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Negotiation is an essential element of almost all of our interactions—personally and professionally. It’s part of how we establish relationships, work together, and arrive at solutions for our clients, our organizations, and ourselves. Simply put, those who don’t negotiate well risk falling victim to those who do. Throughout his career, success expert Brian Tracy has negotiated millions of dollars worth of contracts. Now, with this concise guide, you too can become a master negotiator and learn how to: • Utilize the six key negotiating styles • Harness the power of emotion in hammering out agreements • Use time to your advantage • Prepare like a pro and enter any negotiation from a position of strength •Gain clarity on areas of agreement and disagreement • Develop win-win outcomes • Use the power of reciprocity • Know when and how to walk away • Apply the Law of Four • Plus much more Smart negotiation can save you time and money, make you more effective, and contribute substantially to your career. Jam-packed with Brian Tracy’s trademark wisdom, this practical and portable book puts the power of negotiation right in your hands.
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By BRIAN TRACY
AMACOMCopyright © 2013 Brian Tracy
All rights reserved.
Everything Is Negotiable
"EVERYTHING IS NEGOTIABLE" should be your attitude and your approach to life and business from now on. One of the greatest obstacles to success and happiness is passivity. Passive people merely accept the current state of affairs, and they usually feel helpless to change the situation. Proactive people, on the other hand, see opportunities and possibilities everywhere, and are always looking for ways to change the situation to their own advantage. This should be your strategy as well.
Think Like a Negotiator
There are very few fixed prices or terms on anything, even if they are written down or printed. You must remember that no matter how firm or inflexible the prices and terms seem to be, everything is negotiable. Your job is simply to find out where and how you can get a better deal than the one that you are being offered.
When people began trading and bartering 6,000 years ago, in ancient Sumeria, it was generally understood that every price was negotiable. In the markets and bazaars of third-world countries, and even in the flea markets and garage sales that may be popular in the neighborhood where you live, every price—either buying or selling—is merely a starting point where the good negotiator begins on the way to getting the very best price possible.
But elsewhere in the modern world, negotiating is not encouraged. It is considered by many people, especially those selling a product or service in the commercial marketplace, to be avoided at all costs. Instead, people print a price list or put a price tag on a product or service and then present this price to you as though it were carved in stone. But a written price doesn't really mean anything. It is not a fixed fact. It is the best-guess estimate of someone, somewhere, of how much a person is likely to pay. Any price set by someone can be changed by that person, or by someone else.
Prices Are Arbitrary
The fact is that all pricing is arbitrary. Businesses set their prices based loosely on costs, anticipated profitability, and competitive conditions. As a result, with changing information, all prices can be revised and adjusted in some way. Whenever you see or read about a sale of any kind promoting lower prices, you see an example of the company having guessed wrong when it set the price in the first place.
You should develop the attitude that no matter what the asking price is at the moment, you can improve this deal in some way in your favor. You may be able to get what you want cheaper, faster, or with better terms. Make it a habit to continually look for opportunities to improve the prices or terms in some way.
Contracts Are Merely Starting Points
For example, when you are presented with a contract or an agreement, you are perfectly entitled to cross out or revise any phrases or clauses you don't like. Be aware that any contract presented to you by a vendor (or by anyone else) has been written for and on behalf of the vendor. There is very little in the contract that exists to serve your interests in any way. Never allow yourself to be intimidated by the fact that a contract or sales agreement is written down and official looking.
Some years ago, we took out a five-year lease on new space in a new office building. A few years later, the building owner sold the office building to another property company. The new property managers visited each of the tenants and explained that for legal reasons, the tenants would all have to sign a new lease agreement with the new owner. But, we were told, there was nothing to be concerned about. The terms would be more or less the same as the original lease that we had signed, with only a couple of minor alterations.
When we received the new lease for signing, it was about ten pages longer than the original lease. A friend of mine, a commercial office leasing specialist, reviewed it and found fifty-two additions and subtractions from the original lease! And every one of them, without exception, was immediately detrimental or potentially detrimental to our business.
What we did was simple. We went through the new lease agreement and crossed out, revised, and initialed all fifty-two changes. We then returned the marked-up lease to the building owners. A few days later, they came back to us with a clean new contract with all fifty-two revisions made, as we had requested.
The moral of this story: Never allow yourself to be intimidated by the terms or conditions of any sale or purchase agreement. No matter what the other person says or asserts, or writes down in the form of a contract, it is all negotiable. An agreement is merely the first step in the process.
