Preparation is key to negotiation success. Learn as much as possible beforehand about the needs and interests of both parties at the table. The more information you have, the stronger you will be in the negotiation.
The other side's first offer is usually not in your bet interest, but it can tell you a lot about what they hope to gain in the negotiation. Carefully consider what their opening offer says about their aspirations and where they might be willing to make concessions.
Aim high! Everything is negotiable. Even if you don't think you can get what you want, ask - you'll get closer to it than if you don't. The higher you set your sights, the more you'll get in the end.
Don't second-guess yourself or make assumptions about what the other party's response will be. Don't reduce your aspirations for fear of asking too much; if they want to bring things down, they can do it themselves. Make an offer and let it lie there - if they don't respond immediately, don't undercut yourself. A moment of silence won't kill you!
Plan beforehand and determine your bottom line. Below this point, you will be better off walking away from the negotiation than agreeing. Be willing to walk away, if it comes to that! Having a bottom line set ahead of time gives you leverage in the negotiation.
If you do have to walk away from the negotiation, what else can you do to get your needs met? Having an alternative plan is necessary for your bottom line to be realistic. Without a fallback position you will have to take what you're given, even if the agreement is unacceptable. Determine your best alternative to a negotiated agreement.
You may have heard the old saw about people having two ears and only one mouth because we should listen twice as much as we talk. This is a great negotiation rule! Let the other side talk, and listen to what they are saying - or not saying. Observe their body language as well. Ask good questions. You will be amazed how much you can find out about their underlying interests and needs; this information can help you explore options and build a mutually satisfactory agreement.
If you make a concession, always ask for something in return, quid pro quo. Not only does this ensure that you aren't giving away the farm, it makes the other party feel like your concession has value, and will lead to greater satisfaction for both parties in the end. If you give them something for free, they'll simply ask for more.
Think outside the box while trying to reach an agreement. Monetary concessions aren't the only things that can be traded - discuss delivery schedules, payment deadlines, order sizes, freebies, packaging, colors - anything that might be of interest to the other side. Remember that something might be low-cost for you but of high value to them, and vice versa.
Don't focus only on your own interests. This is a self-limiting approach and will blind you to a wide range of options. Go beyond adversarial positioning, and consider what the other side needs. Work with them to create a solution that satisfies the interests of both parties. A win-win does not mean giving in to the other side; it means finding ways for both sides to get what they really need from the agreement, and walk away satisfied.