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The other day, I mediated a case and the plaintiff told me as follows: “Tell them that I need the money to provide care to my husband.” The other side viewed the case as a nuisance case and one that was not meritorious. In response to the question, I thought to myself that the plaintiff demanding that I tell the other side would not help settle the case. I thought that the defendant would simply say, “so what. I need the money too.” In addition, it reminded me of a principle in negotiations — that is discussed in my book 112 Ways to Succeed in Any Negotiation or Mediation — that people negotiate to their interests and not to other people’s interests. In other words, people will do things because of their own needs and not because someone else needed something. Here, the plaintiff’s need for money would not likely motivate the defendant to pay more money or to pay it any quicker. Indeed, given the zero sum game of many litigated cases, it could have the counter effect of entrenching the other side — because the defense might say that since plaintiff needs the money, let’s hold on to it longer to cause more pressure on the plaintiff to take less.
In my opinion, unless the parties are in a continuing relationship or expect to be in a continuing relationship, the other side will not likely take into consideration the first party’s needs. Instead, each party is making a decision on its own needs. Now in the above case, it might be that defendant could consider that it would pay more money in settlement because it thought that it could eventually be liable for even more at trial — that, however, is taking its own interests and not the other side’s interests into consideration.
In continuing relationships, however, the interests change. One party’s interests become more compelling to the other side because both sides need the relationship to work in the future.
Regarless, as a negotiator, you must think of the other side’s needs and try to tailor your requests or offers in light of those needs and not tailor them to your own needs.
Well, what do you think?
By Steven G. Mehta
After working out the numerous issues with the publisher regarding ebook editions and Kindle, I am pleased to announce that my book, 112 ways to Succeed in any Negotiation or Mediation is now available on Kindle and other e book formats. Just in time for Xmas
To see a copy of the Kindle version, click on the picture below.
As you may know, I conducted a seminar on a 112 ways to succeed in your mediation practice recently and promised the participants that I would slowly place my tips on the blog. Well here is another one of the tips. Think hard about the price you charge.
Many people simply believe, “I will charge the lowest price and business will just flow in.” Unfortunately, that belief does not work. One reason is because of the reason determined in a study I cited in a prior post.
A recent study conducted by Francesca Gino at Carnegie Mellon University demonstrated that the fact that someone has paid for advice means it is more likely to be heeded. The study found that people are more likely to use advice that has been paid for than advice that’s free, even if there’s no difference in quality between the two sources.
Throughout the study, the participants took more account of advice they had paid for than advice they were given free, even though it was made clear to them that the advice was of the same quality. A final study by Gino showed the students took even more account of advice if it was made more expensive. In other words, the more that the person charged, the better the advice was accepted.
This study has enormous implications for pricing of mediation services. You need to evaluate your market and what other mediators are charging for their services. Find out what the top mediators in your field are charging. And then charge accordingly. In addition, try to find out what your particular market will bear. In some markets, if you charge more than $100/hr, you will be too high. In other markets, if you charge less than $300 you must be worthless.
When you understand what the top mediators charge, you can then decide how much less, if at all, you will charge. Too low and you will be the 99 Cents store of mediators. Too much and the clients will simply say, “for that much money, I could get the top tier mediator I have worked with before.”
Further, your price does not reflect your quality. It reflects the perception of your quality. There was a time when certain organizations had the “reduced price” panel of mediators. By advertising on those panels, you are only highlighting that you are desperate for business and are willing to discount your rates significantly.
At a certain point , the price can also help expectations. For example, there are mediators that charge $15,000 a day. When I hear of those mediators, I also hear comments from attorneys that, “at that price, you know he is going to get the case done.” In other words, the price can help people already start to believe that the case will get settled when it is in your hands.
Finally, don’t be afraid of the price you charge. Don’t be embarrassed or worried that you aren’t worth it. You are. If you don’t believe it, then certainly no one else will either.
In my book, 112 ways to Succeed In Any Negotiation, I discuss that negotiations happen every day in every aspect of life. I just saw a video on You Tube from the History channel show Pawn Stars where they provide some basic advice on negotiating.
Here is the video:
As you can see from their advice, one of the best things that you can do in negotiations is to be nice to the other side. Although they don’t discuss why you should be nice, there is a lot of science behind simply being nice.
First, being nice to another person (especially in a tough business like Pawn) is a gift to the other person. That person may like you better simply because of that gift.
Second, being nice invokes the principle of liking identified by social scientist Robert Cialdini. People are more likely to do something for you if they like you.
Third, it is critical to establish a good first impression. Studies show that people are more willing to listen to you and to accept your presentation if you make a good first impression.
To learn more about tips in negotiating, try some of the tips in my book, 112 Ways to Succeed in Any Negotiation or Mediation.