Vendor: Spring Onions 10 Rs.
Me: Give me two for 15
(Give him 20 bucks)
Vendor: I got only 2.50 Rs. Change
Vendor: Here’s a piece of Ginger
Deal concluded. Please tell me, who has bargained well in this case?
“Nothing in this world is worth the Selling Price”
We all bargain at some point or another. If you come to Mumbai and shop on Linking Road and Fashion Street and don’t bargain for the apparel, you will be considered to be ‘dumb’. It’s a good thing India isn’t full of retail outlets with the prices all fixed. There are other price-flexible places to shop.
The principles that we learn while bargaining as kids or at the vegetable market place, affect how we deal with nearly everything in our lives. This also carries forward into our corporate work as well. So it’s important that we learn how to negotiate deals in the Vegetable market and save those few rupees before we take on the huge corporate transactions.
Bargaining and negotiating, as I have learnt, require two things:
I have put down points here which are from a buyer’s perspective. But the reverse can also apply to Sellers.
Leverage: You need to have some leverage over the other person in order to get him to reduce his prices. This leverage could be in the form of
- A big purchase, or in other words (major revenue for him). That is why the Economies of Scale are very important when you make purchases. The more you buy, the better and cheaper you get it at.
- Stock Clearance, if you will pay for his stock that we would otherwise have had to discard, the seller wouldn’t mind reducing his prices.
- Long-term relationship: If he is aware that one deal could make you his buyer for a very long time.
- Image: Often some sellers would reduce their prices if the client they are servicing is of high brand image in the market. E.g. showing your client profile having Tata Steel Ltd. Is lot more sparkly than showing Madupatty Motors as your client.
- Mutual benefit: Everyone is looking for their benefit. You need to find out what is that your seller is in need of that you can provide and often it is not the money but some intangible element e.g. As I mentioned earlier image, as also Goodwill, new market opportunities etc. Flattery too, is very effective.
If you’ve got something they want, that’s when you can start negotiating. Negotiating beyond the extent of your leverage is a huge skill that comes with practice.
Some of us find it hard to even negotiate a deal at least to the extent of our Leverage. One of the main reasons for that is humility.
Humility: The word doesn’t mean putting down yourself in front of others. It’s the attitude that makes you say that someone else has something very good in him and you shouldn’t reject that. How this applies in negotiations is that if a person who has a great big image about him and considers it very important to maintain the same, he will find it difficult to stoop, as it were, to make a bargain. When you go on negotiations and are making some major deals, ensure that the guys you are taking with you care a hoot about their own image. Yes, the company’s image is important but that is another issue altogether. When going on a bargaining trip, make sure that you don’t look to make an impression of yourself with the opposite party.
- You’re working for your company, not his (the buyer’s),
- and you want the best deal, not him
- You don’t want to make him happy you want to make your boss happy.
Don’t be afraid to bargain. Some prices are never fixed. I learnt from a friend in the Real Estate business, some big builders quote a high price because they can sustain no sales for a long time. The other small builders will be more than willing to reduce their rates.
I just thought I’d share these few things with you. If you think I’m missing some points here please let me know. I’d love to learn from you!