When Negotiating Over Price, Your Key To Success Is Preparing Correctly

Your goal is to both create and claim value when negotiating over price
Your goal is to both create and claim value when negotiating over price
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I don’t know about you, but these days it seems as though more and more of the negotiations that I find myself involved in seem to come down to price. Yes, there may be a number of other items that are being discussed, but we seem to move through those easily. However, when it comes to the final question of price, that’s where things seem to just bog down. As negotiators we need to understand that this is the way of the world. What we need are some ways to go about dealing with price based negotiations.

Price Negotiating Is All About Preparing Correctly

Let’s face it, negotiations that focus on price are nothing new. In fact, some cultures have a long tradition of haggling. In these cultures it is common to use your negotiation styles and negotiating techniques to bargain back and forth about the price of an item anywhere deals are done – this means markets and bazaars. In the United States and many other countries, haggling between buyers and sellers is an under-practiced skill. Negotiators might routinely pass up opportunities to haggle in situations where financial negotiations are not the norm because they’re afraid of offending the seller or because they feel inexperienced or uncomfortable.

What we need to realize as negotiators is that when we pass up an opportunity to haggle with the other side we’re likely passing up chances to save money. A survey found that among American price negotiators who tried to negotiate discounts in the previous six months, 83% succeeded in getting lower hotel rates, 81% got better deals on clothing and cell phone service, 71% negotiated cheaper electronics and furniture, and 62% lowered their credit-card fees.

How To Use Haggling To Get A Better Deal

The first thing that you have to do in order to get a better deal when negotiating over price is to make sure that you take the negotiation seriously. All too often we tend to assume that what we think of as “small” negotiations – for a new dishwasher, for example – don’t warrant the type of thorough preparation that we conduct for business deals when we are at work. It turns out that this is incorrect. If you aren’t ready to negotiate, you could end up sacrificing more value than necessary or passing up on a good deal. It pays to apply your business negotiation skills to whatever your current challenge is.

Wise price negotiators begin with a thorough consideration of what their BATNA is, or their best alternative to a negotiated agreement – in other words the action they’ll take if a particular negotiation ends in impasse. Knowing what you will do if you can’t get a good deal will give you bargaining power during the negotiation that eventually follows. Your BATNA also helps you calculate your reservation price as well as your negotiation goals, or the deal you are hoping to get.

You are also going to want to establish the right setting and tone for your negotiation. The experts advise price negotiators to haggle early or late in the day, when stores are often quiet, and late in the month, when salespeople may be especially eager to meet quotas. At chain stores, regular sales staff may not have the power to haggle, this means that you might need to approach a manager. Open your negotiations out of earshot of other customers, as sales staff may not want others to get wind of your haggling. Bring along up-to-date information about competitors’ prices and be prepared for the salesperson to verify it during your negotiation.

Always beware of tricky tactics by the other side. If you’ve taken the time to do your homework, you should be in a good position to negotiate. However, you may need to determine whether negotiation is even possible. Experienced price negotiators tend to extend the time between making concessions in the hope that the other side will grow nervous and make a better offer before they need to reciprocate. But it would be a serious mistake for you during a negotiation to make an unreciprocated concession. Wait out stalling tactics, and insist on receiving a concession in return for making one of your own. If no concession is forthcoming, thank the salesperson and then prepare to leave. Your imminent departure could inspire a counteroffer. If it does not you should feel comfortable turning to your BATNA.

What All Of This Means For You

Price negotiating is something that a lot of us spend a lot of time doing. We need to understand that this is a very special type of principled negotiation. When we enter into this negotiation we need to do it correctly so that we can achieve the results that we want. In order to do it correctly, we need to make sure that we will be showing up to the negotiation prepared. This means that before the negotiation starts, we’ve got some homework that we need to be doing.

Price negotiating is a part of many different cultures. The concept of haggling over prices is something that is done in markets and bazaars everywhere. If during a negotiation we pass up an opportunity to haggle with the other side then we may be passing up a chance for us to save some money. We need to make sure that we always take the negotiation that we are involved in seriously. We need to establish the right setting and tone for our negotiation. We also need to keep our eyes open to make sure that other side does not use any tricky tactics on us.

Finally, although price might be the most important issue at stake, you could always sweeten the deal for both sides by discussing other issues, such as delivery, financing, and the possibility of repeat business. By accepting tradeoffs on such issues, you may be able to get a better price.

– Dr. Jim Anderson Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You: When you are locked in a price negotiation, do you think that you should try to put other issues on the table?

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