One of our close friends once told my wife that she would hate to be involved in a negotiation with me. I took that as a complement. She mentioned that because she knows whenever I enter a deal, I always look to establish a strong position and to get the most value out of that situation as possible. I have never purchased a big ticket item (i.e. a big screen TV, grill, or guitar) without taking the appropriate steps in securing the best possible deal on that purchase. Let’s face it – if you could spend $3500 on a big screen television or spend $2500 and have the balance left over for a brand new living room set (which by the way actually retails at $1400), which would you choose? The negotiation process is as simple as the questions that you ask and the information that you gather in advance. When we decide as a family that we are interested in purchasing a big ticket item, I always tell my wife that I need to research it first. She tends to get a bit frustrated at first because her impulsive nature wants to immediately pull the trigger. However, after a few analysis hours on the Internet, I show her how we can save hundreds or even thousands of dollars based on the information that I have obtained.
Unfortunately, one of the realities in life is “The less you know, the more you blow.” You need to gather as much information as possible prior to entering any negotiation. One of the best examples I can provide is the tenuous process of purchasing a car. If you blindly walk into a dealership without any preparation, you may walk out feeling like you secured a great deal. Unfortunately, what you did not know is that although the sales person dropped their number over $1000, you were still thousands of dollars above the vehicle’s actual invoice price. As mentioned earlier, prior to a purchase I always refer to one of the best consultants available – the Internet. Online one can find out the current MSRP and invoice price for all new vehicles on the market. You can also identify the cost, not price, of selected options. When you are making a purchase or selling a product, you need to begin by setting your target price and your base level. Your target price represents the optimal price level that you would like to When on the other side of the table, you need to establish the lowest price that you would be willing to buy or sell at in order to secure the order. In most cases, if you have done your homework and are prepared for the negotiation, you should never reach this number.