Negotiating is fun, I think everyone likes to do it, especially when you win!
One thing we enjoy most in life is bragging about a great deal we got on our car, or clothes, or our cable bill.
If there is just one key to winning a negotiation, it’s this:
Both parties want to feel like they won. Even if it’s just a little win.
I’ve seen an 11 million dollar deal over a New York penthouse almost be lost over a $100,000 discrepancy. When you’re dealing at the 11 million dollar level, 100k is nothing. But that buyer just had to “win” a little bit.
Negotiating plays very heavily to pride and ego.
Negotiating an engagement ring
Here is the tactic I used for buying my wife’s engagement ring. It can be applied to nearly any object you are trying to purchase.
1. Research. I did the homework. Obviously I found out what type of ring she wanted through her girl friends. Then I googled that type of ring. “Cushion Cut, White Gold, Engagement Rings.”
I learned about color, cut, and clarity. By the time I was done, I felt like I was a diamond expert. I knew exactly what I wanted.
2. Next I Googled: “Average mark up on diamonds” and learned that most places, charge a 300% mark up on their diamonds. (Some go up to a 1,000%)
That means if the jewelry store is charging $3,000 for the diamond ring, they probably only paid $1,000 for it. You can use this number to your advantage. It proves there is some wiggle room there.
Now the average mark up is 300% but at the very minimum they charge is 100% So that means you could probably get them down to $2,000 because you know they’re making a profit, and you’re getting a good deal. Smaller jewelry stores have less overhead than the big “mall” stores, so there may be even more bargaining power there.
3. I compared prices online. Once I nailed down the ring I wanted (in my price range) I started shopping and comparing prices online. Once I found the exact one I wanted, the right carats, the cut, the right clarity, the right band, and diamond setting AND with the lowest price, I printed it out on a piece of paper and took it with me.
4. I went on the hunt. Then I went to literally nine local jewelry stores and pulled out the piece of paper and showed them exactly what I wanted. Now the price listed on the piece of paper I brought was always less than what they were selling the ring for in the store. And I expected that to happen, the ring I found online was a great deal. That’s where your bargaining power comes in.
My approach was simple: I need this ring here (pointed to paper) for this price here: _____________. (A little bit less than what the paper said)
Then I’d say, “Let me know if you can’t do it, and I’ll just buy the ring online instead. I’d like to deal with a local company, but if you can’t beat the price, I’ll just get it online, no big deal.”
And man you should’ve seen the sales people jump through hoops.
It’s a powerful negotiation stance. Since I’ve done my research, I knew about what they paid for the ring, and I knew I could find it online and get a great deal. (I honestly didn’t want to buy it online. Since it was a major purchase, I wanted to see it first and make sure it was high quality)
Now, some of the stores didn’t have a ring like that in stock, but ALL of them said they could get it, if I would be patient for a few more days. But some of the stores did have it in stock, and they started negotiating and bidding down other store locations to get my business. They were fighting over me!
After a few days, I heard back from one of the stores. I had stood firm on my number. (Remember, I could always buy it online) So I had no problem staying on the number I wanted. And I ended up getting the ring for a great deal, at the price I wanted.
I was happy, my wife was happy, and the saleswoman was happy.
Just remember, you want the store to make a profit too, don’t low ball them to the point where they weren’t making any money. You will lose the deal that way. The idea is that you create a win/win for both parties so that everyone is happy.
This tactic will work for just about everything: Cars, houses, TV cable providers, computers…
Review the 4 steps to negotiating success, and remember, it doesn’t hurt to ask! The worst thing that could happen is they say no, or the discount they offer isn’t as low as you’d like.
A few extra tips:
Stay polite, don’t ever be rude, arrogant, or harsh.
Dress sharp when you go to the store
Do your research, don’t sound like an idiot when you talk about the product
Be confident in your price, if you don’t get the number you want, move on to the next store, no big deal