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Saturday, February 7, 2015

You Can't Always Get What You Want.... But it's for Damn Sure You Won't Get it if You Don't Ask for It!

Or maybe Mick says its better.....

You Can't Always Get What You Want..... But if You Try Sometimes You Just might find... You Get What You Need!

Or maybe I should've titled the post simply...

Everything is Negotiable....

Almost everybody's probably heard that little phrase before but not that many really know what it means.

And even fewer that understand the principle behind the phrase actually put that principle into action.

And even fewer of that fewer actually reap any benefit from it.

In my experience and as far as I'm concerned, it is one of the easiest and most effective means of saving money and increasing your buying and selling power.

First, let's add a little meat to the bones of this Powerful Economic Principle and then we'll go through a few real life examples.

For this post and content, let's stick to the specific approach of asking for / negotiating a lower price or a greater service / product.... in other words getting the same for less price or more for the same price.

Here's a listing of general items / factoids / experiences / etc. related to the art of negotiating given in no particular chronology or order or importance or priority:
  • You have to have the right mindset and perspective to negotiate.  If you are squeamish about asking someone to lower their price or if you think negotiating or wheeling & dealing or whatever you wanna call it is a despicable act or somehow below your social and economic status, then just pay full price for everything and rock on.  If not, then read on.
  • This applies to everything in life, but is especially important when asking for a concession from someone..... BE NICE! If you come into a negotiation with an aggressive attitude or a "You owe me something" swagger, it's unlikely you will get what you want.  Be humble, courteous and open minded. If you are negotiating over the phone, smile while you are talking.... and I mean really smile..... Be happy.  It will come across in the tone of your voice and the words you select in your negotiation.
  • Assess whether or not the person you are dealing with and the environment you are in is open and / or appropriate for negotiation.  For example, a department representative at a large corporate retailer is not likely going to be able to negotiate for an item.  However, an individual selling an item from a Craigslist ad will  likely be more open to your negotiating effort.
  • Know something about what you are negotiating for.  Do some research / comparative analysis / shopping around for a similar product or service.  Get as much specific data, names, other businesses providing this service and the prices they provide the product or service at.  Create a unique collection of data for what you are negotiating for and use it to your advantage.  At the worst, the data may show that the product or service you are wanting is already at a fair or discounted price, which is powerful knowledge in and of itself..... maybe no negotiation is warranted or appropriate.  But in most cases, items are priced with some room for a lower price.  The higher the price of the item you're negotiating for, the more time and research is justified.  Think of it as paying yourself an hourly rate for the research and negotiating work you're doing.  If you do 2 hours of collective research and negotiating and you save $200, you effectively earned the equivalent of $100 / hour.
  • If possible, try to separate the negotiable item into different elements all of which can be individually negotiable.  For example, on a residence rental, there are at least 3 negotiable elements - Rental Cost / unit time (usually $ / month), Deposit, Duration of Rental.  The owner / lessor may be firm on the rental cost.  If that's the case, try negotiating a lower deposit.  They may want a 1 year lease at $1000 / month with a $1000 deposit.  You tell them that you are a worthy and responsible renter and give some specific data on that (references, length of employment, debt ration, etc) but based on your budget and cash flow, you could only provide a $500 deposit and prefer the flexibility of a 6 month lease vs a 1 year lease.  All they can say is No.... and, based on my experience, about 8 times out of 10, they will give you some concession that represents a monetary or logistical advantage to you compared to what you started with.
  • Have a Game Plan going into the negotiation aka Begin with the End in Mind.  Try to lay out a plan / progression for getting to what you want.  Do some calculations, some likely what if scenarios or responses from the product or service provider and how you will respond to them. Write this plan / data out and go over it a few times and commit the process to memory.
  • In almost every scenario, Ask for MORE than you want.  This sounds pretty logical, but you'd be surprised how many people don't understand this.  Most people in general want to negotiate so set your negotiation up for the normal flow of give and take that is inherent to this process.  For example, if someone is asking $1000 for something and you don't want to pay more than $750 for it, the negotiating principle of "split the difference" requires you to make a 1st offer of $500.  Why?  Because $750 is halfway between $500 and $1000.  It's likely the seller will say something like, "There's no way I'll sell it for $500!".  To which you are prepared to say, "Well, what's the lowest you will go on it?".  And hopefully and likely, the Seller will say.... "I guess I could go down to $900".  See?  In 2 sentences, you've just saved $100!  You have to judge the situation and the firmness of the Seller's 2nd offer.  How adamant was he about the new lowered price of $900.  If he still seems open to negotiation, and you are trying to get to $750, your next offer needs to be somewhere between your initial offer of $500 and your desired outcome of $750.... Say $600 or $650.  Maybe his next counter is at $850.... then you're almost there..... go to $750 and tell him that's the best you can do.  Who knows?  Maybe he'll take it.  Anyway, that's kinda the method behind the madness.
  • If / When the negotiation results in a new price or set of terms and conditions, repeat those back to the Product / Service Provider to confirm the new agreement.  If the product / service negotiation is not in person, confirm the new agreement with an appropriate documented communication - Text, Email, Written Agreement.
There's probably a lot more bullet points I could write out but hopefully you get the idea.

