How to Instantly Increase your Bargaining Power in any Negotiation

Posted on Posted in General, Meetings

When I was 16 years old I went shopping for my first car. My dad and I went around the neighborhood for hours looking at cars for sale by owner, but nothing I saw grabbed me. That is until I saw it, the most beautiful thing I had ever seen, a 1994 hunter green Buick Skylark. I didn’t know much about cars at the time, but I knew I wanted this one.

My dad waited at the curb while I approached the seller on his driveway and asked him, “How much?” He looked at me closely, and then quoted me the price. It was outside my budget. Slightly panicked, I begged him to consider dropping the price. “Sorry. Take it or leave it, ” he said. I remember feeling absolutely powerless, like there was nothing I could do to get him to budge.

So I ran over to my dad and asked him if he could loan me the difference. “Absolutely, not,” he replied. I was devastated. Until he added, “But I think I can help.” My dad asked me a confronting question: “What would you do If you weren’t able to buy that car?” The question infuriated me. I couldn’t understand why he was being so pessimistic. “No, Dad! I have to have that car,” I barked. He replied, “That’s exactly your problem.” I didn’t quite understand what my dad was getting at, but I decided to play along anyway.

He asked me again, “So what would you do if you couldn’t have that car?” As uncomfortable as it was I thought about it, “I mean, I guess I would get one of those other cars that we saw today.” He followed up, “What did you like about the other cars?” I said, “The red Honda one wasn’t so bad I guess, it looked alright and it also had great sound system.” The more I thought about it, the more I realized that the red Honda really wasn’t that bad. Don’t get me wrong it wasn’t nearly as good as that Buick Skylark, but it wasn’t as terrible as I initially feared. He asked me, “Could you see yourself driving that car if you had to?” I said, “Yeah, I guess if I had to, I could.” He looked at me skeptically for a second. He could see I wasn’t pretending, that I was being genuine. That’s when told me, “Go” as he nudged me in the direction of the seller.

As I walked back, I had a completely different posture. I was confident. I no longer felt powerless, I felt powerful. This time when I asked the seller to bring down the price, I didn’t beg, I asked calmly. The seller noticed the difference. He could tell that I was genuinely willing to walk away. And that’s when he agreed to lower the asking price by 20%. I bought the car on the spot. As excited as I was to have it, I was even more thrilled with my negotiating prowess that day. It wasn’t until years later I fully understood how my Dad had helped me increase my bargaining power so quickly.

The Surprising Power of Pessimism

In their landmark book, Getting to Yes, William Ury and Roger Fischer taught us that our bargaining power is determined by our BATNA, our best alternative to a negotiated agreement. In other words, your BATNA is the option you’d be left to pursue if either you or the party you’re negotiating with were to walk away from the table. The better that option, the greater your BATNA. It’s a fairly intuitive concept. A man who’s trying to negotiate a raise with his current company knows he’s got an advantage (greater BATNA) if he’s got another job offer from a competing firm to fall back on.

So how do you raise your BATNA? There are two ways. The first is obvious, but not always easy. Go out and find better alternatives. But there’s often a much quicker way: just realize that the alternatives you already have are better than you think.

That’s because as Guy and Heidi Burgess rightly point out, what determines your bargaining power isn’t really BATNA. More accurately it’s EATNA, your estimated alternative to a negotiated agreement. In other words, it’s not how good your options are, it’s how good you think they are. And because human beings often get so emotionally attached to one option, it causes them to distort the perceived value of their alternatives.

Case in point: 16-year-old me. I had alternatives. My dad and I saw several other cars that day that were by no means perfect, but they would’ve been just fine. But when I fell in love with that Skylark, it no longer felt like I had alternatives. In my mind if I didn’t have that car, the world as I knew it would end. Sure that sounds absurd, but we all engage in this kind of ridiculous catastrophizing. Because when we are unwilling to consciously think about a potentially negative scenario, we give our mind license to subconsciously invent a fictitious scenario in our head. And that fictitious scenario is often much worse, despite not having any grounding in fact. So how do we bring the perceived value of our alternatives back in line with reality?  We start thinking negatively.

The precise term for this kind of strategic thinking is defensive pessimism. Instead of denying the worst-case scenario, the one in which we don’t ultimately get what we want in the negotiation, we embrace it as a possibility. We visualize the consequences in as much detail as possible, and mentally rehearse what we’d do to cope. It’s not fun of course, because you’ll be forced to confront the very scenario that is producing anxiety. But in doing so, you’ll realize that although the worst-case scenario might be bad, it’s not likely to be as devastatingly bad as your subconscious automatic thoughts have tricked you into believing. As a result, your BATNA improves.

And now I know why my dad was being so pessimistic. An intuitively shrewd negotiator, he could see how attached I was to that Buick. So he made me visualize what it would be like if I was forced to buy that Honda instead. He knew something that I didn’t: I needed to realize that I didn’t have to have that car, before I would have the power to negotiate for it.

5 thoughts on “How to Instantly Increase your Bargaining Power in any Negotiation

  1. What a fantastic read. I know that feeling of not knowing how to get someone to budge – and here all the time it was just a matter of knowing you’re willing to walk away and “settle” for an alternative.

  2. No matter how desperate we are, there’re always other options. But is there a possibility things become more attractive when they are perceived as out of reach? As Alexander Graham Bell said ” When one door closes, another opens; but we often look so long and so regretfully upon the closed door that we do not see the one which has opened for us.”

  3. I can think of a few times when I’ve *really* wanted something and, on thinking about the alternatives, have come to realize that an alternative was more desirable. By getting my heart set on something, I’d overlooked or downplayed many negatives.

  4. Now, if you could just find a way to instill this kind of confidence in teenagers who are convinced there’s only one Mr. or Ms. Right out there — and if they don’t snare that person immediately the world will end.

    So I love this post, Al.

    But just as an aside, what I love most about myself as a grownup is the willingness to want what I want with abandon — and to have my heart broken again and again.

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