The Big Secret of Negotiation

There’s a lot of rubbish written about how to be a great negotiator. I’ve read loads of articles about negotiation and to me they all totally miss the point. They miss it by such a distance that they’re not just useless – they’re actually detrimental.

business negotiation
photo credit: Mait Jüriado via photopin cc

Negotiation is often talked about as a skill, a way of getting a better deal out of a situation. But really negotiation is about the balance of power. Let me give you an example:

When we were working with our web designer we had to agree a price for his service. The price could have varied quite dramatically; some companies charge £500 to design a site and a top agency might charge £10,000. So what do we pay for the site? It isn’t the quality of his sales pitch that makes the real difference, or how we anchor the price, or how we smile and make small talk.

All that matters Is THE BALANCE OF POWER: how much we need the site versus how much the designer needs the contract. This is a consequence of how good we are as a client and how good the designer is (how many people can do what he can do).

In our case, we knew that the market was saturated with competent designers. The designer we had chosen didn’t have outstanding ability and – to be honest – at that stage we didn’t really need a top end site wasn’t great. Even more to the point, we could only afford a low amount anyway.

You can see that we held all of the cards in this negotiation. The result: a low price for the site. The price was determined by the balance of power. As there is an over-supply of web designers at his level, our designer had to put is price down.

We sometimes hire writers for our business. In the broader market, the price for a 1000 word article varies significantly – anything from £5 to north of £500. We pay about £5. Why? Thousands of university students are looking to get into writing, and writing an article for us improves their exposure. In fact, if we could be bothered, we could almost certainly get writers to do articles for free.

On one occasion, a good writer asked me for more money. He presented it as an ultimatum: more per word or he’d leave. As much as I liked him, I didn’t think twice about showing him the door. We had 500 unread CVs in our in recruitment folder – it was a buyer’s market.

So how do you become a good negotiator? Develop something of value. Had the writer or the web designer been of high quality and indispensable to me, I may have considered paying them extra. In a negotiation, you get a good price if you can offer a lot. So instead of thinking about how to be a better negotiator, think about how you can add more value in whatever you do.

About the Author: Hi, my name is Alex Chubb and I’m the director for a company called the London School of Attraction. We’re based in Soho and we offer dating advice to men and women. Here’s our website