How to succeed in negotiations is a question every negotiator worries about. The problem is most people tend to think success in negotiation can be guaranteed by just picking one approach to negotiation and sticking with it.
This is not entirely true! In fact, how to succeed in negotiations depends on knowing if there is for starters, a chance of success, that is, is there a chance for potential agreement?
How to succeed in negotiations
Know how far the parties are willing to go
It doesn’t matter how good you are with words or mannerism, everyone has a limit or a walk away position in negotiations. Your job is to find out this point before you invest so much into the negotiation
For instance;
Let’s say you want to buy an equipment and the supplier has proposed $2000 for the thing, this being the lowest they are willing to go, and you as a buyer are limited to $1500. How do you think the negotiations will go?
Holding all factors constant, there is no point in wasting time negotiating since there is no chance for an agreement.
One of the ways of knowing how to succeed in negotiations is by realizing that there has to be an actual chance or potential for some type of agreement, otherwise it would be more beneficial if you just walked away and saved yourself some time and resource in the process.
Why pushing is pointless
Let use price as our negotiation agenda, although you have to remember that there are other aspects of negotiation and that price is just one of many things one can negotiate about.
In negotiations both parties have their view about how much they are willing to pay or accept as payment.
Supposing the buyer’s highest acceptable price is $1500 then anything above that is out of their range and they would rather pay less.
This means the buyer will open the negotiation with something less, for instance, $1000. This is known as their hoped-for price!
The supplier is motivated with profits and that means selling at a high price meaning their hoped-for price could be $2000.
But in the spirit of flexibility since most buyers won’t go for that opening, they are willing to down bargain, depending on other factors like volumes ordered, to $1200 (which they are not willing to go below!). This becomes lowest acceptable price!
In short you can push all you want but regarding how to succeed in negotiations, you have to set your number somewhere between the seller’s lowest acceptable price and the buyer’s highest acceptable price!
Have clearly defined targets
The MIL approach is a good way of setting your negotiation targets
MIL stands for Must, Intend, Like.
The approach here is to distinguish between objectives we must achieve, objectives we intend to achieve (or which are important to us to achieve) and objectives we would like to achieve.
- Must achieve – These are potential deal-breakers. If we can’t achieve these, the negotiation will fail, or an alternative to the negotiated deal will be a more attractive option
- Intend to achieve – represent a target of negotiation, but failure to achieve one or more of them will not necessarily be disastrous
- Like-to-achieve objectives are just ‘icing on the cake’
It is essential that before entering negotiations, you have an agreed position with stakeholders or budget holders regarding you targets and what you can trade with
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