Thursday, September 20, 2007

Negotiation tip

Blueprint for Financial Prosperity has a great post on negotiation. His advice is to "practise with live ammo", by going through real negotiations for items you don't actually want, in order to get the experience necessary to negotiate what you do want. To get the best deal on that Camry you want, go through the whole process with several other cars (obviously stopping short of actually making the purchase). This is a very simple idea, but it's a great approach, in that it focuses on developing a skill, rather than simply obtaining a one-time outcome. By rehearsing in a real-world situation, you build up the experience and skills to negotiate effectively for what you really want.

This is very much like the concept of paper trading, where you develop an investment strategy, and test it out by buying and selling securities on paper only. Then, by reviewing the results of the paper trading exercise, you can decide whether the rules you've developed seem to work for you.

I think this approach can be extended to many different situations, and it's a neat twist on the usual "do this to get the best deal" advice people give.


SavingDiva said...

I don't know if I would be willing to waste my time with practice...I might be too lazy!

mariam said...

Great tip and such common sense. I always get so shy about trying to negotiate or bargain at tourist traps where you're supposed to bargain. I feel like I'm insulting them. I remember once I just looked at a souvenir tricket; it was like $100 (foreign money) and when I walked away, the girl quickly shouted $20, lol. I still didn't buy it but that's the power of walking away.

As for paper trading, that's hard... It's like practicing for pre-season hockey. You know it's not the real thing ;)