The Art of Negotiation

The Negotiation Table
“Negotiation is not a policy. It’s a technique. It’s something you use when it’s to your advantage, and something that you don’t use when it’s not to your advantage.” – John Bolton

1.) Introduction – Defining A Negotiation
2.) Perceptions In Negotiation – Friend or Foe?
3.) The Narcissism of Negotiation
4.) The Discount Generosity Gambit – Retention, “Fairness” & Discount
5.) Opening Offers
6.) General Maxims
7.) In Closing / Relevant Reading

1.) Introduction – Defining A Negotiation:

Negotiation is a Machiavellian ordeal and yet many devoid of honed Machiavellian ability are required to engage in it, for the avoidance of negotiation is untenable in a world of finite resources and competing wills. Sure, one could go out of their way to avoid negotiations and survive, but survive is about all they’d manage as inept negotiation is a trait of the weak, not the powerful.

What is the nature of a negotiation? A negotiation is effectively a quid pro quo trade discussion where two or more parties dispute terms until each is satisfied with the position of the other. Anybody with even rudimentary Law study under their belt knows this comprises the essence of a contract.

The objective of any contract is to come to a deal, a deal is a mutually beneficial arrangement consciously enacted within an agreed upon framework. Most deals at the individual rather than corporate level occur between two people, when larger organisations are involved the number of people party to the deal expectedly increases.

A successful deal in the truest sense of the word is no less than two or more distinct parties (be they people representing themselves or organisations) who believe they’re getting what they want on terms deemed equitable rather than injurious.

This is in contrast to a heavily biased deal (better characterised as blackmail, although often euphemised as a “deal”) which is an agreement that takes place under the enforcement of economic duress, leverage or aggressive inequitable ironclad legal bullying. So what is Machiavellian negotiation? It’s the optimum way to obtain the most resources and best conditions with as little capital, risk and responsibility as possible.

2.) Perceptions In Negotiation – Friend or Foe?:

Negotiation is fundamentally a dispute of disparate desires dictated by the perception of what constitutes fairness. Each party attempts to manage the perceptions of the other in order to come to an agreement both deem sufficiently equitable. Although in negotiation it is the acquisition of specific objectives that underpins the reason for negotiation, perception is equally important in affecting what kind of deal is struck, or if one is even struck at all.

For example say you have two men, one’s named Harry and the other’s called Bill. Harry grows an exotic grape that only he can source in the continent, his client Bill has no commodity, but has deep pockets. Money is not as scarce as Harry’s grapes, assuming enough wineries and consumers value his grapes. This is a seller’s market, so Harry can charge whatever he likes so long as his price to the customer works out cheaper than importation of the grape via freight from overseas.

When Harry goes into a negotiation, he knows his buyer Bill needs his grapes more than he needs Bill’s money, Bill is not his only client, and clients prefer local produce rather than waiting for things to arrive on a plane which may be damaged in transit. Harry knows if the other person cannot provide a sufficient sum of money or otherwise incentivise him, that failing to come to a deal with Bill would not harm him. In a seller’s market, the pool of customers (buyers) demanding a specific quality is plentiful, whilst the pool of sellers able to provide said quality is minimal.

Conversely in a buyer’s market, Harry’s produce would not be worth much because he either has so many competitors he has to sell cheaply and operate at a loss (market saturation), or simply nobody is interested in what Harry’s selling and thus there’s no viable business operation to be had.

In our fictional scenario here, we’re in a seller’s market. This means Harry has tighter control over his pricing and can force the consumer to cough up higher sums without damaging his business’ profitability. Harry used to sell a vine of grapes for £0.90 each to his customers, but since the local competition went out of business he hiked his prices to £1.80, selling a marginally lower volume than he used to at a more profitable operating cost.

