10 Biggest Negotiation Mistakes That Are Making Other People Rich
Written by
Nicole Spector
Edited by
Ashleigh Ray
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We all want to make it rich, but unfortunately, many of us are leaving money on the table by failing to effectively negotiate.
We see this problem perhaps most pervasively when it comes to our careers. According to a 2018 survey by ZipRecruiter, 64% of job hunters accept the first salary figure offered to them. This can result in being dramatically underpaid; according to Glassdoor in 2017 the average U.S. employee was underpaid by $7,528 ($9,388.23 in 2023) or 13.3%.
But failing to negotiate — or negotiating incorrectly — can cost you money in other ways, too. Let’s explore 10 of the biggest negotiation mistakes that are making other people rich.
Going In Without Options
When negotiating a price, you need to have a few alternative prices in mind.
“Make sure you have three or four options just in case you are not able to make a deal,” said Young Pham, financial editor at Biz Report.
“When you negotiate with options, you negotiate from a position of strength. But when your options are limited, you also feel limited in terms of the deal you can get.”
Doing Poor Research On Pricing
In their practice in financial advisory, Pham often sees folks fail to conduct comprehensive research on how much a good or service should cost in the forest place.
“A lot of people who negotiate fees don’t always seem to have a very good understanding of how we charge, how fees compare across various services and the overall structure of payment,” Pham said.
“That makes it very hard for us to arrive at a deal but more so, it opens up the client for manipulation, especially if they are working with a bad actor who would rather milk out as much fees as possible from the deal.”
Over Haggling
Haggling is one approach to attempt to get something at a lower price, but some people overdo it and end up paying even more than they would have had they kept their haggling tamer.
“One of the most common mistakes I see is over-haggling, or essentially customers haggling to the point where the business owner will add an inconvenience fee to the service due to time already wasted from the outset (without the consumer being aware),” said James Taylor, founder of James Taylor SEO Consultancy.
“It’s important that consumers take into account the context of the business they’re dealing with and how to approach haggling. Naturally there are differences between how you can expect to haggle for a food item versus a luxury purchase, so use context on a per-purchase basis.”
Not Embracing AI Technology
AI, specifically ChatGPT, can be really helpful with negotiating, especially when it comes to routine bills.
“There are several solutions on the market to negotiate your Internet or cable TV costs or even some SaaS subscriptions,” said Martin Rand, co-founder and CEO of Pactum AI, which leverages AI and chatbots to create highly detailed autonomous negotiations.
“You can ask ChatGPT what some of the alternatives to the negotiated deal are. Using prompts like, ‘Which arguments should I use in this negotiation?’; ‘What are my alternatives to this deal?’; ‘What other terms could I trade in this negotiation to get what I want?’ and more.”
Overlooking Long-Term Value
Are you looking only at the upfront cost of something, or are you also factoring in long-term value? You should have a big picture perspective when negotiating.
“Consumers often focus solely on immediate costs, neglecting the long-term value of a deal leading to contracts with unfavorable terms or purchasing products that require expensive maintenance down the line,” Rand said.
“Assessing the long-term consequences of your decisions, which could mean occasionally paying a little more upfront for favorable terms can lead to substantial savings over time.”
Fear of Rejection
It’s interesting that consumers fear rejection from salespeople. But they often do, and this is a mistake in negotiating.
“This fear can also lead to accepting terms that are not in their favor over concerns that the terms will only get worse if they push things,” Rand said.
“To overcome this, remember that negotiation is a normal part of the business process. The worst that can happen is you hear a ‘no,’ which provides you with an opportunity to explore alternatives options.”
Not Seeking Alternatives
Is that the only handbag (or whatever it is you’re looking for) on the market? Don’t rule out the competition or rule out your options.
“Consumers often become fixated on a single product or service, limiting their ability to explore better alternatives,” Rand said.
“As this is commonplace, companies end up benefiting from this and offer fewer options while charging higher prices. Consumers should always seek alternatives and compare their competing offers. This not only helps you find better deals but also puts pressure on companies to offer competitive terms.”
Not Negotiating the Hidden Fees
Forgetting to negotiate the hidden fees or commissions you pay to a service provider is a costly mistake. Kelly Palmer, the founder and chief wealth officer of The Wealthy Parent LLC, sees this mistake happen between clients and their financial advisors.
“If you choose to work with a financial advisor who charges based on a percentage of your assets, not negotiating this rate can cost you huge dollars in the long run,” Palmer said. “You often hear of a 1% fee but this is a starting point and should be negotiated to reflect the value of advice.”
Letting Emotions Take Over
One big negotiating mistake that Elizabeth Pharo, the CEO and Chair of the Board at Divorce.com sees is letting emotions cloud judgment.
“Don’t get me wrong, it’s human nature to be emotional, but emotions can be like fog; they blur your vision,” Pharo said.
“They can make you agree to terms that aren’t in your best interest, just to get things over with. Or worse, they can make you push back on issues that, in the grand scheme of things, don’t matter that much, leading to more legal fees and stress.”
Not Negotiating at All
Of course, the biggest mistake of all is simply not negotiating.
“Most consumers just accept the initial terms offered by companies,” Rand said. “Research has shown that women negotiate less than men. What could help is simply asking if the deal can be negotiated. That helps to reduce uneasiness and opens up the conversation.”
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