12 Negotiation Tricks Every Startup Entrepreneur Should Know

By Divyesh Kharade|10th Oct 2011
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Negotioantion
  1. An entrepreneur spends a lot of time negotiating in his life. It can be with vendors, customers, employees, investors or even family back home. Having spent a lot of time with purchase or supply-chain guys in enterprises, whose primary job is to negotiate day in and day out, there are quite a few tricks that I have picked. You won’t learn these things in b-schools as they have been learnt from a lot of first hand experiences and trial and errors.Play your cards close to your chest: A lot of times, the buyer will try and de-value your product or service by asking you things you don’t possess even if it isn’t critical for him. It makes you think that this is going towards a no-deal and you invariably quote a lower price. What you can rather do is, do not reveal all you have immediately and instead ask questions like: “what are the 3 critical things you are looking for in this software?”, when you have the answers, you can project your product better.
  2. Create an alibi: You can act as if you do not have the final authority on finalizing a deal, and you have a boss or board or someone to report and answer to. This will ensure that you buy enough time to think over their counter offer, it is never a good idea for a decision maker to negotiate directly. Creating an alibi works fabulously well while avoiding awkward situations while declining unwanted counter offers.
  3. Time play: The person who has the holding power or time on his side will be the eventual winner. The one that shows desperation first and shows signs of crumbling under selling pressure or buying pressure (yes I have seen buying pressure too with customers) will lose. Even if this deal is critical for you to meet your targets, try your best not to let it seep in your behavior.
  4. The “surprised” look: When you first quote a price, the buyer will give you a surprised or startled expression something like “WHAT???” It makes you feel as if you quoted something really exorbitant or way beyond market standards and your body language starts showing insecurity about losing the customer. (I have myself used this trick being a buyer) Try and hold your fort by giving market standard examples instead of rushing with a lower counter offer.
  5. Silence is golden: More often than not, the person that speaks a lot ends up on the losing side. While you are speaking bonkers about your product and stuff, the person in front is busy plotting a strategy to pull you down. Silence is a golden tool, it kind of puts pressure on the buyer to talk in that awkward situation.
  6. The emotional connect: I learnt this on the streets of Mumbai from the road-side hawkers. Being a buyer when I asked him for a better price, he went all emotional about the efforts he had spent and told me to take the product for free and pay only if I like using it. Occasionally asking me not to demean his profession by negotiating or bargaining. Though it’s a little cheesy while dealing with enterprises, having tried it myself, have seen it work!
  7. The blackmail: Using words like “don’t let me down” and “we are close, don’t walk away” work in a way in which the buyer instead of negotiating, gets in a consoling mood, that’s when the rod is hot and you can hit the hammer!
  8. Drop the price, take a hit: In the course of the conversation try and understand which of the feature or part is THE most critical for the buyer. When the negotiation gets inevitable, drop the price but strike off the feature which is most critical to him. It will automatically get him on the back-foot.
  9. Walk out: Once you are convinced that the buyer really needs your product or solution, do a walk out below a pricing point. The buyer at that point would not want to lose on getting this deal in. Beware that this may backfire though if you come across highly egoistic buyers.

10. Half price trap: The buyer will try and cut your price to half, which you might flatly refuse. But after sometime he may ask for a lower discount, which may seem reasonable for you compared to half. Avoid getting in that trap.

11. Pull back your offer: You can try giving an offer and then pull it back after sometime behaving as if you gave away a little bit too much. The buyer will try and latch on to it thinking it’s a good deal. You always wanted to give that offer, but a straight offer would have been rejected.

12. Create a mountain out of a molehill: Project some part of your product as something really valuable which you can’t give away for free even if it isn’t that important. After some negotiations offer to give it for free. It will make the buyer feel a sense of victory at the same time will not affect you much.

Negotiation is actually a way in which to achieve at a point that both the parties think it’s a win-win situation. A deal can’t go through with any of the parties feeling dissatisfied. The above pointers can only help you close that deal efficiently but the success will all depend on your product and service.

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