People often enter into negotiations with just one goal in mind: getting the best price they can. However, experienced negotiators and negotiation training professionals know that price is rarely the only factor in play.
Besides, a negotiation that is focused entirely on price isn’t really a negotiation – it’s just haggling.
We don’t want to haggle over price with our valued business partners as though we’re buying a used car. Price alone does not necessarily reflect product quality, ROI, or the support and service that will be provided after an agreement is reached.
From a win-win perspective, other interests to consider would include maintaining a positive relationship between partner organizations, meeting the critical needs of both parties, and conducting business dealings that are respectful and fair.
Let’s consider a few of the other variables – and possible tradable concessions – that should be considered when negotiating.
Non-price Concessions to Consider
1. Other costs.
The price of the product or service is one thing, but payment for delivery costs, registration fees, or Fuel might be a negotiable issue. If any other costs or fees are associated with the purchase or contract, it can be useful to separate these from the main price and use them as bargaining points.
2. Quantities.
Look for possible variables in quantity – the number of projects included in the contract, for example, or the amount of product ordered. Getting (or giving) a discount for large purchase orders is a common concession in supplies.
Alternatively, a seller might ask the buyer to pay a little extra to compensate for having to break pallets or deliver partial loads.
3. Schedules.
Sometimes arranging special delivery schedules, payment cycles, or project completion times can make the deal.
Buyers may agree to a higher price if they are allowed an extra 30 days to pay, or can get the specific delivery terms they prefer. A short delivery deadline can also justify a higher price; an extended deadline can legitimize a lower one.
Discuss and consider all the possibilities in the area of scheduling, time limits and delivery terms to build the most satisfactory deal for everyone at the table.
4. Contract terms.
Longer or shorter contract periods, more or less lenient cancellation clauses, or other contract terms can become valuable in concession trading.
Providing an escape clause, allowing a renter to negotiate a shorter lease, or otherwise reducing the obligation on the part of the other party to the contract can have a high value to them and thus prove to be a powerful concession.
However, always make sure that the risk to you does not outweigh the benefit.
5. Extras.
Bonuses, “gifts,” and other extras that can just be “thrown in” to the deal will sweeten it up a little.
For example, retailers might offer a gift certificate or a product accessory to go along with the main purchase. An IT company might defend a higher rate by offering follow-up maintenance for a specified period, or access to 24-hour tech support.
Trading Concessions Effectively
Concessions based on price and other considerations are at the heart of collaborative “win-win” negotiations.
When trading concessions, the negotiating parties avoid becoming mired in their positions, and work together to achieve a solution that will best satisfy everyone’s interests.
The real keys to building a win-win solution is to offer something that is of high value to the other party, but of relatively low cost to us.
Conversely, when requesting a concession, we should focus on asking for something that is of high value to us, but which might be perceived by the other party as lower value – something they can give you without losing too much themselves.
Using this approach is the best method of increasing the size of the pie – avoiding the pitfall of the zero-sum game – and ensuring that both parties walk away satisfied.
Even while working for a win-win outcome, remember the Golden Rule of trading concessions: quid pro quo.
Do not give a concession to the other party without getting one in return – never give something away for nothing!
There are almost always more factors to consider than price, and almost always more than one way to build a satisfactory deal. Remember to take your own organization’s other interests into account, and find out what you can about the other party’s underlying interests as well.
Always keep in mind that every concession should be reciprocal, and never give a concession without asking for one in return. Trading concessions and working to meet these interests is true negotiation – not just haggling over price.
Baker Communications offers leading-edge Negotiations Training solutions that will help you address the goals and achieve the solutions addressed in this article. For more information about how your organization can achieve immediate and lasting behavior change that leads to bigger wins during negotiations in any setting, click here.
