Negotiation Tips and Tricks (From Salary to Price)

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Negotiation Tips and Tricks (From Salary to Price)

Want to know how to negotiate your salary or how to avoid the biggest mistakes in negotiation?

Get advice from Dr. George Siedel, a master negotiator and Professor Emeritus of Business Law at the University of Michigan.

Read on to learn his insights on:

  • Why negotiation is an important skill
  • His number one tip on how to be a better negotiator
  • The biggest mistakes to avoid during negotiations
  • The importance of body language during negotiations
  • How to negotiate a lower price or your salary
  • If you should be nice or tough in a negotiation
  • How to overcome come negotiation challenges

Want to hear more from Dr. George Siedel?

Enroll for free in his course Successful Negotiation on Coursera.

Or if you’re a member of the press, set up an interview with Dr. Siedel or learn more about the topics he can speak to.

Q&A

Coursera: From Coursera, this is Emma Fitzpatrick, and today, I’m talking with Dr. George Siedel. 

He’s a Professor Emeritus of Business Law at the University of Michigan. He teaches courses on negotiation, public policy, and business law. 

And today, he shares his number one tip for how to be a better negotiator, steps to have success in your next negotiation, along with a lot of other tips about how you can negotiate everything from a lower price to a better salary.

So without further ado, let’s go ahead and get started. 

Before we jump into the specifics about how you can be better at negotiating, I’d love to hear how you yourself got interested in negotiation.

Dr. George Siedel: I really had no idea what negotiation was growing up, never studied it.

I’ve always loved sports. I loved competition. I liked winning.

And so when I was in law practice, I really wanted to be a winner. But what really intrigued me, as I got into the subject a little bit more, was that a real winning negotiation is one that benefits both sides.

And so that’s a key challenge with negotiation, but it’s also what brings the most joy to me. 

Coursera: And I’d love to hear your take on why you think negotiation’s such an important skill.

Dr. George Siedel: Well, because it touches everything we do in life. Almost every day, people are involved in some sort of negotiation. It can be something as simple as purchasing a product. 

But we negotiate with our friends. We negotiate with our parents or children. We negotiate with our spouses. We negotiate when we rent an apartment, when you buy a home, when you buy a car. And that’s just on a personal front.

And then, in business, negotiation is a key skill if you want to develop a successful business or if you want to improve with career prospects.

 And so, negotiation is one of the most important skills we have in life on both the personal front and on the business side. 

Coursera: So from studying negotiation and teaching it for years and years, what are some of the key things that you recommend people going into a negotiation keep in mind so that they can be good at it?

Dr. George Siedel: Generally, I think we should keep in mind the importance of, first of all, asking questions, and second, listening carefully to the answers. 

Knowledge is power in a negotiation. 

So, the more knowledge we can gather through questions and answers, the more powerful we will be.

Sadly, many people think of negotiation as a form of debate or persuasion, that the goal is to try to persuade the other side to do what they want. 

And that is a defeating factor. It doesn’t increase your power, and it doesn’t help you develop a solution that benefits both sides. 

Coursera: So, what would be some questions that you would recommend someone ask when they’re, you know, selling their car to try to get the questions and information they need to be a great negotiator?

Dr. George Siedel: Well, if I were selling you my car, one important question would be, “Why do you need the car? What’s your role? And when do you need the car?”

I would also, as a negotiator, try to identify your BATNA. That’s B-A-T-N-A, and that stands for your best alternative to a negotiated agreement. 

In other words, you’re interested in my car, but if you don’t buy my car, what are your alternatives?

If I know, for example, that you’re interested in another car that has a certain price, then I know that if I ask for a price higher than that amount, our negotiation probably will fail because you’ll use your alternative and buy the other car. 

So, trying to identify your BATNA, your best alternative, because again, that signals how powerful you are in a negotiation and whether you can force the price down.

Coursera: Okay, so in that scenario where we’re selling a car, what would you say is one of the biggest mistakes that you could make in that negotiation? 

Dr. George Siedel: Trying to get your agenda across. Trying to focus on persuading me to buy my car. Talking about the wonderful aspects of the car, the wonderful features, even though those features might not interest you at all. 

If I don’t know your interests, I have no idea whether those features will be of interest at all.

So, the problem is focusing on persuasion as opposed to asking questions and listening. We should be focusing more on listening than talking. 

The other problem that many people have is preparation. You should do a lot of research before you enter into a negotiation.

I should do some research obviously on the value of the car so that I can use that research to determine the amount that I want for the car.

Coursera: And I know one piece of advice I’ve always heard is that when you’re negotiating a price for, say, selling your car, that you never want to say the number first. You always want the person you’re negotiating with to bring up that number before you do.

Do you agree with that piece of advice? 

Dr. George Siedel: Ah, that’s a great question. And it’s also a controversial question, and I can’t give you a yes or a no. 

Almost everyone in business will say let the other side throw out the first price. And there’s a reason for that.

If you don’t know the value of what you are offering, then one way to determine the value is to find out from the other side what they’re willing to pay for the product. That’s a very logical approach.

