Basically, two types of negotiations take place in the world – to win over others (in order to create self-filled benefits) and to create a win-win situation (in order to create mutual benefits).
The most important thing in any negotiation is to understand that the other person can give anything and everything in against of just what he needs. Most of the time all negotiations circle around outcomes in terms of money, but money is merely one important aspect of negotiation, there are several other factors as well which play an important role in negotiations, even if one wish to get better outcome in terms of money. These are:
a) Time: Sometimes a particular party is immediately in need of something. Example – A company needs a solution on urgent basis as it is already short of supply. This supply is small portion of their big project, hence they would be in position to offer more money and there bargaining power is reduced due to the tight situation. In such cases, time proves to be the winner.
b) Information: In this case, a party doesn’t have much information about the other or his product. In other words, the party is too much informed about its own product but lacks information about the product of the other. So, if he is given information about the product of the other, he will lose the battle of negotiation. Example, while signing a partnership deal, party X believes it deserves a better share as their product is superior to product of party Y. But when party Y presents its product and proves it to be more superior, party X is dumbfounded as they had little or no information about their product.
c) Power: If a well-known organization or an affluent person buys or endorses a product, its makers will surely gain power. Example – When a product is bought or endorsed by a well-known film personality, it will gain popularity due to the image of the endorser. Here makers lose in negotiation, he might or might not gain from the deal but maker might wish to win influencing organization or person in order to build portfolio.
d) Competition: This is an important factor wherein a party agrees to bow down in a negotiation simply because it doesn’t want its competitor to win. Example – A soft drink company agrees to gain a contract of a baseball series in a much lesser amount than they expected, just make sure their rivals don’t clinch it before them.
In this way, apart from money, these four factors play an essential role in negotiation.
Negotiation is it worth?
First of all, you should decide whether you would like to negotiate in the first place. Although you can negotiate on anything and everything, the efforts and time invested in the negotiation might not give you desired results. You should be sure that the outcome is worth your time and efforts. So, you should think hard before deciding to negotiate. Example – If you go to a market and decide to negotiate on a product, you have to be sure whether it is worth negotiating. If you have ample time, you can invest it in negotiating but the same cannot be advised to a person who has a very tight schedule. However, at the same time, you shouldn’t think that you won’t get the expected results. You need to positively start working towards it.
How to start negotiation?
The first and the foremost thing is to understand that you need to convince the other party that you know how to ‘walk on water’. However, you should also know where the stones lie in order to walk on the water. You need to keep your facts clear and you should be aware of your actions. For this, you need to carry out a proper research and study and also think of different options. You should also get hold of different suppliers that provide the same solution. By doing this, the other party will consider you a powerful and hard negotiator.
Use all below possible methods to Negotiate.
- Acquire sufficient information about pro and cons of the product / services you are going to negotiate.
- Know about competition; what competition is offering in terms of savings, advantages, benefits and long term usability in compare to products / services you are negotiating.
- Use the power of influence; bring both tangible and non-tangible benefit in negotiation which other party will gain from negotiation.
- Learn to take advantage of Time frame, start negotiation early and bring other party into corner when you see they are in need to finalize a deal urgently because of month end, budget end or sales targets.
- Whatever you negotiate, if it involves regular service or long term relationship, do opt for win-win situation, provide some benefits to other party so they continue to provide you services and benefits in long Run. Win-Win is not best option but it is only option for negotiation for product and services which require long term association or partnership or service relationship.