You're Robbing Yourself With Poor Haggling

If the seller's motivation is to get the highest price and the buyer's motivation is to get the product or service for the lowest cost, how does each side best prepare to negotiate?

There's an amazing amount of information available in this day and age, particularly on the Web, for many products, so that one can be fully informed about the range of plausible prices. Our main recommendation is to get this information (e.g., on cars, electronics, etc.) and then construct a favorable case for an aggressive opening offer -- rather than relying on "list prices" or the like as a basis for setting one's own opening offer. For us, the key is to get an accurate picture of the range of prices, target the favorable end of the range, and then be a little more aggressive than that in setting your opening offer. It's only by doing this that one avoids the "self-fulfilling" cycle mentioned in the first question.

What are the most common mistakes a person makes when negotiating that hurt his or her chances of getting a better deal?

The most common mistakes are a) focusing either on one's own limit or the other side's offer and then making an opening offer based on it; and b) taking at face value some of the bluffs of the other side. In the first case, if a buyer has privately decided he won't pay more than $2,000 for a used car, and the asking price is $2,200, it's dangerous to let these numbers influence your opening offer. It's tempting to drop a couple of hundred dollars and start at $1,800. But it is beneficial to be more aggressive than shaving a few dollars off.