TL;DR - Don't buy a car or house using the same negotiating strategy you would use to negotiate a professional services contract.
I never try to put the other person in the unenviable position of actually having to ask the manager (not the fake ask the manager show they put on). I do however call up friends and find out what the thing costs on the invoice and then go in with that as my offer. (If you are diligent enough to poke around online forums and find the right people you could probably get the same information).
Success rate: The last 2 vehicles I've bought I could have sold the same day for more than I paid.
Story turned out to be that they didn't control the mix of cars that they got, but they could sell every Prius with all options for top dollar. So internally they marked other cars down to sell fast so that they could get more Priuses.
It goes to show how dealer incentives don't always align with the manufacturer's.
(This was in Santa Monica in 2005.)
If you end up with a similar situation in your next vehicle purchase it might be worth writing up a blog. I know I'd read it!
The purpose of this system is partially to obfuscate the real "invoice" price so buyers searching the internet (or services like Edmunds) can't accurately price the car. It also allows the manufacturer to exert more control over dealers.
As an example, I got to know the leadership at the DGDG dealer group in the Bay Area over the past couple of years, and they've fully embraced the notion that there's not much money to be made on the sale itself -- and the more you try to make, the more your customers dislike you.
Instead, they aim for the price you might be able to negotiate down to somewhere else, and focus on making it an extremely pleasant experience. The goal is for you to return for trade-ins, maintenance, and all other auto related transactions.
I am not disagreeing with your negotiation strategy, but why would the dealer be unhappy about making a sale?
That doesn't effect the price you ultimately pay, just who gets what.
(E.g. your "true" interest rate is 2.5%, the dealer gets you to take a loan at 3.9%...they pocket the 1.4%)
Presumably, for a job or professional services contract, where there is significant post-agreement interaction, the article's prescription for and reasoning behind not playing hardball still applies, even if the other party plays hardball.
The salesperson is not your friend. They know this already and the sooner you realize it too, the sooner you can get to a reasonable deal.
>there are no negative consequences for you. did not prove true.
I have free service for the first year or so, not to mention all the warranty issues (none of those yet knock on wood) and guess which dealership is the only one close enough to my house to have free shuttle service?
That's right, the dealership that I absolutely destroyed in a game of hardball when buying the car.
Talk about a Pyrrhic victory.
Edit: maybe the service department of my dealer is just really bad. I was assuming the poor work they were doing on my car was related to my experience with the sales staff.
Making the customer feel that they took the dealer to the cleaners is a time-honored sales technique. They still made money off of you, and will be happy to treat you just like any other customer.
Service and Sales are completely different departments. They rarely speak. They rarely interact. They report through different managers, sometimes up to the VP level for large dealer groups. I've known a handful of car salesmen (half dozen or so) and quite frankly can't believe a story like yours would ever happen at any dealership large enough to have both an in-house service center as well as free shuttle service.
dealership that I absolutely destroyed
To these places you are a "type". They probably clocked you in moments as "guy who like to think he's playing hardball and winning" and walked you through that set of conversational gambits. At the end they end up with a profit in their acceptable range, you end up feeling you came out ahead. "win-win"
It's certainly possible they made no money on the sale itself for a variety of reasons.
You might have got them down to net zero on this on - I have no idea. But the vast majority of people who think they did, didn’t. Just part of the game.
There are pretty reliable ways to get a good/better deal , but they still make a bit of money. And you’ll usually compromise something too.
There may be exceptions, but I haven't seen them.
This one is useful when the two parties are equals, but it is horribly wrong in negotiating with a future employer.
Once they've identified you as someone they want, and they've made you an initial offer, nothing you can say* will make them walk. And if you negotiate well, you'll be identified as higher value than someone who didn't.
*Within reason - if they offer $120k and you ask $150k, that's fine. If they offer $120k and you ask $500k, you might run into problems.
You don't want to work for these companies.
Some companies will try to feel you out for salary right off the bat in order to "weed out" anyone who would ask for too much money, and you need to always resist this.
This is why so many places have a "Salary Expectations" box or something similar on their interest form. Some will even try to brow beat you into saying a number. Never do this until they've named a number first. This puts pressure on them to offer something reasonable right off the bat, instead of having the pressure on you to not ask too high.