Let’s say a seller throws out a first price that is much lower than what the buyer had expected to pay, and so the seller is penalized. 

So one answer to your question is follow the business advice. Always let the other side throw out the first price. 

However, there’s a psychological principle called anchoring. And basically, what that means is when you’re in a negotiation when you throw out a number, the other side psychologically will anchor on that number.

 It’s a very powerful effect, and so if I’m the seller and I throw out a high price, your brain is going to anchor on that number, and that will become the basis for our negotiation.

So anchoring is the opposite advice to what a business person would tell you. 

Well, what I would recommend is if you’re selling something and you’re uncertain of the value of what you’re selling, then follow the conventional wisdom. Let the other side throw out the first price because that’s a way to determine value. 

On the other hand, if you’re feeling confident you know the value of what you’re selling, then you should throw out the first price and try to anchor the other side to your price. 

Coursera: Oh, interesting. Okay, so I’d love to hear what’s your best piece of advice to someone who wants to get better at negotiating? 

What’s the one thing they should keep in mind? 

Dr. George Siedel: First of all, try to identify your strengths and your weaknesses. 

In my negotiation course that I do for Coursera, for example, learners participate in a one-on-one negotiation. The other side will give you feedback, honest, candid feedback, on what you do well as a negotiator, and how you can improve.

So, what I would recommend is taking that information on how you can improve and keep that in mind as you read about negotiation, as you watch good negotiators. What are they doing that’s very effective?

And finally, just practice as much as you can. 

And if you do that with a mind towards asking questions, listening, and focusing on mutual interests, I think you’ll go a long way towards becoming a more effective negotiator.

Coursera: And when you say practice, would you namely be practicing what kind of questions you’re going to ask?

Dr. George Siedel: Yes. The questions that you’re going to ask along with the answers that you might give when the other side asks questions. Cause we’re dealing with an experienced negotiator, they’re also going to ask you questions. 

For example, I mentioned before the importance of your BATNA, your best alternative to a negotiated agreement, and the other side is going to try to find out what your BATNA is. 

Because if you have strong alternatives, they will realize how powerful you are. And so, when you prepare for negotiation, you have to think, “How am I going to respond when they ask me questions about my alternative?”

And generally, if you have a strong BATNA, let’s say, for example, that you’re a manufacturer, and you’re negotiating with a supplier. And you have other suppliers who would love to have a contract with you. 

You have a strong BATNA. In that situation, if I were the company, I would just tell the other side what my BATNA is. I would tell them that there are other suppliers who would love to have this contract, and so if you don’t meet my price demands, I’ll just go to them. 

But on the other hand, if I have a weak BATNA, if I have no other suppliers, then I want to be more secretive about my BATNA. 

So when you prepare for negotiation, you want to think about the questions you would ask, but also how you’re going to respond.

Coursera: And as you’re practicing the questions that you’re going to ask and some of the responses that you’re going to give, should you also be thinking about body language?

How important is that in the negotiation process? 

Dr. George Siedel: Body language is a little bit tricky because sophisticated people play with body language. And generally, there’s no harm in trying to read somebody’s body language, but I would recommend that you not be overconfident in trying to interpret other people’s body language. 

For example, once in a while, I’ll ask my class, can you tell when the other side is lying during negotiation?

A number of hands usually go up in the class. Yes, if they act in a certain way, if their body language indicates this or that, then I can tell when they’re lying. 

But yet, the research shows that actually, you cannot tell when somebody is lying. Only a small group of experts who have a lot of training and who study videos of somebody negotiating in milliseconds, maybe, maybe they can tell when somebody’s lying. But even they aren’t foolproof.

And so, I think the important message with body language is not to become too overconfident.

 So how can you deal with somebody lying during a negotiation? 

Well, it comes back to the importance of asking questions. 

The research shows that if you ask somebody a direct question, most people will not lie to you. Without that direct question, they might deceive you by not providing you the correct information. But they won’t directly lie when you ask them the question.

And so there’s another reason for asking a lot of questions in negotiation. 

It’s a way to flush out a potential lie by the other side.

Coursera: That makes sense. So I’m glad that we’ve gotten a high-level snapshot of some best pieces of advice to get better at negotiation, things you can keep in mind, and ways you can improve what you’re doing.

So let’s talk through some examples of what this might look like. 

How can you negotiate a better price for something, a lower price? Any advice on that? 

Dr. George Siedel: Number one: do your research. Find out what the value of cars are of the car that you’re looking at.

And use that research to, number two, determine the maximum amount which you want to pay. Again in negotiation language, this is called your reservation price.

And then also use that research to determine your target price, what do you feel is a reasonable amount to pay for the car. 

And then determine your stretch goal. In this case, your stretch goal is going to be a low figure. If I determine that a reasonable price is for the car is $10,000, then you might stretch them out by initially focusing on a figure of $8,000. 

And the research shows that people who set the largest stretch goals are the most successful. So, this is a very important tactic.

Coursera: So, what’s a reasonable goal? Say if the person you’re trying to buy the car from is selling it for $10,000, can you go like 25% lower? Or is there a percentage or range that you say is a good place or a number to put on that stretch? 

