Set your limit and stick to it

- When you're preparing to negotiate, the absolute most important thing you must do is to set your limit, your walkaway point, and then never go beyond it. This means that if you're buying, you decide the most you'll pay. And if you're selling, you decide the least you'll accept. Beyond this point, you'll say no and you'll walk away. The reason why this walkaway number is so important is that it's the root of all of your strength. Having a walkaway point gives you something to push back from like your back being against a wall. And if you know you'll walk away at a certain point, it gives you power because the only power you have in a negotiation is the power to walk away. Put another way, if you don't have the power to walk away and if the other person knows it, then you have no power at all. Most people are fine with the bit about setting a limit, but they struggle with the second part which is about sticking to it. On training courses, I play a little game where I make everyone promise that they'll never go beyond their limit. And then I get someone to tell me how much they would pay for their dream holiday. Let's say they would pay $5,000. And then I say that when you inquire, you discover that it's $7,000, but you negotiate, and the holiday seller eventually comes right down to 5,010. Would you go over your limit by just $10 and take your dream holiday which is perfect for you and a bargain? The person on the training course always does. And everyone else all agrees that they would too. But I wouldn't. I would turn that holiday down. If they refuse to come down that last $10, I would walk away. I'd rather sit at home in the rain than go over my limit. Similarly, if my lowest price for running a training course was $5,000 and the customer could only afford to pay me 4,990, then I'd walk away from the deal. I'd rather sit at home and earn nothing than go below my limit by $10. Why? Am I mad? Well, there are two reasons. The logical one and the emotional one, which is the real one. The logical reason is why would you buy something for more than it's worth to you? Or why would you sell something for less than it's worth to you? You're making a loss on the deal. I know in my example it seemed very petty to walk away from the holiday when they've come down to within $10 of my limit, but it's still more than my limit. Do you think a person should pay more for something than it's worth to them? But don't worry about that because here's the real reason. The reason you must never, never, never go beyond your limit is that it's a promise to yourself. If you ever go your beyond limit, what you're really saying to yourself is that when you set a limit, you don't really mean it. You'll probably just go past it because you're weak and spineless. Say after me, I'm weak and spineless. No, you must never say that. You must say, "When I set a limit, I mean it. I'll never go beyond it." This does mean that you need to set your limit very carefully. Ask yourself, am I really prepared to walk away at this point? Would I actually pay a bit more if I have to? And once you've got the number correct in your mind, set it and stick to it. I sometimes even write it on a piece of paper and I have it in my pocket so that I can feel it with my hand so I know I'm not going to go beyond it. I actually rather like walking away when a negotiation reaches my limit because it makes me stronger for next time. It proves to me that I can and will walk when I reach that point. It's not about the other person at all. I probably won't see them again. I guess it would be a great signal to send if I was going to see them again though, but it's all about me and what goes on in my head. If I know I'm prepared to walk at my limit, then somehow they know it too. So I do need to walk away sometimes in order to maintain my mental strength and I welcome those moments. Of course, I'm a bit sad not to get that particular deal, but I know that the next one will be better because of it. I once walked away from a house I really wanted. They came down a bit, but I still just couldn't quite afford it. And for a week I was quite sad about it. But then I found a house down the road that was cheaper and better and I ended up buying it. And every day I would drive past the other one on my way to work. And every day I thought, "Thank goodness, I didn't go beyond my limit and pay too much for that place." So it's fine to walk away. There's always another one down along the road, another house, another customer, another supplier, another job, another job applicant that's different, but just as good, maybe better. So have the strength to walk away and hang on for the right one.