courage to ignore your pride if you're going to accept a deal that's
within your limit but isn't great. And it does take courage of another kind to walk away from
a deal that's tempting but not quite good enough. I remember years ago when my kids were
still young, the circus came to our town and we all happily went off in the car to see it.
There was a queue of traffic to get into the field and park and then another queue to get to
the little window where you bought your tickets. There were no prices publicized and I
hadn't expected it to be a problem. But when we got to the window, the price they quoted
for a family of four was too much, far too much. I can't remember what it was exactly but I
knew immediately that it was beyond my acceptable limit. I couldn't afford it. Well, I could
afford it but it was a rip-off and I wasn't going to pay it. So I said to the family, sorry
everyone, but we're not going in after all. We're going somewhere else. And we walked
away. Back past the queue of people waiting to buy tickets, got in the car and drove out
back past the queue of traffic. And we never did go to the circus. That's how mean I am. Do I
regret walking away, thinking back on it now? No, definitely not. We had a great day doing
something else, I think we went to the beach and flew kites. And also the kids learned that
you can't always have what you want. Sometimes you have to walk away from things that
are too expensive. Which I think is an important lesson. Oddly enough, there was no fuss at
all in the car as we drove off as if they understood or at least they could sense that
complaining would be futile. When I walk away, I really mean it. And they knew that. But
more importantly, I have to know that and you must know it for yourself too. And funnily
enough, both Louise and Myles have grown up to become demon negotiators in their own
right. And I wonder if it all started with that moment at the circus. So the main thing you
must do is to set your walkaway point so that if you get to a situation where you can't find
any more tradables, you really are at the end of the road, you can easily make the simple
choice between agreeing to what they want and walking away.

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Pratice with low-risk negotiation

- Ideally, you would practice some of these ideas as soon as you can, while they're all still
fresh in your mind. In a low risk situation where you can convince yourself that they really
do work, you can get your wording nice and slick and where it's not too scary because it
doesn't matter too much if you get it wrong the first time. So the best place is probably
some sort of yard sale or market where the items are cheap and people expect you to
haggle. Another good way to try negotiating without too much pressure or risk is if it's
something you don't really want or it's not quite perfect for your needs, you should
definitely give negotiating a go and only buy it if it's a bargain. Also, if you found it cheaper
somewhere else go back to the first place, the more expensive place and have a haggle. If
they won't come down, you have a brilliant backup plan. So you have all the power. If they
come down to the same price then I think you should still buy it from the second cheaper
place. And if they come down lower then I think you should get him to hold that price and
go back to the second place, you kind of owe it to the second place to have the opportunity
to equal the new price of the expensive place. By the way, if you can get it cheaper
somewhere else don't tell the person or the shop that because A, that's too easy. You need
to practice negotiating even when you don't already have it cheaper somewhere else. And
B, they will only equal it. You'll never get them to come down significantly lower which you
might achieve if don't tell them about the other price. Another time to negotiate is when
you really can't afford it. Instead of just walking on by why not go in and make them an
offer, you have nothing to lose. You are going to walk past anyway and you never know
you're doing them a favor by giving them the chance to reduce it if they want to, otherwise
they could have had a sale and you could have had a bargain, but you never read asked.
Another thought is to try a bit of negotiating if you're not under time pressure, if you're at
the shops and you've got an hour to spare, why not try and make you an offer for
something you'd quite like and see what happens. If they have to go off and see their
manager, you don't care. You've got loads of time to wait and see what they do. Finally, it's
good to have some rules. If it costs over $100 maybe you should always try to negotiate.
And if you want two or more of anything over $50 say some chairs or shoes or whatever,
you should get a price for one and then say how much off what I get if I bought two. So
there are some thoughts on how to get started. Have a look at my list and make a plan for
when you could have a try at negotiating maybe this coming weekend.

Why would you negotiate on a product you really cannot afford?

because it's not worth the asking price

because you can actually afford the product with store credit

*because you have nothing to lose

because it displays power

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When the other person makes a final offer, why should you propose tradables to finalize the
deal?

*because it allows the person to continue to move, without losing face

because it makes room for an equal playing field between both parties

because it eases tensions between parties, and allows a win-win negotiation

because it shortens the length of the negotiation, and you end up in a win-lose outcome

When you say "Split the difference?" what are you really saying?

You are fair and reasonable.

You will not give in.

You have the power.

*You have given up.

How can you prepare yourself and avoid "the nibble"?

Before the negotiation, ask for a few tradables to offset the upcoming nibble technique.

After the negotiation has been settled, ask whether there are any extras you need to know
about.

Before starting the negotiation, ask whether there are any extras you need to know about.

*About halfway through the negotiation, ask whether there are any extras you need to
know about.

When is the quivering pen technique used?

after the agreement is made, and after you have signed

*after an agreement seems to have been made, but before you have signed

before an agreement is made, and before you have signed

after an agreement is made and you signed, but before you shake hands

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When should you stop trying to get a better deal than the one that's currently on the table?

when your gain exactly equals the other person's loss

*when there are no more trading options

when both parties are happy with the deal, and both come out financially ahead

when you have received a better price than originally intended

CONCLUSION

Continue to grow your skills as a negotiator

- So that's the end of the course. Well done. You finished it. Now you have to put it into
practice. Just give it a go. You'll be amazed how well it works because the other person will
probably have no idea what's going on, no idea what's happening to them. And don't worry
if the first one goes badly, you never know what the other person will do. You're bound to
get some nos. So if by pure bad luck, your first negotiation attempt comes up against a brick
wall, don't give up on it forever. Just write that one off to experience and try another.
Remember, if it works for 50% of the time then you've got many more bargains than you
would have. And review and learn after each one. What could you have said to make it even
better? Did you use round numbers? Did you move too much from your starting figure? No
worries. Just make a mental note to get it right next time. I still don't ever get it 100% right.
I'm still learning, but be positive about what you did get rather than dwelling too long on
what else you could have got if you'd done it even better. So you don't put yourself off from
giving negotiating a go next time. Keep to my top 10. There's a list in the exercise files and
you'll be 90% of the way there. And you'll save thousands of dollars at work and at home
and send me 1%. No, I'm just kidding, but do connect to me and let me know how you're
getting on via LinkedIn. I love to hear your stories. Connect to me on LinkedIn and sign up
for my free email tips which will keep you thinking about negotiating and learning about it.
So that's it. I've really enjoyed making this course for you but it's got to end somewhere. So,
bye for now.

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