Bisi, 25, a nutritionist wants a Toyota Corolla; it is the kind of automobile everyone says balances affordability with quality, and she knows getting a car would put an end to queuing at the bus stop just to get to work several miles away.
But there is just one problem: The car costs N5 million whereas she can only afford N4million at the moment.
Bisi wants to ask the salesman to agree to her price but she doesn’t know how to start the conversation, so she walks away hoping to raise an additional N1 million, and get out of bed early the following morning if she doesn’t want to miss her bus to work.
Learning to bargain effectively is a skill that is useful not only when a determined salesperson stands between you and your dream car. Being able to negotiate can be useful in many other instances, including at your workplace, the grocery store, bidding for contracts etc.
The first three (3) tips were given in the first part of this article published last week.
Do your homework:
Know the product, the alternative price offering by competitors. Understand how seasonality affects the price and try to appear knowledgeable about the product- it prevents the seller or other parties from exploiting you.
Understand your seller:
What is the motive of the seller? Is s/he selling only to get rid of the property? Also, know the cost of the item to the seller and if possible the margin so you can bargain to price points the trader finds acceptable.
It is “give and take”, incentivise your seller:
Convince the other party that selling to you brings more benefit than money. Sometimes people can be willing to make short term losses if it promises longer-term benefits. Make a value proposition; it could be promising patronage in the future.
At the end of the day, a great deal is one in which you leave the other party feeling like they make a good decision to agree to your terms.
Build rapport:
It is bargaining, not war! Being friendly and subtle usually helps when it comes to sealing the deal. You want the seller or other parties to see that you are “on their side” and you want them to make a sale- although you must never say you are helping them.
Using friendly and kind words, perhaps trying to find common groups outside the immediate deal might help.
Imagine learning that you and the other party support the same cause, attended the same school or come from the same part of town?
Of course, you must avoid acting too nice or polite as it might irk the other party.
Avoid the crowd:
Cutting you a deal would cost the seller to an extent and s/he would not want to keep incurring the same cost on every buyer that walks into the store or showroom.
On account of that, it is never a good idea to start a bargain in front of other customers. Merchants are usually less likely to consider a counteroffer if it would force them to grant the same terms or conditions to their other customers.
Know when to make the first offer:
Negotiating well involves a lot of attention to details and proper timing, like knowing the right moment to drop your cards.
Conventional wisdom tells us to allow the other party name a price then bid lower. It usually works that way and especially if you don’t know what a fair price is- else you blurt out a price only to find the seller enthusiastic about your proposition.
However, “going for first blood” could give you the advantage of anchoring the price. This is how anchoring works: Bisi walks to the car dealer and sees an N5million sticker on her dream car. If she chooses to negotiate, the bargain would likely revolve around N5million which is the anchor, reference or starting price (point).
For certain types of deal, you can steal this power if you make the first proposition-just make sure your initial offer is lower than you actually intend paying so you can appear to make concessions paying what is actually a fair price to you.
Something you could do if the seller makes the first proposition is to ignore the anchor and try to avoid revolving around that price.
Use Silence, Stories strategically:
Use stories to get the seller on your side. This is not the long and boring irrelevances to fill in awkward moments of silence but as a way of showing you are familiar with the product and can give your “expert” opinion on it.
Consider this scenario: Bisi wants to buy a car but she doesn’t just tell the dealer “I want a car” instead she says “My xyz car broke down last week but I think it’s time I replaced it with a newer one, can I see your abc model?”
However, you should avoid rambling else the other party would see through the smoke and take your loquaciousness as a sign of failing confidence.
Also, avoid the temptation of asking “so what is it going to be?” during moments of silence else you would seem desperate.
Just keep quiet and the seller might eventually give in just to avoid the awkwardness of moments. Salespeople have to talk to make sales, hence are not used to or comfortable with silence.
Ask open-ended questions:
putting the other party on the spot where they have to answer “yes or no” to your question can be counterproductive.
Instead of asking questions like “will you sell this for me at XYZ?” try “This product really seems nice but it is slightly more than I had hoped. How can you help me?”
Do not make the other party dismiss your offer in one or two words by asking binary questions, keep them in a position where they have to explain everything.
Look for leverage:
Bargaining chips or leverage are potential concessions or other factors which can be used to advantage in negotiations.
For instance, if the product has a little defect, you should factor that into your pricing and make the seller know you would have to be compensated for such inconvenience.
It is often useful in fact to give them an estimate of how much cost would be involved in repairing the item or restoring it to perfect condition. Just make sure the cost is expressed in terms of time (effort) and money.
In addition, if you want to buy more than one unit of a product, start the bargain on that unit then, later on, offer to buy more than one if there would be a discount.
Be willing to walk away:
Do not be afraid to leave the table unless you cannot afford to lose the opportunity-even then do not show it.
Sometimes you have to pretend to walk away to test the true limit of the other party’s resolve. However, it should be a last resort because if the other party doesn’t bulge and you return to the negotiation table, you lose your bargaining power.
