I have had the privilege of growing up with a master negotiator (my father) who has built a small real estate empire over the last 25 years. He negotiates for everything he touches and here is the advice he always gave me and my older brother (which has served us very well):
a) try to understand the costs associated with the product/service you are buying as much as possible before you make an offer. in other words, assume a reasonable price someone is putting on their labor and try to quickly estimate to the total cost of materials. if the price they are quoting is out of line, your job is to put them in line. a notorious industry for this is plumbing and electrical work. plumbers try to get away with murder, often charging what equates to $400 an hour for work on top of material cost. $400 is unreasonably by any measure and you'll find that they agree too when you push them hard enough.
b) never, ever pay more for something than what it's really worth to you. this seems a bit silly and self evident but you'll be surprised how often people violate this rule. this requires a bit of self reflection.
c) the most serious buyers are the ones who ask a lot of questions. ask questions and you'll be taken seriously. it will also help you understand them and where they are coming from.
d) regardless of whatever they may try to make you think or believe, if you have the money, you have the power. period.
e) most important rule of all, never be ashamed of your offer and take it very seriously. they'll take it seriously too and it will force them to reflect hard on their offer. As shakespeare said, all the world's a stage and all the men and women merely players
A lot of it just takes experience and practice. There are a few good books available. "The Knack" by Norm Brodsky is very good, and the source of the "You don't ask, you don't get quote". The chapter on negotiation is small, but the rest of the book contains tons of invaluable insight.
Many books stress formulating a "win-win" situation, and "expanding the pie" so that "everybody wins". This is good in theory, but rare in practice. In almost every negotiation someone will have the upper hand.
I think the best approach is to listen carefully and try to understand the other party's need. This may not necessarily be more money. Maybe they want to build a long term relationship. Maybe they are willing to lower the price if you pay upfront, or provide a larger deposit, because they prefer the cashflow now. Maybe business is slow. You never know.
You also need to know your best alternative. If you have options, it is easy to walk away from the deal. If you are informed, you will know the true market price. You can't be afraid to walk away. I think it just takes time and practice to develop this mentality, and the opposing side can typically sense if you're serious about it or not.
A strategy that has worked well for me is to just say something like "I really like your product/service, and would love to start using it, but the price is a bit out of my range. Is there any way you can give me a discount?". It doesn't work for everything, but I've been surprised how often it does work. The worst thing that happens is that they say no. Remember, you have to ask!
One way that taught me a lot. Go to a third world country and just for fun, negotiate retail items (baseball cap, tshirt, whatever). Shoot for 80% off. Can you do it? Then go for 90% off...
You'll quickly learn that you have two weapons: money in your pocket that the other guy wants, and the ability to walk away if you don't like the deal.
Everything else is fluff.
PS: another way to practice is go through timeshare presentations. Keep saying no. You'll be amazed how low the prices can get. You'll be handled by 2,3 or 4 different sales people, each with supposedly more authority and better deals to offer you. Keep saying no. You'll see :-)
In Manhattan's Chinatown, my wife would sometimes pick up an item and lay down the cash she thought it was worth (lower than the listed price, of course).
They never wanted her to pick that money back up again.
Probably the only opening I know of for negotiating "normal" stuff is, "how much of a discount would we get for a long-term commitment, say, a year up front".
But in this case, you've already sequestered yourself into a one year commitment, and the other person has conceded nothing. If I know you're available to commit, I just need to find your discount level. You're going to underestimate my acquisition costs, I can guarantee that.
Better to suggest: "I really like your product here, but to be frank, I've got to watch my money right now. Is there a way you can reduce this price 20% and still do business with me?"
The catch is that some people will most certainly say no. You either deal with them and reward their stubbornness or walk to someone that is willing to talk. I think that's more of the key than an opening line.
You're right, of course, but a lot of people who aren't flexible on price are flexible on payment or delivery terms, so I guess I'm just saying pull whatever levers you can find.
But this is an example of how much I suck at day to day negotiation.