In simpler language: Harry sells less quantity but makes more money because his price per unit has increased enough to offset the reduction in sales volume the price hike caused. If Harry’s sales dropped to the point where the price per unit did not offset the reduction in volume, he’d have to decrease his prices in order to increase volume to a profitable margin. In this scenario, Harry would be experimenting with price points in order to find “the profitable zone”, the perfect price where the highest price per unit is found, the precipice on which a subsequent price increase results in overpricing as indicated by a sharp decline in sales.

Harry finds his perfect price, and thus begins to make so much extra money that he can afford to keep his “grape bubble” inflated whilst still giving some of his favourite customers the old £0.90 rate. Being in a strong position, Harry is able to economically implement his prejudice into his pricing system. Friends and old clients he has favourable relationships with get the £0.90 rate, strangers get the £1.80 rate, and he is able to outright refuse to sell to those he doesn’t like.

In a seller’s market the buyer has the privilege of buying, the seller is not privileged to sell because demand for the seller’s goods are high. Simplistically, in a seller’s market the seller is the most valuable party, in a buyer’s market the buyer is most valuable.

Bill on the other hand is a winemaker and desperately needs Harry’s rare locally sourced organic grapes to help him make a very expensive wine. Bill was a charming Machiavellian and befriended Harry awhile back by taking him out to dinner and paying for his food, gaining favour with Harry whilst he was satiated by steak and slightly inebriated on the very wine Bill needed Harry to source grapes for. Bill was clever, figuratively as well as literally giving Harry a taste of the business he was in.

As they got along so well, Harry begun selling Bill grapes at the “friend rate” of £0.90 per vine, increasing the profitability of Bill’s winery. Bill was satisfied with himself that all those restaurant dinners and well-timed jokes had paid off. However, disaster struck. One time Harry brought his daughter along to the restaurant not realising Bill was a sexually predacious yet shredded 45-year-old pick-up artist. Harry’s daughter full of daddy issues because he’s a workaholic, later matches with Bill on Tinder. From here she begins enthusiastically fucking Daddy’s “totally hot and rich” business associate as a textbook act of sordid female rebellion.

Eventually she falls for Bill, but because he failed to commit to her, she in her inevitable upset tells her father of their liaisons. Upon discovery of Bill’s adultery with his daughter, Harry refuses to continue selling Bill the grapes he sorely needs for his company’s leading product. Bill desperate for the grapes then offers Harry £10.00 per vine, far above the inflated market value Harry usually commands, yet Harry refuses to accept. Why? Because at this point Harry is more interested in hurting Bill than in making a profit from him. The perception of the other party has become so negative that a want for destruction has become greater than a love of profit.

Moral of the story: It doesn’t matter if two people want something from one another if either party disdains the other too greatly. In the absence of respect, a desperate party accepts extremely inequitable terms, or it’s simply impossible to reach consensus. In the presence of hatred or a need for revenge, otherwise logical and desirable outcomes are rejected in favour of schadenfreude. Secondary lesson: do not shit where you eat, girls related to high-value business interests aren’t worth the hassle they can cause, income is more important than sex.

3.) The Narcissism of Negotiation:

Feelings of entitlement heavily influence the outcome of a negotiation, a person with a strong sense of pride or entitlement will get as much as, or more than they’re worth; whilst a person with low self-esteem (and thus sense of entitlement) will get as much as, or less than they’re worth.

People with low self-esteem are exploited by people with high-esteem for profit, those with high self-esteem are so compelling in their conviction to those with low self-esteem, that in awe of the egotist’s confidence the one with low self-esteem will pay extra, do more work, or generally agree to a predacious deal.

In a self-perpetuating feedback cycle, this reaffirms to the narcissist they’re worth more than they really are because they’re good at making weak people agree to bad deals, and this reaffirms to the unconfident that they aren’t worth much because they’re not very good at getting what they deserve. The ancient Chinese philosopher Confucius said “Whether you think you can or think you can’t, you‘re right.”

Confucius was right. If you don’t value yourself or believe you deserve adequate compensation for your work, you will be a poor negotiator who is not adequately compensated. In feeling this way you unwittingly and disadvantageously assign higher value to the other party, causing you to give them more than they deserve, or to accept less than you deserve.

