Resource 4 - The "ID Rules of Negotiation The ten rules: 1. Don't negotiate unless you need to Don't tailor the deal for the other party: a Buyer: work out the value to you and how much you want to spend and tell the vendor. a Seller: work out the value proposition and sell it by solving the customer's problems and ask for payment 2. Never negotiate with yourself We often feel anxious when we negotiate and want to make our offer look better, but by doing this we are negotiating with ourselves, and negotiating to our detriment. - Purchaser: set a gure that you want to spend, which may be due to what has been budgeted. or what your expectation is, and just stick to it. Make it as a rst offer if you have to (see Rule 4) orjust hold back. a Vendor: Simply lead with the list price. 3. Never accept the first offer - As professional negotiations usually always hold back (and do not want to break rule No 2] you should not accept the rst offer. - Usually there is a better offer, which may not necessarily be a change in $ but there may be something else of value, eg terms. warranty. 4. Never make the rst offer if you can a If you make the rst offer you may be pegging the deal to your disadvantage. - Let the other side go rst, and then follow Rule No. 3 (Never accept the first offer). 5. Listen more and talk less :- Listen to the deal a The more you keep your mouth shut the less chance there is of breaking one or more of the rules. 6. Don't give free gifts - If someone wants something [eg discount, information, warranty, cooperation etc) then they need to give you something in return - It is dangerous to give free gifts as the other side will expect the same when you start negotiating next time. 1. Watch out for the 'salami effect' :- Purchasers: They should insist vendors itemise their quotations so the purchaser can: 0 Analyse and thus negotiate the price down on the individual components and thus negotiate the total package down; and 0 Get a better price where there is a variation as vendors will now have less scope to pad their variation quotations. :- Vendors: They should resist itemising the quotation as it will work against them. 8. Avoid the 'rookie's regret' :- It is natural for people to walk away for an agreement and wonder whether they did well or whether they could have done better. - To avoid this we need to ask three questions: 0 If I am to make a concession how much will it cost me? c What is the concession worth to the other side? 0 Knowing the first two questions I now ask what do I want in return for the concession? :- By answering the three questions this takes the subjectivity out of the negotiation and one is more able to determine whether one did well. 9. Never make a quick deal a Every deal has its own tempo .- Watch out if the other side wants to change the tempo, especially if they want to speed it up, as there may be two reasons for this speeding up: 0 I have made an error and they have recognised this advantage for themselves and they want to sign me up ASAP to enforce the situation to their advantage; afor c They see an advantage for themselves thatl have not yet seen and they want to sign me up ASAP to enforce the situation to their advantage. :- If the other side seeks to speed up the negotiations do the following: c Try to slow it down 0 Say 'may be' 0 Go back to the 3 questions in Rule 8. '10. Never discuss your bottom line :- Never before, during or after the negotiations tell the other party your bottom line. a If before or during: this will affect how much the other side will be willing to offer. a If after: this may damage an otherwise good win-win agreement, as the other side may feel that they have lost. and we have gained at their expense