February 17, 2012
When I was a lieutenant in the Air Force, I bought my first car. I knew I needed to negotiate to get the best deal I could and I thought I knew what I was doing. I was fresh out of college and truly on my own for the first time. It turns out that I wasn’t a very good negotiator. When I tried to get the salesman to lower the price, he laughed at me. Ok, he didn’t actually laugh at me. He made a lot of statements about the manufacturer’s suggested retail price, the dealer’s costs, the invoice, and a lot of other stuff that sounded like a foreign language to me. We eventually began discussing the price in terms of what monthly payment amount I was looking for. When we reached an amount that I was satisfied with, the negotiation ended and I thought I had done a good job. Actually, I had just let him manipulate the interest rate and payment terms until he reached a monthly payment that was close to what I had asked for without changing the price of the vehicle at all!
Fast forward four years later. I had only six months left to pay on my car and I was out with a friend who was car shopping. I was NOT in the market for a new car. As I strolled around the used car lot I found myself standing near a Porsche 944. The salesman strolls over and casually points out how sharp that car looked. Remember, I was really NOT in the market for a new car. I told the salesman that it was a very nice car but it was nowhere near my price range. I was not trying to negotiate because it truly was nowhere near my price range and I was certain that he would never lower it that much. He offered to let me test drive it. I know that tactic of trying to get a person to fall in love with the vehicle by letting them drive it, but I wasn’t worried because I knew I could not afford that car. After I returned, the salesman took me inside to start the negotiations. I was so calm and cool because the car was so far out of my range that I was in no danger of buying. The salesman mistook my calm demeanor as a negotiation tactic (I later realized) so he began lowering the price. I shrugged off his repeated offers because I never expected him to keep going. When he reached his bottom line price, it was still too high. But then he surprised me by offering me above the Blue Book value for my car as a trade-in. That was all I needed to put the car in my range and I was sold! I had engaged in a successful negotiation without even trying.
Negotiations happen whether we intend them or not. Sometimes we try, as I did in my first example, and sometimes we are fairly uninvolved, as in my second example. In either case, there is still a negotiation taking place. Your assignment, should you choose to accept it, is to learn effective negotiation techniques before you find yourself unarmed in the middle of a tough negotiation. Consider the following tips as ammunition:
(Don’t worry, this tip will not self-destruct!)