In a perfect world, people would negotiate being fully transparent and no written contracts would even be necessary to be signed. As Warren Buffet once did, he never even had to sign a written contract in a deal with the giant Walmart, because they had an established trusting relationship in place and Buffet “knew that they would deliver, and they did”.
However, in most situations this is not the case. Yes, you should sign a written contract in order to set the ground rules of the relationship, and yes, you should be aware that there are dirty tricks that are often used in negotiations.
Here I will discuss some of the most famous negotiation tricks and how to avoid becoming a hostage at the table.
1. “Let’s meet up at my place”
The physical surroundings of a negotiation are known to play an enormous role in the outcome of a meeting. Often the other side picks the place they want to negotiate and sometimes this might mean they are setting you up for failure.
For example, if they arrange the negotiation to be taken place at a bar or a noisy place, they are probably trying to make you feel uneasy what will lead you to want to conclude the negotiation as fast as possible.
So, whenever you can, be the one to pick the place. This will make sure that you are negotiating in a place that you feel comfortable at, and hopefully the other side feels the same way. Remember, a good negotiator looks for mutual gains, so take into consideration the other side’s needs.
However, there are times that letting the other side pick the spot is advantageous to you. Stepping into their turf will put them at ease and more open to suggestions.
If you ever get caught up negotiating in a “uncomfortable” place express your concerns and postpone the negotiation to another time and a different place.
2. Personal attacks
This is one of the dirtiest tricks in the book, and often used by people who a poor negotiators.
In this situation the other side will make personal attacks to your appearance, ignore you, make you wait for them, refuse to make eye contact, and more.
A perfect example is if the other side makes a comment about how tired you look. All these comments are intended to put you down and make you feel self-conscious. If you do look tired the other side should not be commenting on it, as this is irrelevant to the negotiation.
Whenever you feel that you are being attacked make sure you mention it to the other side and be hard on the problem. No negotiator should have to put up with such behavior.
This one if self explanatory. If the other side starts making threats of taking something away from you, or doing something harmful, remember one thing: the only reason they are doing that is to build up pressure on your side. Good negotiators don’t cave in to pressure.
On the other hand, warnings are a lot more legitimate than threats. These are realistic potential outcomes that could occur in the case of failing to reach an agreement. For example, expressing that if no agreement is reached, you both should be aware that the media will expose both parties’ inability to negotiate a deal, and no one wants that.
Also, expressing your plan of action in case no agreement is reached could be seen as a warning rather than a threat. For example, “if no deal is reached we will have to go with company X instead, as we absolutely need the material Y in order to produce product Z”.
If you ever feel that you are being threatened you can do any of the following: ignore it, make them unauthorized, make them irrelevant.
Businesses often record phone calls (and express that they are doing so) to avoid either side from threatening each other, forcing them to act in their best behavior.
In this case the negotiator will try to “anchor” an initial value proposal to a lower one. For example, if you are selling a house worth $200,000 the other side might make an initial offer of $100,000, what is extremely below your expectations, increasing the amount you have to bargain for.
This technique can be advantageous when the price of a product is unknown to both sides. Letting the other side throw the first price will give you an idea of how valuable this product is to them, and from there you can begin bargaining for your price.
However, if you are aware of how much something is worth (such as the home you are selling), go right ahead and throw the first price. This will allow you to start off with some advantage and have the other side bring the value to their desired range.
Beware that throwing an unrealistic price, such as $300,00 for the house, might make you lose credibility, leading the other side to walk away from the table without even bothering.
5. “Take it or leave it!”
I believe we have all been held hostage of this tactic. When we go to a store, for example, a product has its price tag on it and that is how much it will cost you – no room for negotiation. This is a non-interactive deal making method that is very effective in most developed countries.
If you ever travel to Peru, for example, on the way to Machu Picchu you will encounter a bunch of street vendors that will be willing to sell their products to much less than what they are asking for. This happens because they have a lot more to lose if they don’t sell that product than you do if you don’t buy it.
If you ever encounter a “take it or leave it” situation ignore it at first. Carry on with your principled negotiation trying to get to the bottom of the objective criteria as to how much something is valued at. Try to present different solutions, and if you do bring up that you are aware of such tactic explain to the other side what they have to lose if they don’t make a deal.
At Michigan University, professor George Siedel in his negotiation class asks his students to bargain for a lower price in a “take it or leave it” situation, such as buying a hamburger from McDonalds. And, unlike what most of us would have guessed it, generally over 69% of the class is successful in negotiating a lower price, yielding an average discount of 40% overall.
6. Contrast Principle
This tactic is famously used by real estate agents. It is an illusion that makes things look different when presented in sequence.
For example, when someone is looking for a house, the real estate agent often takes the person to a really run-down house that looks horrible. The person says that there is no way that they would live in there. And then he/she takes the client to another bad looking house – once again it is a no-no. But finally, the real estate agent takes the person to a beautiful looking house – very expensive – and the client often agrees to buy it. The agent has just created the illusion that the last house is a perfect place that is extremely hard to find by presenting bad looking houses beforehand.
Most likely, if those two ran-down houses were not presented beforehand the client would not have bought the last house in the first place, and that is why you should beware of this tactic. Make sure that you always use objective criteria when analyzing a deal and avoid becoming affected by external factors.
Becoming aware of these 6 tactics can make you a much better negotiator. It will help you become more knowledgeable of what is really going on and help you stay on track.
You can even use some of these tactics – with the exception of 2 and 3, for obvious reasons – as tools to better your position in the negotiation, as long as these don’t conflict with your ethical standards. Remember, don’t do anything that you would regret later if it were to be shown in the front page of the newspaper the next day.