Here's a few examples where I have applied a few of the principles / approaches from above to recent negotiations:

  • When I came down to Santa Fe in late December 2014, I was originally gonna do a 1 month rental on a furnished motel room with kitchenette.  After living in one of the units for a day, I realized this wasn't gonna work so, at my wife's suggestion, I checked the Santa Fe Craigslist for furnished rentals.  One of the first ones I focused on and called about was a 2 bedroom casita just north of the Plaza.... Prime location.  The asking price was $1960 / month.... somewhat out of my price range.  I called the property management rep and asked about the property and viewed all the pictures and decided this was my best prospect so far.  I couldn't see the inside of the property but did drive to the location and view the neighborhood and verify the easy access to the plaza.  It was nice and I wanted it and there wasn't a whole lot of other options, but the property management rep didn't know that.  I decided to start my negotiating at $1200 / month.  The rep said she couldn't do that but she came down to $1650 / month.  That told me right there that she needed to rent the place and was willing to come down on the price to do it.  I offered her $1400 / month and she said she had to call the owner to approve that kind of price concession.  Five minutes later, she calls me back and says "Let's do it".  I give here the drafting instructions for the rent and 10 minutes after that I got the keys and am moving into a beautiful, furnished 2 bedroom casita with all the comforts of home in a beautiful neighborhood in Santa a 29% reduction from the original price!
  • I needed a bike when I came to Santa Fe and I shopped around for a rental.  About the best I could do for a month's rental was $300 for a Townie bike at New Mexico Bike N Sport on Cordova.  I thought to myself.... Hell, for $300 I could buy a bike.... so I went on to Craigslist and found several prospects and called / emailed about them.  One of the bikes was an older Bianchi Advantage with a rear rack and 2 baskets on the rear rack.... Perfect for what I needed.  The seller contacted me and we arranged for the bike to be brought to my location for inspection.  The Seller had the bike listed for $145.  I did some quick (5 mins) research on the web and went to a site called and found that this bike was worth about $125 in good condition.  Armed with this knowledge, I met with the buyer and inspected the bike and took it for a test ride.  I found out pretty quickly it wouldn't shift on the rear derailleur. I concluded that it was just froze up from lack of use.  I got out my bike oil and worked on the shifter a bit and got it halfway working.  I also noticed that one of the brackets for the attachment of the rear rack to the frame had the derailleur cable pinched.  I told the seller that if the bike was in good condition and working order it would be worth $125..... but that in the condition it was in, it would require some work and the best I could do was $80 cash.  Seller said OK and I did a little work on the shifter and freed up the cable and have been riding the bike ever since all over Santa Fe and in Durango.  I've probably put 200+ miles on this bike and could easily sell it for what I have into it.
  • My motel rental in Durango was a 2 bedroom bilevel motel room with a kitchenette but it didn't include a stove.  I asked the manager if he had any rooms that had a stove or cooktop and he said no.... but he did have a "common area" room that had a stove in it.  I told him that cooking my own food was very important to me and that I couldn't rent the room without access to the stove.  He agreed to that and provide me a key for 24 hour access to the room with the stove.
  • Recently, I contacted a car / truck dealer down in Angleton Tx, my old stomping grounds, about a deal that would involve swapping my 2014 Ford Mustang GT Premium with 9600 miles for a new 2014 Ford F-150 STX Sport 4x4 SuperCab.  Upon initial inquiry, the dealer rep said his used car department could only give me $25000 for trade-in on my Mustang, a number I knew was too low because I had researched several different websites like (Kelly Blue Book) and knew the retail value (what the dealer could sell the car to the public for) was more like $29,000 - $29,500.  I related this information to him and explained all the options on the car and the low mileage and told him he had to do better than that.  In one phone call, he had come up from $25000 to $28000.  I stopped the negotiations at that point because I hadn't decided whether to do the transaction or not, but the point is that a little bit of knowledge about the true value of the car and some conversation regarding it netted me a $3000 improvement on the offer.
  • CrossFit Box memberships and fees vary widely based on location, facility and services.  Down at CrossFit WMD in Angleton Tx, I was paying for a 15 workout punchcard for $150.  CrossFit Durango did $12 / workout for 3 workouts or more for Traveling Athletes.  The first month I was in Santa Fe, I paid $150 for 10 workouts at Zia CrossFit.  When I came back I used the data from CrossFit WMD and CrossFit Durango to negotiate a 10 workout punchcard for $120.... a savings of $30 or 20%.
  • On the Sell Side, I've listed several household items on Craigslist.  I had a nice small rolltop desk listed for $125.  I knew I wouldn't take less than $100 for it.  A buyer emailed me about it and asked if I'd take $85 for it and I said No but if they'd come and get it, I'd come down to $100.  Done Deal. Desk sold.
And all these examples have happened in the last 6 weeks!

Am I a Star Negotiator?

Absolutely Not, but I do try to use a few basic skills and knowledge where applicable to save money or get more for my money.

Is this sort of Give and Take Price Negotiation good for everyone?  

Probably not....

But if you think you're up to it and can use any of the suggestions above to better you and your family's life....

Go for it and Good Luck to You!

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