Somebody who value themselves excessively (a grandiose narcissist) is the opposite, they assign less value to the other party by actively devaluing them, and if said person accepts this devaluation the narcissist exploits this weakness and leverages it for everything it’s worth. The highly narcissistic are as such prone to giving people less than they deserve, because their intrinsic devaluation of others means they’re always undervaluing people, making them great hagglers.

Often a successful businessman is simply a person with high self-esteem that is skilled at finding people with money and low self-esteem, insecurity being an incredibly profitable emotion.

An example of such a relationship would be a ripped personal trainer on steroids in San Francisco targeting obese silicon valley programmers and basement dwelling World of Warcraft players. All the trainer needs to do is convince a loser to sign a contract to get his juicy commission.

He knows the loser is throwing their money away because they won’t even turn up to workout, but as far as he’s concerned if these people want to bootstrap his lifestyle by subsidising his gym and increasing his income, that’s their loss and his gain, he feels no guilt at all. He will gravitate between this demographic and any other low self-esteem and lazy demography, such as the over 50’s cat lady who wishes to feel like she’s doing something about her weight without actually putting the effort in.

When you have two people with low self-perceived value negotiating, the people will get what they’re worth and negotiations won’t last long. When you have two people with high self-perceived value negotiating, the people will get what they’re worth but negotiations will be more aggressive, there will be more shit testing (eg: narcissistic dismissals, negs and pressure flips) and things will last a little longer.

Whoever fails a shit test loses credibility, and this is leveraged by the winning party for better terms. If nobody fails a shit test then narcissistic party A has won the respect of narcissistic party B, and party B will feel like party A is worthy of what he actually deserves, rather than the lesser amount he normally assigns through his default devaluations.

Know the other person’s options, do they have alternatives, are they dependent on you? If they have no alternatives, you can ask for whatever you want and extract as much as they can feasibly afford. If they do have alternatives, you can tell them the alternatives are inferior and play to their ego by telling them if an inferior service is what they’re after, they can save a buck and visit your competitor!

By referring them to the competitor you subtextually communicate you’re in a seller’s market, demonstrating your elite status and lack of neediness in one fell swoop. This lets them know you’re not dependent on their custom and thus dispels the common “entitled customer mindset”, in turn increasing their likelihood to purchase at the highest possible price point on the terms most agreeable to yourself.

This reverse psychology will likewise lightly offend anybody who considers their need or problem serious, and thus is likely to convince them it worth paying more to get a quality of service equal to the seriousness of their problem, after all, big problems require elite solutions.

4.) The Discount Generosity Gambit – Retention, “Fairness” & Discount:

If they pay up but cannot afford your services in the future, offer a tactical discount in an attempt to retain their business (say 10%, no more than 20%). Do not offer a steep discount as it damages the perception you provide an elite service, elite services are not cheap services, everybody innately knows this. In fact, people often become suspicious of self-touting elite brands that go on sale, as it harms the perception of their value to the point people believe the sale items are bogus, inauthentic or otherwise somehow diminished in quality.

If you offer the correct discount, you may not only retain the custom of your client as your service is now within budget, but they’ll feel special they get a discounted rate and perceive it to be charity because you usually charge so much. Your tactical generosity plays on their ego, and increases their affinity for you.

If you are in a position to set your own rates, this is of course nonsense as your rate is what you’re willing to accept intersected with what the market is willing to pay, there is no “rate set in stone” because you pull the figure out of your ass after morning coffee. When one sets their own rate, they do so by being in a seller’s market (or at least leading the buyer to believe it’s a seller market), getting as much as they can via the exploitation of said mechanism.