Overcome Your Negotiation Fears
THE KEY TO getting a better deal is simple. Ask. Ask for a lower price or for better terms and conditions. Ask for revisions and changes in the agreement. Ask for additional inclusions, discounts, concessions, or extra products or services to be included as a part of the overall deal. Ask pleasantly. Ask expectantly. Ask confidently. Ask courteously. Ask adamantly, if you believe it will be more helpful. But always ask definitely and clearly for what you want. Always ask why, and why not? The future belongs to the askers. The future belongs to those people who confidently and boldly ask for what they want, and ask again, and continue to ask.
If this advice is so simple, why is it that so few people step up and ask for what they want? For many of us, it goes back to early childhood. It stems invariably from the fear of rejection as the result of criticism and the lack of unconditional love many people experienced as a child. When children do not experience a fully nurturing environment during their formative years, they grow up lacking in self-esteem and self-confidence. As a result, they often don't feel that they deserve to get a better deal than the one they are offered.
This fear of rejection can hold people back throughout their adult lives. They will often accept agreements, conditions of employment, prices—both buying and selling—that are far less advantageous than they could actually accomplish, just because they are afraid that someone will say no.
You can overcome a fear by engaging in the opposite behavior. If you have a fear of rejection and your normal behavior is to passively accept the terms and conditions offered you, you can overcome this fear by continually asking for a better deal, and by not caring if the person says "no."
Do it repeatedly, and the fear soon diminishes and disappears. This is the process of "systematic desensitization." By confronting your fear, and by repeatedly doing the thing you fear, the fear eventually disappears.
Just as fear is a habit, courage is a habit as well. By forcing yourself to act courageously, especially in asking for better prices and terms in a negotiation, you actually build your own self-confidence and self-esteem.
Cold-Calling Builds Courage
One of the most important lessons in my life came when I began door-to-door selling and cold-calling, hour after hour. At first, I received more rejection than I ever thought possible. Virtually every door I knocked on was closed to me, since I ended up being rejected and told that the person did not want, and was not interested in, my product. I heard the word no hundreds, even thousands, of times. Then one day, I asked an experienced salesperson how he dealt with this nonstop rejection. He shared with me these magic words: "Rejection is not personal."
Don't take rejection personally. When someone says "no" to your request in a negotiation, it is not a reflection on you or your personal value. It is not a statement about whether you are a good or a bad person. As far as the person saying no is concerned, it is merely a commercial response to an offer of some kind. It has nothing to do with you. Don't take it personally.
Once I learned this key idea, I became a selling machine. I would confidently go from door to door, asking people to buy my product. No matter how many times I heard the word no, I just laughed. I realized that the other person was not thinking about me at all. The other person was merely engaging in a knee-jerk reaction that takes place whenever anyone proposes anything that is different from the status quo. Rejection is not personal.
Building an Empire
One of my seminar attendees was a construction worker in Phoenix who decided he wanted to buy older homes and rent them out for enough to pay the mortgage, plus make a profit. But he didn't have very much money to start.
Nonetheless, he began going through the newspaper looking for homes that were put on the market "by owner" instead of being listed with a real estate agent. He began calling on these homeowners and would arrange to view the house, and after determining that it would be a good house to buy, fix up, and rent, he would turn to the owner and offer him 50 percent of the asking price. Some homeowners were angry. Others were furious. But out of every twenty homeowners he called on, one of them was invariably going through a life situation that made the owner a highly motivated seller. There were people whose business had shut down, or who had lost their job, or they were going through a divorce or a bankruptcy, or they had decided to move to another part of the country, and the only thing holding them back was selling their house.
So for every nineteen rejections, someone would counteroffer with a price that was 60 percent or 70 percent of the asking price, which he would eventually accept.
After a few years of his willingness to hear the word no over and over again, he owned forty-two houses and was earning more than $10,000 a month. He was on his way to becoming a millionaire. And all because he was not afraid to hear the word no when he asked for what he wanted.
Negotiating as a Game
Think of negotiating as a game. It is not a serious, do-or-die matter. It is merely a form of sport. In fact, it is one of the great games in life. Your job is to play the game as skillfully as you possibly can, and then to get better and better at it.
Top negotiators insist upon negotiating on almost every occasion. They haggle and bargain because, for them, it is a form of fun. When you begin to look upon negotiating as an enjoyable activity, and remain calm, confident, and cheerful, you will begin to see opportunities to negotiate on your behalf everywhere you go and in almost everything you do.
The Types of Negotiating
THERE ARE TWO types of negotiating. Each of them has a different purpose and a different desired outcome. The problem is that they often become confused in the mind of the negotiator, leading to worse results than you could achieve if you were absolutely clear what you were doing and what you wanted to accomplish.
