The
Guidelines to Saving Money When Making a Purchase
1.
Establish reasonable goals resulting from solid preparation.
2.
Listen in order to understand the other party’s position and interests.
3.
Always be polite and avoid showing your emotion.
4.
Never make the first offer or bid against yourself.
5.
Work through impasses.
6.
Hold people to their representations
Establish
reasonable goals through research
I
sometimes think that this is the most important aspect of preparing for any negotiation.
Before you can begin negotiating you must know what it is you want. Often
people have no clear understanding as to what they would like to accomplish by
the negotiation. They may well have some vague idea about what they would like,
but have not established in their heads where they want to end up. Nor do they
have any plan on how to get there even if they do have some goal. Such vague notions
and lack of preparation will almost surely mean that you will not reach your
goal.
There
was a folk song that was popular in the 1960s that became the unofficial anthem
of the civil rights movement, "Keep Your Eye on the Prize." It sounds
simple enough. Nonetheless, this is exactly what you need to think about each
time you negotiate: What is the prize you hope to receive through the
negotiations? What is it that you really want? The late Stephen Covey in his
popular self-help book, "The Seven Habits of Highly Effective People,"
identified the most important of his habits for a successful negotiation:
"begin with the end in mind."
That
is what I am asking you to do each time you begin a negotiation: "begin
with the end in mind." Every time you are engaged in a negotiation, and as
we will discuss, you are probably engaged in some form of negotiation many
times every day, keep this principle in mind. If you do, you will be more
successful in those negotiations. Why does this formula work? Because, if you
keep your goal in mind, you are more likely to negotiate in a way that will
facilitate the accomplishment of that goal. It does not matter whether you are
asking for a raise from your boss or discussing where to go to dinner tonight
with your spouse. These are negotiations and having a firm goal in mind will
enable you to achieve that goal. Sometimes people are afraid to express that
goal to the other party. That can be a major source of frustration. Who hasn’t
stood outside with their co-workers deciding where to go to lunch and no one
speaks up until finally someone does and then you end up going someplace you
hate. Believe it or not, that is a negotiation and you just lost it.
How
do you decide upon your goal? Let me suggest that one way of doing so is to do
your research and plan out what you want to say and do. Let me give you a few
examples. Let’s say you are interested in buying a new car and you want to make
sure that you get the best price. When you go into the car dealer’s showroom,
you will see the sticker price on the side window of the car you are interested
in. As you know, that is really just the beginning price; it is not the price
you should pay. You will soon be entering into negotiations with the salesperson
and perhaps the manager. You want to be prepared; you want to know what the
best price you can expect to get for the car you want.
One
way to find out is to research the price paid by the dealer so that you know
how much the automobile has been marked up in price. Two excellent sources of
that information are Edmunds.com and Consumer
Reports magazine. Edmunds will show you what other people are paying for
the same car you want to buy. Consumer
Reports, in addition to its yearly car issue and periodic reviews, has an online
product that for about $14 will give you a printable guide for the exact car
with options you are interested in buying. It will show you not only the cost
of the vehicle to the dealer (what he paid for it from the manufacturer) but also
the costs of any accessories and packages available for that model.
Armed
with that information, you can confidently go into the dealer, present your
research and ask for the best price based upon the cost to the dealer. Now, the
dealer will complain that he will not make a profit if he sells you the car at his
cost. Certainly, he is entitled to some profit. Your research also should have
taught you that frequently the dealer will receive certain incentives from the
manufacturer that are not shown anywhere. That may be the only source of profit
he needs. So don’t be shy about asking
for the car at the dealer’s own cost. Who knows, you might actually get the car
at that price. In any event, as a result of your research, you have established
your goal: get the best price from the dealer. And you have used that research
to get that price.
This
same strategy can be employed when buying a house or a new television as well
as many other products. For example, when buying a house, before making an
offer, you should research the real estate records for your county (some of these are available
online, so start there) to determine the price paid by the seller as well as
research the price recently paid by buyers of comparable homes. Now, your agent
may say that she has done so, but I suggest you do your own research. It is
your money and no one has a greater interest than you in making sure you do not
overpay for your dream home.
When
buying appliances such as televisions, a good practice is to go to one of the
big box stores such as Best Buy or Target, find the product you are interested
in, noting its price. If you then go online and check on Amazon, eBay or
similar sites, you can determine the price others are paying for that same
product. Of course, you can purchase the item from Amazon if the price is lower;
or, as an alternative, take your research to the big box store and ask that
they either meet or beat that price. You will probably be surprised how often
they will make the sale at the lower price. You have established your goal
through research and will probably reach that goal.
