Let us never negotiate out of fear, but let us never fear to negotiate. John F. Kennedy, 1961

Our users often ask us what’s the best way to counter-offer on CarWoo! What you’ll find below are some things to do as well as keep in mind when you’re making counter offers on CarWoo!

What to Do: Determine your Best Alternative to a Negotiated Deal

If the deal falls through what do you do? Do you buy a different car? A used car? Or just stay with the one that you have. It’s important to know what you’re alternatives are so you can set a floor price on negotiations. If you know that you’re best alternative is to stick with your existing 10 year old car that’ll require another $3000 to keep it running having to pay an extra $50 might not seem like such a big deal in the long run.  Click here for more information on BATNA.

What to Keep in Mind: Have a Strong Alternative to a Negotiated Deal

An alternative to a negotiated deal is a requirement to succeed in any negotiation.  If you don’t have an alternative the negotiation will invariably break down leaving you with no options. Having a strong alternative also provides leverage to the negotiation. A strong alternative to a poor proposal helps negotiating with confidence and keeping a high and firm walk away point

What to Do: Know the Range of Prices for the Car You Want

Do yourself a favor and go visit sites that offer pricing tools for new cars  and spec out the car you have offers for to determine approximate dealer cost and average sale price based on historical sales.

What to Keep in Mind: ‘Pricing’ tools – caveat emptor

Sites like Edmunds, KBB, and TrueCar are great but they aren’t 100% accurate.  Dealers aren’t lying to you when they say these sites aren’t totally accurate.  Most pricing tools are based on historical sale prices for similar cars in the market. As a result the data they provide is not 100% up to date and small changes in dealer cost does in fact change during the year. In other words what these sites report as dealer cost isn’t as black and white as you might think.

What to Do: Set a Price That You’d Be Happy With

20% below dealer cost isn’t an answer.  Set a reasonable price for the car that you want and negotiate to that position.  Keep in mind that once you’ve made an offer you’ve set a floor price for yourself and negotiating lower than your floor price is hard to impossible.

What to Keep in Mind: Dealers have to Make Money Too

Contrary to the stereotype car dealers are good people. As with all salespeople they are compensated on sales and margin of sales. Car dealers do deserve to make some money for their work (especially if they add value on top of the sale). What that margin is you have to work out between you and the dealer. It is true that some dealers are willing to do deals below dealer cost but this is the exception rather than the rule.  Read Megan’s post on seeing both sides of the coin for more insight into the day to day of being a car dealer.

Finally… remember to communicate and stay clear headed. Obfuscation and emotion don’t help negotiation. Stay rational, be honest and deals will get done.