A hiring manager, after having offered $130k, would never do something that stupid.
The less they need you, the less this is likely to matter. But if they really need you then of course your price is high!
President Lincoln summed it up best:
"If you would win a man to your cause, first convince him that you are his sincere friend.
"Therein is a drop of honey that catches his heart, which, say what he will, is the great high road to his reason, and which, when once gained, you will find but little trouble in convincing his judgment of the justice of your cause, if indeed that cause really be a just one."
I teach some of the principles of rapport to stand-up comics. For example, do your material until they start ignoring you, then talk to the audience. When they start paying attention, return to your prepared material.
I prefer to think of this as winning the short vs. long game. If a person wins this single deal for +5%, but blows up the relationship, they have likely lost the long game. Now any future deal with the 'loser' will be harder, and there may be ripple effects out to other deals.
The above is not only with business deals, but with but life in general.
I personally can't stand it when rich foreigners try to get a souvenir for a few dollars less than the list price. That infinitesimal fraction of your wealth doesn't matter to you; but it could make a big difference to them. And similarly, I hate when I have to treat business deals as if I'm negotiating with a hostile enemy, when we can both benefit.
That said, the GP comment was about trying to win the long game by sacrificing the short game, and I meant to point out that there is not always a long game and even if there is, not everyone subscribes to the same win/win philosophy and recognizing when your negotiating partner doesn't is a valuable life skill.
If you don't haggle in haggle culture, you're missing out. It's just part of the experience.
Of course you may not enjoy it, in which case missing out is preferable but it serves many purposes.
Yep, this is an excellent point. The interaction doesn't quite take place in isolation: it's in a societal environment, and your actions can return to you through that network in some form.
Is it really true that you would win nothing? I think that one might be a better person to leave just a little on the table rather than have that random trinket vendor right on the knife-edge between taking the deal and refusing it.
One might even say that one could win one's soul!
"Real" negotiation takes place when there is no such equilibrium. For example, hostage negotiations, car sales, or a negotiation between a landlord and the tenant are of this sort. Maximizing your utility minimizes the other's utility, and vice versa. These types of negotiations proceed only by using psychology to trick the other side into making concessions. Being a tough guy is mostly counter-productive in such cases, too, it's more about exploiting cognitive biases like the anchoring effect. This activity is adversarial.
Good mediators are people who are able to turn such win-lose scenarios into real bargaining with win-win solutions, not by mere "reframing", but by really changing the decision/distribution problem. That's often possible, if you make the goals of the participants and broader setting/presumptions part of the negotiations.
Ummm, hostage negotiations probably don't have a win-win, but I think that it's at least arguable that car sales and landlord-tenant negotiations do.
After all, it's a win-win for the car buyer to have a car and the car dealer to have some dollars (lose-lose would be for the car-wanter to have no car, and the dealer to have no dollars). Likewise with landlord-tenant negotiations: the tenant wins by getting a place to use, and the landlord wins by getting money. Sure, the tenant would like to use the place with no restrictions whatsoever, and the landlord would like all the money of the richest tenant ever, but there's a point where each gets enough of what he wants to make the deal worth making.
This is why it is easiest to negotiate when you don't actually need to.
Back then I didn't know the tricks of how to negotiate in such adversarial situations. Our goals were really just "raise rent vs. keep rent as is". You could say that it was still win-win, though, for example by pointing out that our secondary goals were to maintain good relations and not have any lawsuit.
In general, because of the information asymmetry and extreme advantage the employer has over the employee, accepting a weak offer can mean leaving over 30% on the table, and that matters to individuals. (It matters to some companies)
You can have healthy conversations explaining that you want to reach an agreement that's good for both of you and still explain that you need to get paid. Companies and recruiters actually value that _more_.
My recommended reading/listening on negotiating as an employee is patio11's posts.
As a company, yeah, don't try to "win" and be fair (as much as is possible given funding constraints)
I think this is easier said than done. A lot of negotiations are invariably started with very incomplete information. Knowing what a fair offer for the other side would be often isn't clear.
