Thursday 19 June 2014

Craftsmanship of Price Negotiation

Authored by Fahad Amjad

Negotiation is a basic, generic human fuss that everyone engages in. Good negotiating skills are essential to the smooth running of your business. You need to be able to negotiate with many different types of people in many different business situations - whether you are negotiating a loan from your bank or the next pay rise with a union or staff representative. The skills, once learned, will stand you in good stead. The most familiar approach to negotiation is positional in which each side adopts conflicting positions on pertinent issues and strive to convince the other side to accept the persuader's preferred position. Some people are quite skilled in positional negotiation and are able to achieve their goals most of the time using positional techniques. Moreover, successful use of positional techniques is difficult to sustain. Positional bargainers develop reputations that reflect their negotiation approach. Individuals facing negotiators with such reputations are very vigilant, distrustful, and reluctant to share information that can lead to agreement. Individuals typically view negotiations with positional negotiators as competitive challenges and strongly resist positional efforts to change their positions. Often the result of such encounters is a breakdown of negotiation and no agreement. When this happens, there are no winners.

Here are few tips to make negotiation process less painful:

Complete Home Work: Before you start to negotiate, draw up a list of the factors that are most important to you for having strong grip for example, price, value for money, payment terms,delivery, after-sales service and maintenance arrangements quality, lifetime costs of a product or service etc.

Understand your supplier: By conducting some basic research into a potential supplier you can work out how valuable your business is to them. Your bargaining power increases in direct proportion to your potential supplier's need for your business.

Negotiating Strategy: It's important to plan your strategy in writing before beginning negotiations. This will help you set clear goals and work out where you will draw the line and walk away from the deal. Start by defining what your priorities are, such as low price, high specification goods or a specific delivery schedule.

Impact-full Communication: Start Negotiation well by having strong communication skills don’t give weak gesture while communicating, it'll be great grasp on overall negotiations.

Identify Mutual Consent: Try to discover the area of mutual understanding for example if supplier don’t compromise on price focus on other areas of agreement such as down payment duration of warranty or discount on bulk purchasing, that might provide even greater benefits for both parties.

Mention Multiple Suppliers: Let the supplier know that you are getting different quotes and will consider the best one available. This creates some competitive pricing.