We tend to think of a good negotiator as someone who is persuasive—who knows the right things to say.  But research has shown that even an average communicator can be successful at negotiating if he or she has bargaining leverage and knows how to use it.  Leverage gives you the power not just to reach an agreement but to get an agreement on your terms.

Rarely do we negotiate on a level playing field.  One side usually needs or wants an agreement more than the other side.  And this creates bargaining leverage.  One way to become a better negotiator in your business or personal life is to pay attention to the needs, desires and fears of the other side.  Use your leverage when the field tilts in your favor, but remember that leverage changes over time.

Dave, a friend of mine, was determined to find tickets for the Super Bowl.  But frugal Dave was determined to get a good deal.  Experienced ticker scalpers told him to wait.  Prices would drop as the game date approached.  And they did.  Prices dropped from $3,000 a ticket to about $1,500.  But Dave was determined to get a better deal.  He and his wife, Brenda, flew to Houston, hoping to find two tickets near the face value of $600 each.  Before leaving they agreed that if they couldn’t get two inexpensive tickets, they would buy only one.  Dave would go to the game and Brenda would go shopping.  Brenda wasn’t all that interested in going to the game anyway.

When they arrived in Houston they were encouraged by offers of $1,000 a ticket, so they decided that prices would be even better at the game.  Still without at ticket on Super Bowl Sunday, Dave and Brenda headed for the game, finding a great parking space near the stadium.  As the approached the stadium they were aghast to find hundreds of Patriots fans looking for tickets.  No tickets were to be found.

Dave made a desperate call to his nephew in Charlotte to see if anyone on Ebay was still selling.  Miraculously Dave’s nephew found a guy on his way to the stadium with two tickets.  Dave and Brenda met the scalper at a convenience store forty-five minutes before kickoff.  When the scalper demanded $4,000 for two tickets Dave tried to negotiate.  But he quickly relented.  He was determined to get in the game.

Dave then turned to Brenda and said, “As we agreed, I will sell your ticket.  You can take the car and go shopping.”  Dumbfounded, Brenda complained,  “You mean after all this I can’t go to the game?”  Tears welled up in her eyes. 

Brenda thoroughly enjoyed the game.  Dave was miserable. He ended up paying nearly four times what he thought he would pay.  Where did he go wrong?  He thought he was a great negotiator. 

Sitting at home a week before the game watching eBay, Dave had considerable leverage.  Although he wanted to go to the game he could easily forgo it altogether.  But then he made a series of decisions that reduced his leverage.  First, he bought plane tickets and made hotel reservations.  Then he and Brenda traveled to Houston in search of tickets.  By then they were invested in the outcome.  Dave thought his leverage would increase as the game approached.  His plan backfired.

A perfectly rational person would say that the air fare, hotel, and time spent looking for a ticket were sunk costs that should not be considered in deciding how much to pay for the tickets.  But most of us aren’t capable of ignoring sunk cost.  When we invest time, money and energy in an outcome, we are usually willing to pay a little more to see it through.  Emotion kicks in as well.  Amid the sights, sounds and aromas of the Super Bowl, who wouldn’t dig a little deeper to get in the game? 

Even experienced negotiators forget that leverage changes over time.  Business owners who are thinking about selling their business often box themselves in by entering into buy-out discussions with only one buyer.  The business owner starts out with considerable leverage because he reckons that he can decline to do any deal and just keep running the business.  But as the business owner spends more time and effort convincing the buyer to buy and responding to due diligence requests he becomes invested in a sale.  He also starts contemplating life without the business.  If the buyer drives a hard bargain the business owner has only two options: (1) sell to this buyer, albeit at a less than ideal price or (2) reject the offer and give up the idea of selling altogether for the time being.  The business owner has put himself in a weak position by not maximizing his options.  If he had three or four other suitors, he would be in a much stronger position to negotiate the deal he wanted.

To be a good negotiator you must take advantage of leverage when you have it.  The best way to increase your leverage is to expand your options.  In the end, you are only as strong as you have other attractive options.  And watching the Super Bowl on T.V. in a hotel room in Houston is not a very attractive option.

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