How to Lose Money When You're Negotiating

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Scenario: Your bad self just broke up with your significant other. Earlier, you had sold your product to a big-time client. The client still wants to negotiate prices again tomorrow. Do you delay the meeting? Sure...that is, if you want to lose money.

People who feel emotionally distraught significantly undervalue their products and services.

(And, if you're on the other end -- buying -- then you tend to overspend.) Negative emotions then harms your profits by driving you to negotiate less for your products/services. Why?

It's in the study.

Jennifer Lerner's research team discovered how undesirable emotions affects you negatively:
  1. The Study

    [The research team] asked subjects to watch either a sad snippet of The Champ (in which a boy's mentor dies) or a revolting clip from Trainspotting featuring a filthy toilet.
  2. How

    Participants were divided into buyers and sellers, and then asked to name a price for a set of highlighter pens.
  3. Results

    Sadness made subjects so desperate to change their circumstances that they undervalued the pens, while buyers would overspend to get them.

Always be cautious of negative emotions.

So some of you might be saying: "Yeah sucka, but I play Dungeons and Dragons in mama's basement while eating Cheetos. I don't have a girlfriend, so I'm never emotionally distraught!" Peep this: Negative emotions don't just happen outside of meetings somewhere far, far away. Likely, you can very well construct those emotions when you're negotiating. And to be real with you (cuz you're a badass), that happens at most negotiations.

It's the classic negotiating scenario:

  1. Bob's company produces his kick-ass widget for $1500.
  2. Katie needs a kick-ass widget. She only has $1000.
  3. Bob meets with Katie.
  4. Katie's grilling Bob to lower his prices.
  5. Katie starts talking about Bob's mama.
  6. Bob cries.
  7. Bob sells his widget for $500.
That's how the typical negotiation scenario plays out: Person A gets to Person B, then Person A takes serious advantage of Person B. Most entrepreneurs who first start out are prone to those situations. (So be cautious, you new folks!) It's also another reason why keeping yourself positive is so vital if you're building your business.

"So how do I keep my emotions in check when I'm negotiating?"

Use our three of our tips:
  • Have "cooling off" periods if you're feeling those emotions.

    A period to escape from the emotionally-charged situation gets you thinking rationally again, and you'll make much smarter and nerdier decisions as a result.
  • Think positive.

    Confidence gets you thinking how kick-ass your services and products are -- and why people need to pay premiums for them. It readies you for a good and rational fight.
  • Smile inside.

    When you're negotiating -- If you're not genuinely smiling inside, you're having what we call the "super bad and ugly emotional" blues (a.k.a. SBUE; a.k.a. "sboo"). You probably need some cooling off period above before you can smile again, and make smart decisions.
A rule of thumb we use at Trizzy: Unless you're smiling inside, don't make any decisions. Remember: Bad Emotions = Bad Business. The other, more important reminder for your bad self:

"I am a badass who makes decisions when I'm not feeling the negative emotional blues. No sboo!"

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Posted on September 20

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