Why You Should Always Negotiate

When I was in senior year of high school, I helped my friend to negotiate the price on his first car. A pristine condition Jeep Wrangler, known for its mudding pedigree. The car was in excellent condition, but priced a bit high for its value: $16,500 for it’s mileage and year.

My friend and I, had investigated Kelly Blue Book (the authority on pricing used cars), we shopped around to get a gauge for the market, and we even saw a few similar cars sold on an eBay auction. We spent months looking at different Wranglers. We felt like we had investigated and inquired about every Jeep Wrangler being sold in the Miami market for the past 6 months. We had really done our homework.

After a few months, of looking, we finally found one in the condition, mileage, and year we were looking for. We were ready to pull the trigger.

We were convinced that a fair market price for this vehicle, in this condition, with the current mileage, should have been $16,500.

We had arrived at the house, and were convinced we would get the price we were looking for. We had done our homework and studied all the authorities on negotiation. We even knew you never ask for the price you want directly. You never win a negotiation like that.

You always low-ball them and then work your way towards the middle. Right? This is how negotiating is done…

So we show up, kick the tires, drive the car, feign disinterest. All of the  tactics we had learned from all the “experts” (friends) we consulted. After a little chit chat, and standard questioning, we’re ready to make an offer.

With his palms sweaty and his voice blatantly quivering, my friend squeaks out an offer.

“What do you say to $15,000…”

How insulting, he must be thinking. I wish I could take it back. A cold sweat rushed our body.

We both cringed waiting for an angry response. We had insulted him and his car. We immediately regretted it.

But what happened next shocked us. Something that would alter the nature of this sale forever.

“That’s a little lower than I expected, but ok! How will you be paying?”

Wait, what? That was it? All the homework, and preparation, and practicing negotiation tips was a waste? All we had to do was simply make an offer, and get the car we wanted at a dream price? This was too easy.

Unfortunately, the joyful elation of getting a fantastic price was soon replaced with paranoia. Now both of our minds were racing. There must have been something we missed. There had to be something wrong with this car. NO ONE would sell a car like this for this low. NO ONE.

Despite these thoughts, there was a certain momentous pressure that came over us that prevented us from backing out of the transaction. We didn’t want to be the young punks that couldn’t really afford the car, and were just wasting this man’s time.

So he cut the check, signed the paperwork, and we drove off with the car…

Even though the mechanic cleared the car, we were convinced something was up. The first three months were brutal. Every time the car would hiccup to start, even for just a second, we were convinced the engine had blown. Every noise was something critical.

There was tension around that vehicle.

We were scared it was going to fall apart, and it would serve as a $15,000 reminder of our stupidity.

But nothing ever happened. The car preformed beautifully. Eventually, the anxiety about mechanical failure was replaced with regret to our original offering price. If he agreed to $15,000 so easily, how low could we have gone?

Could we have purchased it for $14,000? $13,000?

My friend was never truly happy with the car. It was a painful reminder of the money he felt he overspent on the vehicle. Despite buying the car at $1,500 lower than his intended asking price.

He eventually sold it, but that event stuck with me till this day. It served to me  an important lesson:

Negotiation is elemental for a win-win situation.

If the original owner had bargained with us, even just a little bit- he would have ended up $1500 richer, we would’ve bought the car at what we thought was a fair price, and everyone would have been happy. Instead, by not negotiating, everyone lost out on what could have been a WIN-WIN situation.

Which brings me to my point and the most important rule in negotiation.

Do not be afraid to negotiate.

Too many people have the misconception that negotiation is an ugly term limited to cheesy car salesmen, and greasy agents. The fact of the matter is, you can very well be an extremely classy negotiater.

You soon learn that almost every situation can be improved simply by negotiating, and what you will soon come to find is that EVERYTHING is negotiable.

The terms being negotiated may not be price, but you will end up with a better deal than simply accepting an offer. You probably can’t get a better price on that Ferragamo in Nordstrom, but you can get complimentary shoe shines. You probably won’t lower the monthly payments on your new phone bill, but we will waive the activation fee.

By simply negotiating a better term, you improve your purchase, you make the salesman feel like he earned your business, and if done professionally, develop a relationship that will continue to foster benefit in the future.

Win-Win negotiations are the core of good business practices, and you can’t have a win-win situation if you aren’t negotiating.

To get started here is a great resource of simple negotiation tactics.

It is a valuable skill for any aspiring business owner. One that you will use countless times in your life.