When a customer is about to walk (honestly or as a bluff) the idea is to re-entice them into continuing their business with you for the new maximum amount they’re comfortable with. You deploy the discount gambit to feed their ego, feeling warm, fuzzy and proud of themselves, they like you more and keep doing business at the newer marginally reduced rate. This makes sense to a seller in a buyer’s market, as new buyers are difficult to acquire and the profit sacrificed from the loss of a customer is greater than the amount lost from lowering price.

A customer who keeps trying to get discounts is an administrative pest, only offer the discount if you’re in a buyer’s market, if you’re in a seller’s market you can easily replace the customer and thus there’s little point in trying to retain them.

5.) Opening Offers:

If they make the first offer, do not try to renegotiate for the highest price possible if they open with an amount you are happy to receive. Likewise if the other party is incredibly narcissistic, this is a risky endeavour that can easily backfire. The reason for this is if you try to get more, they may feel you are being unreasonable, get outraged you are trying to rip them off and then lower their initial opening offer, or even refuse to do business with you. This is of course not a probable outcome when dealing with the low self-esteem, but should be considered when dealing with the powerful.

If you don’t particularly covet their opening offer or are highly confident you can get more, you should haggle. If you’re happy with their offer, indulging greed risks a devaluation of the opening offer making it is wiser to accept rather than haggle. People who are serious about wanting your product or service will make a strong opening offer, the exact kind of customer you don’t want is the one who tries to nickel and dime you, as one must consider the opportunity cost incurred from all the administrative back and forth.

Exemption: if the person you’re dealing with is very powerful, agree to do something for free and be owed a favour (be overt you’d prefer a favour later, no covert contracts). If they refuse to owe you a favour, give it to them cheaply so you can leverage your generosity later on. When dealing with the powerful, it is better to be paid in favour rather than money, as their favour is more effective at getting you out of a tight spot than their money. You can get money from anybody, but it’s not everyday you have the opportunity to gain favour from the powerful. Favour with the powerful always trumps money as even losers have money, even if it’s not much, they still have some!

A lot of people will want you to make the first offer because they want to see how much you value your services, this is basically a probe to see how narcissistic you are and how much they can lower your price. To get the maximum amount, you must always demonstrate you value yourself highly. Start with a very high price and they will offer you the highest price they are willing to pay.

Generally speaking, people like to offer you 50-75% of what you asked for to feel like they got a bargain, so you can pre-empt this expectation with your opening offer. Ask for 3 times what you value yourself, if you value yourself at $50 an hour/or product ask for $150. Then if they offer half at $75 an hour you got 50% more than what you value you or your product at. If they offer $100, you got 100% more than you value you or your product at.

Of course the other party don’t know what you really value yourself at, this is what they’re trying to ascertain whilst refusing to make an offer until you state an opening figure. When you are asked to “go first”, the other is trying to undercut you, overvaluing yourself makes you immune to this as it conceals this crucial information, and overwhelmed by the exorbitant amount you quote, they offer the most they can afford, which is a typically generous yet far lower sum than the astronomical figure you quoted.

6.) General Maxims:

If you are surprised someone has made you a really great offer, do not let on. Hide your excitement, act entitled, even slightly offended to see if you cannot squeeze the other party for a little more. Should faux offence not gain you more, drop it and retain a decorum of entitled agreement, eg: “Yes, I find this agreeable” sounds far more composed than “that’s so awesome!” Adopt the decorum of the prior rather than the latter.

If you feel you are taking more than you deserve, do not let on. Hide your guilt, remain stern, but be friendly. Remember Confucius, those who think they can’t, can’t, meaning those who think they do not deserve – don’t.

7.) In Closing / Relevant Reading:

As you have probably intuited in your reading, buyer/seller marketing principles can be transferred to dating. Always remember negotiating is psychological, the rates, the time allotted, whether a deal is made, and whether it will be repeat or one-off is almost entirely psychological. There are no firm rules, everything is open to the manipulation of perception in the quest to get the most favourable terms. Work out if you’re at an advantage or not by deducing if you’re in a buyer’s or seller’s market, then calculate the external party’s degree of narcissism and negotiate accordingly.


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