The first type of negotiating, or Type I, is what I'll call a "one-off" style. In this situation, you only plan to negotiate or deal with the other party once, and never again. Each party to the negotiation has only one goal: to get the highest or lowest price and the very best terms and conditions for this one purchase or sale.
Take No Prisoners
In Type I negotiating, you are in an adversarial position with the other person. His goal is to pay you the very least, if buying, or to extract from you the highest possible price, if selling. He is not your friend. No matter how much he smiles, or how polite and courteous he is in the negotiation, he is thinking only about himself and his own benefit or reward. At the end of the day, he does not really care if you pay too much or get too little.
In this type of negotiating, you must be calm, crafty, and selfish. You are entitled to use any possible trick or maneuver to get the best possible deal. Once this transaction is complete, you should assume that you will never see or hear from this person again. It does not matter whether this person likes you, respects you, or wants to be your friend. All that matters is that you get the best deal possible. In later chapters, you will learn a series of strategies and tactics that you can use to increase your success in this type of negotiation.
The second style of negotiating is long-term negotiating, or Type II. This is where you intend to enter into a more complex agreement that must be carried out over an extended period of time. In this case, because of the nature of the product, service, contract, or agreement under discussion, you may be working with the same person or organization for many months or years into the future.
Thirty years ago, when I began producing audio and video learning programs with a manufacturer/distributor in Chicago, I was grateful for the company's willingness to market my programs nationally and internationally, and fortunately, the company offered me a set of terms and conditions that were both fair and standard for the industry. Today, thirty years later, I am still working closely with that company and the key people in that organization, from the president on down.
Over the decades, the market has changed, many people have come and gone, and more products have been introduced into the market, become popular, and eventually disappeared. But throughout, my relationship with the key people in that business has been friendly, cordial, polite, and professional. Because I always treated the relationship as a long-term involvement, it has led to some of the best business opportunities and results of my life.
The Chinese Contract
I began using this strategy years ago and have taught it to thousands of businesses and executives who have gone on to use it as well with great satisfaction and excellent results. Let's start by understanding the difference between a standard Western contractual agreement and a Chinese contract.
In the West, an enormous amount of time is spent negotiating the fine print of a contract. "The party of the first part shall do this ... and the party of the second part shall do that...." This contract, then, becomes the basis for the entire business relationship. Each party is expected to fulfill commitments as stated, word for word, in the written contract. Any deviation from the written contract can lead to breakdowns in the arrangement, penalties, and even litigation.
In the Chinese culture, where I spend a good deal of time each year, the terms and conditions of the agreement are negotiated, discussed, and agreed to. They are then written down on paper, reviewed, revised, and duly signed by both parties.
In a Western contract, this step is the end of the discussions or negotiations. But in the Chinese contract, this is the beginning of the negotiations and discussions.
In the Chinese mentality, everything that can be thought of or anticipated is written down. But there is a clear understanding that, as the arrangement goes forward, new information will emerge and new situations will arise. This new information and these new situations will necessitate revising the contract so that it is still fair and equitable for both parties.
Whenever I negotiate with a counterpart (and I have agreements with clients in more than sixty countries), we often conclude complex, multipart agreements, involving many thousands of dollars, with a couple of pages.
Right at the beginning, I'll state, "Let us create a Chinese contract between us. In this type of contract, you and I will agree on the basic terms and conditions of the business that we will do together. But I want us both to be happy. If at any time something happens that changes the situation around this contract, let us sit down together and renegotiate the terms and conditions so that both of us continue to be happy."
And the good news is this: My partners and I have never had an argument, a disagreement, or litigation over one of these "Chinese contracts." In every case, we have remained open, friendly, and focused on maximizing the benefit to each party in the process of our working together.
Lifetime Business Relationships
IT IS THE SAME in almost any business. You begin working with a company or an individual, usually at a lower level, and over time, that business relationship can grow into one of the most important parts of your financial and personal life.
Gerard Nierenberg, a past master at professional negotiating, once said the purpose of negotiation is "to reach an agreement such that all parties have their needs satisfied to the degree that they are internally motivated to fulfill their commitments and to enter into subsequent negotiations and transactions with the same party."
Let us break down this definition into its constituent parts. First, "to reach an agreement ..." means that the purpose of an ongoing negotiation is not to win or lose, not to defeat the opponent, but to reach an agreement of some kind. When both parties begin the negotiating process with a sincere desire to find a way to reach agreement, the behaviors of the two parties are quite different from the onetime negotiating style, and the results are usually far better.
Excerpted from NEGOTIATION by BRIAN TRACY. Copyright © 2013 by Brian Tracy. Excerpted by permission of AMACOM.
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