Recently, I traveled to Beijing on business and after a long week of great meetings and success with my business partners, I decided to take a trip to Beijing's famous Silk Market. I thought it would be great to get a few gifts for family and test my negotiating skills. I wasn't disappointed! The Silk Market is a six floor building of every type of vendor you can imagine, selling just about anything you'd ever want.
Here are a few lessons I was reminded of as I made my way through the six floors of unbridled bargaining and negotiating.
Make Sure You are Prepared With the Right Resources
No matter what in any negotiation, you must make sure you are prepared and have all the details to be successful. That means making sure you know all of the angles of a deal, or having the resources that do by your side to help you. I walked into the Silk Market at a disadvantage right from the start. I had never been there before. I didn't know what the going rates were for "good deals" on the different items that I was looking for. And I certainly, didn't do any preparation.
But, I did have one advantage. I brought the right resources. A friend of mine, a long time resident of Beijing came with me. They knew this place inside and out and knew what "good deals" looked like. I was fortunate to be able to bounce thoughts off them and ask them simply if the prices I were negotiating were good or not. If there weren't, they'd give me a little shake of the head telling me to negotiate further. If they were, they'd tell me the deal was good.
Having the right resource by my side allowed me to pay at least 30% less than the initial negotiations (which we were pretty deep cuts already).
Be Willing to Walk Away
This is something I learned a long time ago. If you are not getting what you want, don't get emotionally invested...just walk away. You'll eventually find the deal you're after. And, of course, it's really good if you can get the other side emotionally invested.
How do you know they are emotionally invested? You walk away. And if they start further negotiating or trying to pull you back in, you know you are in the power position.
This worked on several occasions through my trek through the market, but the one that sticks out most was when I went to find some cool souvenir shirts for my 4 year old daughter. I knew ahead of time what I was willing to pay for a shirt (around $5 US) and was willing to walk away. When I first went into the little store, I was immediately thrown into negotiations with the vendor. First, they tried to give me a deal for 3 shirts that was ridiculous - basically $20 per shirt! I could have gotten better deals at the airport. So, after telling him that was outrageous and saying "thanks, but no thanks;" I started to leave the store. What did he do? Everything he could to pull me back in. He started dealing. First, he cut things to $40 in total. Same thing from me, nice dice. Next he cut it to $30 as I started to walk away. Third time was a charm, we settled on 2 shirts for about $15 US.
Because I was not emotionally invested and willing to walk away 3 times, I was able to get 75% of the starting price. And you know what, the guy still made a good margin! That is why he ultimately did it. If he truly wasn't going to make money, he would have walked too. We both won and that's all you can ask for.
Negotiate and Then Negotiate Again
As you just read in the above example, it took multiple rounds of negotiation to get where we settled on a deal. In my experience, negotiations rarely settle on the first pass...and if they do, one side is getting the best of the other. It takes several rounds of back and forth to get it right.
That does not mean you have to be a hard ass or a jerk, but it does mean you must come in prepared, know the deal you want, be willing to walk away, and have the stamina to go through multiple rounds like a boxer to get the best deal.
This mentality definitely proved useful at the Silk Market because they WILL wear you down if you let them!
The Best Deals are the Ones in Which You'd Take Both Sides of the Table
A mentor once told me that the best deals are the ones that you would not just take your side of the table, but if you switched sides, you'd be willing to take the deal you gave them. A true win-win. This is never easy to get to, but that's the point. To get a true win-win, both side have to give up some things. That is how it should be.
I know that I probably didn't get the best possible deals I could have gotten at the market, but I got some pretty good ones; and for the most part, would have switched sides and taken the deal I gave. I stayed within my budget, got everything I wanted to get (and a little more) and the vendors did too. Everybody won and that's all you can ask for.
Negotiating is such a crucial tool for success. Take the time to practice it in your life and look for ways to get your win-win's. You and your bank account will be so glad you did!