A Negotiating Tactic

Mar 21st, 2010 | By | Category: abundance, Career advice, career challenges, challenges, mentor, success

Are you a good negotiator?  Most of us have been negotiating since we were toddlers making deals with our parents to get what we want.  Our negotiating skills continue develop with our interactions with others, and our confidence grows the more we successfully obtain our objectives.  However, how do we do against a skilled negotiator?  For most of us the toughest negotiations we encounter is buying a car.  Although we accomplish our objective of obtaining the car, most of us feel we could have done better.  The feeling of buyer’s remorse, thinking we paid too much, often sweeps over us as soon as we sign on the dotted line.

Last week a friend came to me with a problem.  She has run a delivery business for years distributing products for a local company.  Over the years the business model has shifted more and more administrative duties on the delivery services. A few weeks ago the company announced the delivery services would be contracted out, and encouraged my friend to apply.  Having years of experience running delivery routes, my friend easily developed a business plan and cost analysis to hire subcontractors to cover one of the larger delivery areas.  She went over the plan and costs several times until she was confident that her figures were correct and defensible.  She felt prepared and ready to negotiate a deal.

The meeting started off great. My friend made her presentation and passed out copies of her business plan and costs to support her bid.  The company team looked over the proposal. After brief review, a company representative opened by saying the proposal looked good and provided the delivery services the company required, but the price was too high. Before my friend could respond a second company rep spoke up saying that there was mistake in the calculations, and they were not that far apart.  My friend was shocked that she made an error after all the time she spent. The jolt eroded her confidence as she waited for the company rep to recalculate the numbers.  Sure enough, after he reworked the numbers the price was very close to what the company had in mind.  If my friend would accept that price they had a deal.  Believing that she had made a mistake she accepted the company’s recalculated price and signed a tentative contract.  After she got home she went over the numbers again, and found the company rep had left out part of the expenses and thus came up with the lower number.  Now what was she to do?  She had just signed a tentative agreement for a price that would allow her almost no profit.  She would be working for almost nothing.

How did this happen?  Although well prepared with the facts of her business plan, my friend was not expecting a controversial meeting, and was easily caught off guard.  Secondly she trusted the company to rework her numbers on the fly, and accepted the answers without verification or discussion.  This sounds like an obvious mistake, but this is a common tactic.  For example, every time I buy a new car I negotiate with the salesman and arrive at a price.  Then he goes to sales manager to get approval.  It seems to take forever, but he finally returns usually with a little higher price to cover a cost he forgot.  Once I even received a call after I had signed the deal telling me they had forgot to include the cost of special paint.  The other side is counting on you wanting the car, and being understanding of their oversight. Often they increase the price several hundred dollars.  They are quick to remind how well you negotiated, and what a good deal you are getting.

The easiest remedy to this tactic is to ask to see their calculations and for time to verify them.  That is what my friend should have done.  It is difficult to do calculations on the fly, especially when someone talking to you at the same time.  You should always bring a calculator with you, and be prepared to ensure that the numbers add up and include everything.  It is also a good idea not to go alone.  Always bring someone with you to talk with the negotiator while you verify the figures to keep form being distracted.  If you are not good with numbers insist on time to have someone verify the figures for you.

So what happened to my friend?  First she had only signed a tentative agreement so that there was still time to renegotiate before signing the final contract.  When she went to sign the final contract she presented revised figures pointing out omissions the company made in their recalculations.  They arrived a new figure less than she originally wanted, but was closer to her original bid.  Yes, she has buyer’s remorse.

The PracticaL Mentor.  <leave a comment, tell a friend>

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