3 Negotiating Tactics You Need to Watch For

3 Negotiating Tactics You Need to Watch For:

Savvy business people know how to negotiate and most corporate decision makers are tough negotiators. Sellers often make mistakes or fall prey to variety of negotiating tactics and this costs them money in lost profits.

Here are negotiating tactics you need to watch for.

The Nibble

The nibble is one of the easiest ways for buyers to get an unexpected concession from a seller. Here’s how it works: After the initial deal has been agreed to, and before the contract is signed, the buyer will say something like, “You’ll include delivery on that, right?” or “Technical support is part of this package, right?”

This nibble is an attempt to gain something of value without paying for it. And the reason it is effective is because the sales people feels that if he does not make that concession, he will lose the sale. Plus, the concession often seems trivial in comparison to the overall deal.

A few years ago I worked out a deal to speak at a conference and part of the arrangement included supplying a copy of my first book, Stop, Ask & Listen.

Initially, I was told that approximately 200 people would attend the sessions. When that number crept up to almost 300 people I spoke to my client and said that we would have to revise the terms of the agreement, he replied by saying, “Oh, I thought you would just include the extra books.” I laughed and said, “If that were possible we wouldn’t be having this conversation.”

Had I not I resisted the temptation to give into his request and stood my ground, that concession would have reduced my profit on the project by almost $1500.

Smart buyers always nibble and try to get something for free or little cost. Watch for this tactic and respond accordingly.

The Vise

The vise is a simple tactic designed to get you to reduce your price. It sounds like this: “You’ll have to do better than that.”

It’s not uncommon for sellers to quickly reduce their price the instant they hear those words. However, that approach puts you in a position of weakness and limits your leverage. The most effective way to respond to that request is to say, “Exactly how much better do I have to do?”

Then wait for the other person to make a counter offer.

The difficulty with this approach is that many times the customer will repeat themselves and not give you a counter offer. That means you, too, need to repeat yourself and say, “Exactly how much better do I have to do?” While repeating oneself is not comfortable, you will typically find that the other person will make a concession after the second or third request. The key is to resist the temptation to give in quickly.

This tactic may also sound like this: “Your price is too high.” If you hear those words, respond with, “Exactly how high is my price?”

The key is to listen carefully and to practice your responses beforehand so they flow naturally and comfortably.

Take it or leave it

Some aggressive buyers will issue the “take it or leave it” ultimatum. This hardball tactic can be difficult to respond to and most affects sellers who are struggling to meet their quota or who have a low volume of leads in their pipeline.

My personal opinion is to ask for a concession immediately by saying, “Mr. Smith, if I accept those terms will you be willing to…?”

You may not get that concession but at this point, you have nothing to lose by asking. When faced with the “take it or leave it” approach, you need to decide if it makes good business sense to accept the terms presented. It is often better to walk away from a deal than to accept one that is not profitable.

These three negotiating tactics are commonly used to drive down your price. With a bit of planning and practice you can reduce the effectiveness of them and increase your sales and profits.