Originally posted on on the e-Sourcing Forum [WayBackMachine] on Thursday, 6 December 2007

Recently, Michael Soon Lee posted an article over on uPublish.info on “Ten Negotiating Mistakes that Cost You Thousands” that deserves to be highlighted. Although it made heavy use of martial arts metaphors, all of the points are simple, important, and easy to understand on their own and we can easily work them into a sourcing framework.

1. Being Afraid To Bargain
Do you want to pay full price? Or do you want a deal? It’s up to you, but if you don’t bargain, you will pay full price.

2. Forgetting that Everything is Negotiable
Who says it takes seven days advance notice to ship an order? Why can’t it be five? Who says everything not on contract has to be at catalogue prices? If you’re buying $10K worth of an item – that’s worth a discount.

3. Believing It’s Not Worth Haggling Over Small Items
Let’s say you are buying for a large enterprise that buys 1M worth of Laser Toner annually and $250K worth of paper. Don’t just settle for a 10% discount on the Toner – a 5% discount on the paper is equal to $12,500. That could be your bonus!

4. Thinking About Ourselves First
Michael quotes the ancient Chinese saying “To defeat an opponent you must first think like an opponent.” Master bargainers are always thinking about what’s in it for the other party. There has to be a clear benefit to the other party for the other party to negotiate seriously. Before they give you a 20% discount, they’re going to want a significant order or commitment. A master bargainer figures out what the minimum commitment would need to be for an offer to make sense to the other party, and is prepared to ultimately make that offer.

5. Making The First Offer
As a buyer, once you make an offer, you can only go up. Try to get the seller to make the first offer because, as per the rules of the game, if it’s a buyer’s market, the price can only go down from their.

6. Being Too Nice
If you must make a first offer, make it low. And don’t be afraid of no. Remember, the negotiation isn’t over.

7. Being Too Eager
Take your time and don’t add undue pressure to the situation. The last thing you want to hear after a first offer is “okay”. That means you offered too much. Remember, in some cultures, negotiation’s do not start until after a mutual level of trust has been built between the parties – which might take two or three weeks of casual conversation and joint activities.

8. Not Doing Your Homework
Be sure to know what the current demand is, what the average profit margin in the industry is, what competitors are quoting, and what leverage you have. Otherwise, you’re not going to get the best deal.

9. Not Playing To Win
It’s true that you’re not going to win if you don’t think about the other party and are not willing to make the offer worthwhile for them, but that doesn’t mean you play to tie. Your goal is always to get the best deal you can while giving up as little as possible. After all, if the other party agrees to an offer, then they must think it’s fair and benefits them.

10. Missing Opportunities
Remember that everything’s negotiable and don’t make a single purchase off-contract without asking yourself “is this the best deal I can get?”.