Tactics to get a good deal

At some point in life, you're going to need to negotiate. Whether it's buying a used car, a house, agreeing a salary for a new job, buying (or selling) software or agreeing terms with an investor, negotiation will come your way whether you like it or not.

There are a few rules of thumb that I'd always recommend.

1/ Never make the opening move.

The first move in a negotiation draws a line in the sand. If you're buying, it shows how much you're willing to spend, if you're buying, it shows how much you're willing to accept. It's much better to get the other side to reveal their cards first.

2/ Treasure information

At every moment until a deal is done, it's in your interests to find out as much information you can about the other side without revealing too much information yourself. If you do reveal information, offer up harmless information that doesn't strengthen the position of the other side. Ask questions, be curious. Find out what is important to them.

3/ Have viable alternatives

If the other side knows that you have a viable alternative, you're in a much stronger situation. In a negotiation, you have your best bargaining power when you have alternative options and better information. So, be sure that other side knows that you have alternatives.

4/ Create multi-dimension deal structures

The best deals are the ones that create maximum value for both parties. To do that you need to bargain on more than just price. Things that you can bargain on other than the basic price (depending on the type of transaction) could be; added extras included for free, better payment terms, volume discounts, marketing exposure, a rent-free period and so on. The reason this works is that you will give up things that don't cost you much but have value to the other side. The other side will do the same - they will concede on things that matter to you but have lesser impact to them. So - to create maximum value in a deal, increase the number of things that can be negotiated upon. A package that works for you and also works for the other side is the surest way to get a good deal and to get it done.

5/ Know your numbers & be prepared

In the event you can create a multi-dimensional deal structure with lots of levers, be ready to know whether you are being made a good offer or not by creating a simple excel model with the inputs (what's included / not included) and then calculate what that would mean to you over the period that matters to you (e.g. 1 year, 2 years, 5 years). That way when the other side makes a suggestion, you can easily see the impact. Have the model on your laptop in the meeting but don't reveal it.

Everyone likes a good deal.

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