Negotiating Tips, Negotiation Strategies, Business Negotiation September 10, 2010

Negotiation: Reaching agreement on price.

As a buyer, you want to reach a price within your budget. If you are the seller, you are aiming to make a profit. There are many negotiating tactics to reach the price you want.

Of course, the easiest way to reach agreement on price is finding a fair price, which satisfies the buyer’s budget and the seller’s bottom line. However, not all business negotiations will involve parties who want to be fair and reasonable.

Dr. Chester Karrass, in his book The Negotiating Game, tactics dealing with price “amount tactics” and details how they work. Some of these tactics are not fair and reasonable. Here are five of those tactics you should know about:

Bulwarism: The take it or leave it approach, where one party starts by making a final offer to the other, leaving little room for negotiation.

Intersection maneuver: One party seeks to tie existing and future contracts into the current negotiations. This tactic may help extend leverage to other contracts.

Escalation: Once agreement is reached, one of the parties changes its demands. The other party now wants to go back to the agreed to price because it seems more reasonable.

Non-negotiable: Setting exorbitant demands, and not allowing any negotiation for the sole purpose of creating deadlock. Clearly, this is something to avoid if you truly want to reach an agreement.

Reverse-auction: In this scenario, the buyer is negotiating with several vendors, telling them that the others are providing better pricing. It creates tension and artificial competition on price. To counter this, a vendor must test the buyer.

What tactic do you find most useful to get to the price you want?