» You can negotiate ANYTHING --if you know (1) exactly what you want, (2) how little you're willing to accept, and (3) what you'll do if the deal doesn't work out.

Note, the method detailed in this post works best for single-issue negotiations. If you’re going through a messy divorce, let’s say, and you’re trying to negotiate every single aspect of your life, then things get a little more complicated. You can still use the strategies listed below, but they work best when you’re trying to achieve ONE goal — like lowering your cable bill or getting more vacation days at work.

Most people (myself included) are hesitant to negotiate, especially when it comes to sensitive issues like our salaries or the price of a new home.

But there are two things worth knowing about negotiation…

  • It’s fucking uncomfortable, but it can be worth a LOT of money. If you start a new job and negotiate your salary $1,000 higher than the initial offer, you’ve set a new baseline for your earning. Over 10 years, if you did nothingbut collect your 3% merit increase every year, that one conversation was worth $13,000+. And conversely, if you negotiate lower interest rates on your credit cards, a cheaper cable bill, a smaller car payment, etc., the savings start piling up quickly.
  • You negotiate everything in pretty much the same way — whether it’s the $600,000 price tag of the house you want to buy, or where you and your spouse want to go for dinner. It all revolves about three parameters that you develop before entering a negotiation.

Step #1: Figure out what you want.

This is called your aspiration point. It can be anything you want, as long as it’s specific and measurable. For example, if you wanted a salary increase, you wouldn’t tell yourself, “I want more money.” You’d say, “I want to earn $5,000 more annually.” Your aspiration point needs to follow two rules:

  • Make it ambitious. Don’t sell yourself short. If you think you have a realistic chance of getting a $5,000 raise, then make your aspiration point $10,000.
  • Keep it realistic. This seems like it violates the make it ambitious rule, but if your aspiration point is TOO crazy (“Boss, I demand a raise of A MILLION DOLLARS A YEAR“), you’ll lose all credibility in the negotiation. Do a little research on whatever you’re trying to negotiate, and make sure your aspiration point is ambitious, but not fucking absurd.

Step #2: Figure out how little you’re willing to accept.

This is called your reservation point, and it’s the absolute shittiest deal you’d be happy with. Using the salary example, let’s say your reservation point is $1,000 a year. You asked for $10,000, you’re hoping for $5,000, but shit, you’d take $1,000 if push came to shove.

If, after some back-and-forth discussion, your boss says, “Sorry kid, you’re an awesome employee, but the best I can do for you is $1,500…” then you take the motherfucking deal. Any offer that falls between your aspiration point and your reservation point is called winning the negotiation. Congratulations.

So how do you know if you’ve set a good reservation point? Easy. There’s only one rule:

  • It has to be better than your BATNA. What’s a BATNA? Great question. See Step #3.

Step #3: Figure out what you’re going to do if the negotiation doesn’t work.

This is your BATNA — the Best Alternative TA Negotiated Agreement. And it’s your source of power in every negotiation. Seriously, never ever enter a negotiation without a BATNA. You will lose.

If we stick with our salary increase scenario, your BATNA might be another job offer. “I just received an offer to work downtown, for $1,000 more a year, and if I can’t reach an agreement with my current boss, I’m going to accept the offer.” However, if you’re looking to lower the price of your car insurance, your BATNA won’t be so drastic: “I’m going to find another insurance company who will charge me less money.”

It’s just a Plan B. That’s all. But a good BATNA needs to be three things:

  • Honest and realistic. If you know, deep down in your heart, that you won’t actually go through with your BATNA, then it’s fucking useless. A BATNA is your Plan B. It needs to be a realistic option for you.
  • Worse than your reservation point. If your BATNA is better than your reservation point, then your reservation point needs to go higher. After all, why would you walk away from your negotiation before you’ve reached your floor?

Step #4: Use these parameters to guide your negotiation.

Negotiation is about compromise. Steps #1, #2, and #3 help you establish what you will compromise over, and what you won’t compromise over. Once you have those in place, you’re going to bargain with the other party until you’re offered a deal that’s better than your reservation point. If that point never comes, then you exercise your BATNA and walk away from the table.

There are a few key points to keep in mind during the actual negotiation.

  • It’s okay to share your aspiration point. Feel free to tell the other party what you want. If they don’t know what your goals are, then it makes it harder for them to compromise, right?
  • If the deal isn’t going well, it’s okay to share your BATNA. Your BATNA shouldn’t be flaunted over the other party, but it’s fair to say, “Listen, I want this to work out for both of us, but I’m prepared to do X, Y, or Z if we can’t reach an agreement.”
  • Never, ever, ever, ever, ever, ever share your reservation point. If they discover the worst deal you’re willing to accept, then guess what? They’re going to make you that offer. And guess what? You’re going to accept it, because you’ve lost all leverage.
  • If you can guess the other party’s reservation point, you win. Correctly guessing the other party’s reservation point is an automatic I WIN button in negotiation. Inexperienced negotiators might actually fucking tell you their reservation value: “Times are tough. All I can afford is $200.” Is $200 higher than your reservation value? If it is, negotiation over.
  • If you’re negotiating with someone you care about, your reputation is more important than getting an optimal deal. If you’re negotiating the price of lawn service with your best friend’s brother, you might have the acumen required to absolutely fucking destroy him. Restrain yourself. Same goes for coworkers you’d like to work with again, or small businesses you value. Don’t negotiate in a way that will compromise your reputation. Always be as fair as possible. Now, on the other hand, if you’re negotiating with the random customer service rep at Comcast, go fucking crazy. Who cares?
  • If you realize you’re not adequately prepared to negotiate, it’s okay to reschedule and walk away.Midway through the negotiation, you might realize that your reservation point is way too low. Or your BATNA has a major hole in it. Or your aspiration point is way higher than it should be. It’s okay to say, “You know what? Based on some things I’ve learned from our discussion, I’d like to take another day or two to revise my thinking. Can we reschedule?” That’s totally fine.

Negotiation is fucking complicated. It’s a confusing blend of human psychology, business acumen, and confidence that a lot of people don’t have — that’s why you hired a lawyer to “negotiate” with the judge after you ran that bus-full of kids off the road back in ’98.

But basic negotiation is actually really simple. It’s totally process-driven. If you can figure out (1) what you want, (2) what you’re willing to accept, (3) and what you’ll do if an agreement isn’t reached, then you have everything you need to start negotiating stuff in your everyday life.

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