Testing The Waters: Does The Other Side Really Mean That?

by drjim on August 8, 2008

A firm position set by the other side can often be overcome during negotiations

A firm position set by the other side can often be overcome during negotiations

Just a little over 20 years ago, I found myself in the middle-east on a business trip. The folks that I was traveling with decided to go down to the bazaar after dinner to see what was available. While shopping I happened upon an old man who was selling (fake) Rolexs. When I asked him how much one was, he told me $20. As I reached into my pocket to pay him, one of my traveling companions stopped me and in a quiet voice said “He doesn’t really mean it, negotiate with him.” It turns out that he was right – I ended up getting the watch for $10. Just in case you are wondering, yes, it does not pay to purchase fakes because that watch stopped working two weeks later.

This same situation often happens during business negotiations. The other side will state that one of their positions such as a firm price or position is non-negotiable. What do you do now? The last thing that you want to have happen is for the negotiations to end badly. You’ve got to find out if this is really the case or if they are just saying that as part of their negotiating strategy. The WRONG thing to do is to charge right at them and offer them a lower price / different position.

Instead, what you want to do is to “test” just how firm the other side’s position is. Just because they say that it’s immovable, doesn’t mean that it really is. Testing means that you need to change the nature of the deal. Take the firm item and add some additional pieces to it. Change the quantities that you are talking about. Change the delivery time: make it longer or shorter. What you want to do is to mix in items that are not fixed with the ones that are fixed and then go back and negotiate the bottom line. What you may find out is that what was once fixed, is no longer so!

Now this is not the only approach that you can take. Depending on how the negotiations are proceeding, there are four alternative steps that you could take:

  1. Try walking out – this may make them chase after you and offer to revisit their “firm” position.
  2. Charge on and keep on talking as though you never heard them state that it was a firm position. Note that this approach is extremely dangerous if they call you on it.
  3. Protest to a higher power – bring the other side’s boss into the negotiation and complain. Once again this can be dangerous if the boss is the one who told them that the point was firm.
  4. Finally, reduce the size of the deal being discussed by determining if there are some things that you can do yourself.

So what do you think – is there ever a case where something is really, really, firm and non-negotiable? Have you tried any of my suggestions in the past and did they work for you? Even better, has anyone tried to get around one of your firm points during a negotiation?

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{ 5 comments… read them below or add one }

Ted Linklater April 20, 2009 at 10:15 am

Assuming that one has alternative and acceptable suppliers, the tactic of “Walking Out” would definitely work. The downside here is that the outcome may be a “lose-lose” or a “win-lose” situation.

Reducing the Scope of the Deal would be my choice because it makes no difference as to whether one has alternate suppliers or not. The best part, of this tactic, is that we have a “win-win” situation in almost all cases.

Tactics #2 and #3 are of limited value. #3 in particular might result in short term success but will ultimately lead to problems in the long term.

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Quynh Nguyen April 20, 2009 at 12:04 pm

Thank you for this topic, Mr. Anderson, since the delicate skills involved seem more art than science related. When I was at General Atomics, single sourced items frequently got into the “firm” NC/NR situations, given the fact “who needs whom more”.

Your advice “What you want to do is to mix in items that are not fixed with the ones that are fixed and then go back and negotiate the bottom line” is very practical if you happen to need more than just the “firm” items. I was told Temper-Pedic beds had fixed prices throughout authorized distributions. In my experience, I agressively negotiated on the “bundle” price. The seller then put all discounts towards the non-firm item in order to wrap up my purchase at past 6 pm on Sunday 2/28/09 for his February bookings/performance. Those non-firm items ended up being at 36% of their original selling prices. I thought it was a win-win situation in today’s economy conditions.

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Dr. Jim Anderson April 20, 2009 at 8:20 pm

Quynh: that’s a fantastic story! It sure looks like you did what all good negotiators do – you combined multiple tactics to achieve your goal. The day that you did your negotiation gave you more “power” to start with and then by combining fixed and non-fixed items you were able to get the total price down to where you needed to be. Bravo!

Keep in mind that the other side did a good job also – you left the negotiation feeling satisfied and so this was truly a win-win deal.

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Jo anne Kaysen April 23, 2009 at 3:20 pm

I find it valuable to find out what the drivers are for the cost, then it is much easier to discover what may not be necessary for my needs. The 5 why’s have served me well!

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Dr. Jim Anderson April 23, 2009 at 8:24 pm

Jo Anne: ah, I fully agree. Now of course, finding out what those drives are is the key. If all else fails, I guess you can always ask the other side straight out…!

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