In those situations, usually the path to getting the best outcome is more about you. If you deeply understand what you need, especially as compared to what you want, you can get relative advantage.
Usually people who are selling things care about this quarter more than next year. If you understand what they need to get, you can usually find a way to make things work.
There are exceptions to every rule, but I've negotiated with Russians, Chinese, Americans, British, French, Italians...and just about every other European country and probably a few others I'm forgetting. (Deal sizes have been 1m+, but there's definitely layers above that where I don't have experience.) In all my experience thus far, I can honestly say I've only ever had the displeasure of having to manufacture a 'loss' once. And that was dealing with an American, albeit he was working for a large Chinese company.
I'm always eager to hear about other folk's experiences, so if you can give some more insight into what cultures you've seen this with and how you've managed to handle it I'd love to listen!
edit - I just realized the tone of this might come off as a tad 'superior' and that's truly not my intent. If you have experiences that can potentially make me better at what I do, I'm genuinely eager to learn.
I would note that some people view negations as win/lose. Personally I prefer not to do business with them. Edit: this is really covered by the "be prepared to walk away" rule.
-- Below is how I mitigate that in my world, but if anyone has good strategies/tactics to handle such scenarios, please share!
Being well-informed means going in with the best possible knowledge. Of course, there's always the chance to step on a land-mine, but more often than not if you put in the work you can learn everything you need to know to frame the negotiation in a constructive manner.
Some really important points that are relevant for what I do (and may help others!)
1. Who are the stakeholders in the negotiation? Is it the person I'm speaking with, their superior, or a party much farther removed (shareholder/board member/internal influencer) that must be identified.
2. Who in their company is responsible for the information I need, if such a person even exists? Can I address the relevant questions directly to this person? (Sometimes this is as easy as sending an email and literally just asking. Sometimes not)
3. What are their high-level goals? If they are a public company you can glean a lot from their public reports and financials. Sometimes you can find out that you're basically swimming upstream, and sometimes you find out that your counterpart is basically mandated to make certain decisions.
4. Is there any visible progress towards their goals? If they're struggling to make headway, and you can identify this, you can re-focus the discussion on making their pain point go away. (This depends heavily on what you do, but for my field, I can almost always find accurate information)
Ultimately, the prep work for a serious negotiation is what we internally call CIA work. It's a lot of intelligence gathering, asking (sometimes indirect) questions to get some insights, and doing the due diligence to ensure that we're as informed as we can be. Even with all that effort negotiations still fail sometimes. But if they fail, it's usually because the type of deal that would be struck wouldn't make sense in the first place.
Of course, this doesn't apply to hostage negotiations or to what I could only describe as 'toxic' scenarios.
The assumption here is that you have access to that knowledge. In many cases, you just don't. You can't address it by emails or talking to anyone. All these scenarios aren't necessarily 'toxic' but common in daily life.
Interesting approach which uses Emotion aware technics to get what you want. The main point - let your opponent to negotiate with themselves.
Obviously neither of these needs can be successfully ignored, but thinking of it this way helps me mitigate the guilt that comes with asking for more, without engaging the "winning" rhetoric even subconsciously.
Like everything, it depends on the situation. But this seems to be key to me. Most people seem to walk in with expectations of leaving with something. If you're not willing (or able) to walk away, you're at some kind of disadvantage.
My basic rules for all negotiations:
1. Be useful to your counterparty. (Simply, this means to be well-informed and listen intently. Present any information they need as they need it. Don't be the type to 'bury' the opposition in paperwork when you know they're looking for a few specific details.)
2. Be empathetic to their needs. (Everyone has a reason to show up to the table. If you can identify, with absolute clarity, what they need - you can help them get there. In return, it's often MUCH easier to get what you need.
3. Don't try to win. (The extra 1-5% you might gain in most cases is outweighed by the negativity of the event. If you're negotiating with a future employer, vendor, or potential client, then the value of having them actually want to talk to you is greater than the difference most of the time.)
And lastly, #4 - If your counterparty plays hardball with you, give them a truly fair offer that addresses their needs. If they don't take a fair deal when offered, be prepared to walk away.