“I don’t want to seem greedy. I feel awkward asking for that much of a salary increase. What happens if they reject me for the lease I want when I ask for a discount? I’m scared to ask for a better used car price. I’ll just buy it at list.” Friends of mine have shared all these concerns with me when I suggest that they negotiate. Maybe you too have felt this way at some point in your life. If so, it’s time to stop feeling guilty and negotiate well.
The Forces Scaring You from Negotiating Are Profiting Big Off Your Feelings
The only people who would tell you that you’re greedy for trying to get the best deal for yourself that’s possible are those who want to manipulate your emotions for their own profit. When I worked in corporate America, they made talking about compensation seem like a four letter word.
Who does that help out the most? A large corporation has a sophisticated human resources department. They have huge spreadsheets full of data about every salary in every division in the company. Their goal is to get as much talent for as little as possible. If compensation was a transparent part of the company, people would know how drastically underpaid they were compared to their peers, which would strengthen their negotiating position and weaken that of the company. Hence, they come up with some bogus rule that it’s rude to talk compensation with your peers, and BINGO.
I recently had a used car dealer tell me that he wanted to offer me a “welcome to St. Louis deal.” Used car dealers only welcome more profit in their pocket. He appealed to my emotions to see if I was the kind of person who was easily swayed.
Realize What the Other Side Negotiating with You Wants to Accomplish, and How Much Weight You Have
As a bond trade, I negotiated trades every single day. Sometimes I’d do a transaction for $5,000 of bonds, and sometimes that transaction would be for $50 million of bonds.
When I did a trade for $5,000, typically the seller just wanted a quick price to move it off their balance sheet. That small of a position in the bond markets is a nuisance position. So people will accept a lower price to remove their problem. When I did a trade for $50 million, that position could be their main focus of the day. Trades for that amount of bonds would be highly defined by the market. However, few companies could buy the entire $50 million position at once. Therefore, I knew I could get a better deal if I bought an entire position than if I just bought a piece and I frequently used this strategy to obtain the best trade prices possible.
When asking for anything in a negotiation, you need to have a good idea of what the other side wants and what weight you have in the situation. If you’re a specialist surgeon negotiating pay in a rural area, you have a ton of weight and can dictate an extremely high salary. On the other hand, if you want an academic medicine job in LA or NYC just like everybody else, your negotiating weight will be almost zero because there’s such a large supply of candidates.
If you see a car you like that’s been sitting on the lot for a month, you should offer a low ball price to the dealer. He might refuse it, but he’s taking up inventory space and is likely looking to make a deal. To take the car at list in this situation would be foolish because you would be ignoring what the other side wants, a fast transaction to remove the car off the lot.
Say your employer would have to spend a lot of money searching for the right candidate to replace you if you left. You have a lot of negotiating power. You could ask for a higher salary or a promotion. If there’s a credible threat that you would leave to work for a competitor the employer will likely give you what you want.
Negotiating is Not Personal, It’s Like a Boardgame
If you’ve ever played Risk, you know sometimes it can get tense and friendships can be frayed. You get bonus armies for holding continents, and Asia has the largest bonus at 7 extra armies per turn. If you hold all of Asia in a multiplayer game, everyone is going to try to take a shot at breaking up your continent to prevent you from getting the bonus. That’s not a personal decision. Risk players want a good, fair game. If everyone let you have such a large bonus, then you would win the game with no problem.
The key when negotiating for anything is to think of it like playing a board game. Would you let Boardwalk go up for auction in Monopoly and let it go for $100? If not, then why do you give your labor to your employer for far less than it’s worth? Why do you feel the need to pay list price on an automobile because it will make the salesman happier?
Guilt must not be present in negotiation. You want to have a fair, honest trade in every situation. To avoid having a deal that’s one sided, you have to stand up for yourself. I just asked for $25 off a month in rent on an already great deal, and they said yes. I also asked a bunch of people selling their cars to sell me the vehicle for $100 above the fair condition price on Kelly Blue Book. Eventually, I found someone who was weary enough from getting Craigslist ads to sell at that price. The worst thing that can happen when you negotiate and ask for something is that the other side says no. Unfortunately, many people do not even let themselves get to that point. They let emotions and manipulations prevent them from asking. Don’t give away Boardwalk for free. Stop feeling guilty and negotiate well.