The art of negotiating – a crucial skill for a frugal lifestyle

The thing I love most about the frugal approach to life is that it forces me to get creative. The more I challenge myself, the more fun it gets. Small efforts and small returns add to big changes in life and big savings overall. More than anything, it makes me feel better for trying, all the time, to get the most of life.

When I was a little child (in India), I’d watch my mom buy vegetables from a street vendor almost every single day. Watching the two of them engage in a fun haggling process was the high point of my day. They pushed each other back and forth to finally settle on a price that worked for both of them.  And in the end, I’d always see a deal, a sale, and two happy people waving goodbye.

Only now do I realize that as I watched this process, I was learning a very essential skill needed for a frugal lifestyle – the skillful art of negotiation.

Since then, I have grown up, been to various countries, had numerous jobs, consulted on business, married, had kids, and even studied negotiations in business school. And over all these years, I have learned that no matter where I am or what I am doing, some basic truths about negotiating exist – be it negotiations with business partners, clients, friends, spouses, or even my own kids.

Rule 1.  EVERYTHING is negotiable.

When you REALLY need something and believe that there is NO WAY you are going to have it, tell yourself that EVERYTHING in life is negotiable. Have you noticed how your three-year-old will do his very best to get what he wants? No matter where you are, what you are doing, and what you are buying, ASK for a better deal. Never EVER assume a price on anything is set. And if you have a legitimate NEED, be sure to communicate it to the other person.

Picked up a product that is less than perfect at a store? Ask for a discount.  At a hotel, and you need a better table or room? Ask for it. It costs them nothing to make a change for you. Ask for a price-match, even if the store does not advertise it. If something sounds expensive, just ask about what kinds of discounts or coupons they might have.  Are you a blogger?  Did you know that a number of hotels offer a blogger rate these days? Ask. Ask. Ask.

When you have a genuine reason for something, people WILL listen.  Even completely computerized stores have a way to put in discounts and such.  When people learn about your situation (like that my child hates closed spaces and will scream in a corner), they might be more likely to help you (by giving you a better table, room, or airline seat).

Rule 2.  There is almost ALWAYS a WIN-WIN for both parties.

Negotiating a deal does not always mean one person wins and the other loses.  As much as you might think of negotiating as something a shady car salesman would do, most successful negotiations in life are the ones are where both parties reach a mutually agreeable decision.

This approach works at stores ALL the time, because stores exist to make sales. When you don’t get the exact product you are looking for, be sure to ask if the store can give you the similar-but-more-expensive product at a lesser price. If there is a product that you’re thinking of buying and the store wants to get rid of it, find out what their best offer is. Do you want to attend an event but can’t afford it? Can you volunteer at the event and get a free pass instead?

No matter what people say, every person WANTS to make a sale.  It’s as simple as that. And as long as the sale does not create a loss, they will consider it.

There are two perspectives to every negotiation. Whenever you want something, and truly believe that you deserve a better deal, take a minute to think about the situation from the other person’s perspective.  Think about what’s valuable to them, and see how you can offer that. Once you see the other side of the story, you might be able to see what YOU can offer to help the other person.

Can someone do a little design work for your website if you pay back with babysitting?  Can you drop a special word to their boss for someone whose been helpful at a store or hotel?  Hopefully you’ll enjoy the rest of your experience, and perhaps a few add-ons and discounts as well.

People are busy with their own struggles.  There aren’t too many customers who’ll willingly see my perspective on things – but if someone did offer to make my life a little better, I am certainly more inclined to help them with a discount or a better deal.

Rule 4.  It’s best to keep the EMOTIONS out.

With two people talking about something they really want, it’s a challenge to keep emotions out of a negotiation.  Add kids and loss of sleep to the equation, and it become impossible to shake out those emotions – even when we want to make a simple request to someone like a flight attendant. But it’s important to remember that keeping emotions out and starting negotiations on a positive note is key to getting what we want. Be it with your child, your client, or your prospective consultant – always start out by creating the right platform for a negotiation. Show respect for the other person, appreciate, and thank the other person.

This approach works just about everywhere and in every case.  And it’s key for successful cross-cultural negotiations.

Emotions cloud a person’s thinking. Especially negative ones. Keeping emotions out will make it much easier for you to get what you need – be it at a restaurant or at the airport. When a waiter gets your order wrong, stay calm, and you will get your order fixed. Appreciate the waiter for fixing his mistake, and maybe you’ll get dessert on the house.  (Or you could get all worked up, and get marginal treatment the rest of the evening.)

Rule 5. The end GOAL is somewhat fixed, but the process is not.

Negotiate with a goal in mind, but be flexible with how you actually negotiate. Think of negotiating like playing a game. Keep your eye on the goal, but respond appropriately to the other person at every step.  Keep emotions out and add a gaming spirit. Listen and respond to what the other person is saying. Be aware of cultural differences – things work differently in different countries and in cultural groups.

You want something really badly, and the other person refuses?  Change your game plan.  Does your daughter desperately want something at the store?  Get creative and say something other than no. Tell a story and save that money, perhaps.

The gaming approach forces you to be more responsive and creative.  And when you negotiate like you’re having fun, people are less likely to take advantage of you – including your own toddler.

A  little story

Two people were arguing over an orange.  The obvious solution was cutting the orange in half and each talking one part. But as they talked, they realized that one of them wanted the orange for juice, and the other wanted the orange to make marmalade.  So they created a different solution – one took the fruit, and the other took the rind. Soon enough, they were both sharing an orange farm – one farm, twice the output.

If someone is unwilling to negotiate, tell them this story.

Have everyday negotiations helped you save some money and take pride in your frugal lifestyle? Share your stories in the comments!

I plan to share my negotiations worksheet for more advanced negotiations in my next column on frugal living.  Let me know if you think that would be useful.