How to prepare
Any serious negotiation requires proper preparation. Without preparation, you're entering the negotiation arena completely blind, and your results will suffer. Here are some points to consider:
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Competitive vs. collaborative. You'll want to decide whether you'll negotiate competitively (where you attempt to claim value for yourself) or collaboratively (where you attempt to create value for both parties).
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Interests. Take a close look at your own interests to decide why you want what you want. Don't settle for positions; rather, determine the reasoning behind your positions. Attempt to identify the other party's interests as well.
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Issues and targets. After figuring out all the interests you can discover, decide on a finite set of issues that will need to be negotiated. Then, put a target for yourself on each, and estimate the other party's targets.
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Reservation price. Consider the subjective utility of the other party's offer and determine the least you're willing to accept (seller) or most you're willing to pay (buyer). Usually, you'll need to think about the most pessimistic outcome.
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Opening move. Think about and prepare your opening move. In general, you want to make the first offer, as this usually becomes an anchor for the whole negotiation. Research shows that making the first offer results in a better deal.
If you carefully consider these items, make notes, and have a clear plan of action, you'll be far more confident in the negotiation. Ultimately, this will lead to a much better deal.