Dr. George Siedel: That is a fantastic question and also one of the most difficult and one of the most important.

The reason why it’s important is that if you go too far with your stretch, let’s say; you’re trying to sell me your car for $10,000, then I throw out a figure of $5,000. 

I’m going to lose credibility. You’re going to say to me, “Well, you’re obviously not interested in my car,” and walk away. 

So you want to pick a stretch goal that is really a stretch, but also not so unreasonable that you lose credibility.

And unfortunately, I can’t give you a formula for that. 

My general rule of thumb is: Is there some way you can credibly explain how you came up with the $8,000 figure? 

For example, could I say that, well, there’s another car I’m sort of interested in, and it’s selling for $8,000. 

Some way to back up the stretch number that you came up with.

Coursera: I’m really glad we talked through that example, and I’m curious. 

Are the tips for negotiating salary any different than what we’ve been talking about here so far? 

Dr. George Siedel: They’re basically the same. I get a lot of questions from my students about salary negotiations as they graduate from business school.

 And the problem that my students face goes back to BATNA. Often, they do not have strong BATNAs. They do not have a number of great alternatives when they’re offered a job. 

But on the other hand, the companies they’re negotiating with have strong BATNAs because they have hundreds of students they could hire as alternatives. 

So, BATNA is a big challenge. That’s why so many students coming out of college get locked into whatever the company is offering. It’s very difficult to negotiate with the company.

The other piece of advice is that this is where research is especially important. So, you want to look at websites that have information. Is the salary different in Atlanta as opposed to San Francisco? 

There are all kinds of questions you can research to try to be knowledgeable when you’re discussing salary. 

Coursera: And one thing I’ve always heard is that you should always offer a counter when you’re offered a salary for a new job.

Do you agree with that piece of advice? 

Dr. George Siedel: I don’t– unless you’ve done a lot of research and you have a strong rationale. And also, unless you have a good alternative when the company says no. 

 It’s an offer back to the company, so be very cautious about countering. 

Instead of countering, just have a general conversation with the company about alternatives.

Coursera: And now let’s talk through some recent data studies that have come out. I’d love to hear your take on some hot new topics. 

A study came out that being nice actually hurt the success of a negotiation. And this was specifically when negotiating price, and it was online. So asking for, you know, a lower deal on, say something you saw on Craigslist or Facebook marketplace or in the classified ads.

So do you agree with that? 

Do you see niceness as a weakness in negotiation?

Dr. George Siedel: I saw that study awhile ago. I had some big questions about the study because I wonder whether they were equating being tough with being firm. And those are two different things. 

And number two: I also have my own strong views, and that is your personal strategies of doing nice or being tough, aren’t all that important.

What’s more important is to keep your eyes focused on your strategy. Having a firm view of what your minimum is, what your target, what your stretch goal, what your BATNA is. 

But don’t try to be something you’re not. If you’re naturally a nice person and you go into a negotiation trying to act tough, I don’t think that’s going to help at all. 

Coursera: Oh interesting. And then, I saw another recent study that came out that identified challenges that women face when negotiating, things like self-advocacy, managing difficult emotions, overcoming resistance. 

Do you have any advice on overcoming some of those?

Dr. George Siedel: In my classes, I have never noticed a difference between the skills of women negotiators versus men negotiators.

So number one: I think there should be caution about stereotyping. 

 Some of the issues you just mentioned are problems for all negotiators. Men have problems managing emotion. Men have problems overcoming personal resistance. 

What might be a significant difference is not the ability to negotiate, but women might be more reluctant to start a negotiation. They might be more reluctant to ask for a raise, to ask for a new position. 

And again, caution with regard to stereotyping, but if this is true, if women are more reluctant to advocate for themselves, there are some solutions. Some of the research shows that women, while they’re reluctant to advocate for themselves, are willing to advocate for others.

And so for example, if I’m a woman and I want a more flexible work schedule, instead of talking to my boss and asking the boss if I can have a more flexible schedule, which is self-advocacy. 

Instead, ask the boss, “Hey, is there some way you can incorporate more flexible work in our organization? Because that’s going to help many people in our organization.” 

Then all of a sudden, you’re advocating for others rather than pushing your own agenda. 

If people are interested in learning more, I do have my massive open online course with Coursera called “Successful Negotiation.”

It covers essential strategies and skills. 

The course has a very simple framework. It follows the path of a negotiation. 

So, it opens with how you prepare for a negotiation, which as we discussed earlier, is really critical for negotiation success.

And then, second, it focuses on the negotiation itself. What goes on in a negotiation, how you can use your power, a checklist of psychological tools that are very useful in negotiation.

And then, third, how you close the negotiation. 

And then, finally, we focus on performance, how you negotiate disputes that might arise. 

So the course mirrors what happens during the course of a business negotiation. 

Coursera: To keep learning more about negotiation, go to Coursera.org today to enroll for free in George’s class, “Successful Negotiation.”

 And as always, thanks for listening and happy learning.