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January 19, 2011

What selling taught me about buying (and vice versa)

Not my parents, but they might just be someone else's
After years of asking as a buyer, now I'm discovering what it's like to be batting for the other team. Let's give it up for... The Sellers!!!

In the next two posts, I'll share two negotiations I recently undertook: one where I undercharged the client and one that turned out great. But first, an intro.

Maybe people in business school or with parents who ran import/export companies understand business negotiation intuitively. I grew up with two bohemian, nerdy immigrant parents (I mean that in the best sense possible, Mumsie and Daddums) who in turn grew up in a cruddy communist regime with no lemonade sales or other chances to practice being entrepreneurial. One is a computer analyst and the other an architect. Hence until I was 22 I thought networking was something you did with the extra wires in your house. And sales are things you go to.

So from a total newbie perspective, here's what I'm discovering about being a seller.

Revelation: Selling is not that different from buying. 

I'm still looking for value. When I buy, that means maximizing the goods, time or services I can get for my investment of money. And when I sell, I'm trying to maximize the money I can get for my investment of goods, time or services.

I'm still using empathy to come up with the best outcome. Selfishly, empathy lets me consider the other side's situation, motivations and resources, thereby giving the me bargaining chips I need to get what I want. Altruistically, it helps me come up with solutions that satisfy both sides and are fair and humane. For example, I charge people with limited means less, in the same way that I wouldn't ask for a huge discount or free services from someone who is struggling or in a position of less power than me.

I'm still negotiating every transaction, empowered by the belief that the other party is a free agent and can always walk away or make a counteroffer. 

I still believe that I am worthy. Of quality goods or services at a price I can afford; and of compensation that matches my talent, credentials and the value or benefits I bring to the table.

But there are two big differences between buying and selling.

The first is supply. Unlike when I'm shopping and there are 100 other boutiques or plumbers or airlines around the corner. When I'm selling, I'm lucky if there are 3 clients around the corner. For now, at least.

How does that limited supply change things?

Well, most businesses I deal with don't "eject" clients. (At least, maybe I've never gotten drunk or naked enough. In public. Next to minors. While shouting obscenities in French.) But clients eject businesses all the time. So once I have a client, I work very hard to keep her. I'd be willing to go to certain lengths to offer exceptional value to a returning customer -- including discounting my services for the right project/client or offering extra services as an occasional perk.

Second, I have to be very thoughtful about pricing services. That's different from when I'm buying, because I already know the value of most things (and if I don't, a few moments on Google yield the answer). How much I spend depends on my budget, how much I want or need the item, and how much the market and merchant are asking. But when I'm selling, my price is a function of what I can bring to the table, how much time or effort I invest -- but ALSO on their budget, how much they want or need the item, and how much the market is charging. Too. Many. Variables. Aaaaaaa!

Putting it all together, here are two big two takeaway points:

When you're buying, leverage the seller's insecurities.

1) Limited supply of clients and effort to line up new business

Next time you're reevaluating your expenses on a cell phone, salon, or shrink, remember: you're worth a lot more as an existing+future client than a potential client. So if they know what's good for them, they'll work extra hard to keep your business. In fact, the best time to ask for a discount or break might actually be after you're their client, not before!

2) Concerns they are overcharging

Don't underestimate the power of this line: "I'll be honest: I'm considering working with one of your competitors  I like what you have to offer, but can you come down on the price?"

When you're selling, channel the buyer's confidence.

Remember what it's like to be a buyer and use those same skills to sell. Protect your assets, maximize the value you obtain, and be confident that if you've done your homework about the market and you know the benefits you bring to the table, then you're worth every penny you charge.

If you can bargain down a car or get 10 percent off at Marshall's for a skirt with a stuck zipper, there's NO reason you can't also be great at asking for more money at work. Juts flip the mental switch and get in seller negotiation mode. It's really the same thing as buying -- only you end up with more money in your pocket at the end of the day!

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