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Written by Marijn Overvest | Reviewed by Sjoerd Goedhart | Fact Checked by Ruud Emonds | Our editorial policy

Negotiating in Business — Everything You Should Know

Key take-aways

  • Negotiation is a strategic dialogue, requiring preparation, effective tactics, and diverse skills for success.

  • Master negotiation phases, like preparation and execution, to ensure favorable and lasting business deals.

  • Essential skills—preparation, content expertise, observation, interpersonal, and questioning—are crucial for successful negotiation.

Negotiating in business involves give and take. Each party tries to persuade the other one to agree with their point of view. It may seem frightening but it is important to grow your business. 

In this article, we will talk about what negotiating in business is all about. We will tell you the phases and tactics you can use in negotiation. We will also tell you the different styles and some skills that you must have to become a master negotiator. 

Once you are done reading this article, you will have a better knowledge of negotiating in business. Thus, allowing you to effectively negotiate every deal. 

What Does Negotiating in Business Mean?

Negotiating in business refers to a strategic discussion between parties to resolve an issue that is acceptable for both parties. In negotiation, all parties avoid arguing but agree to meet halfway. Thus, making a compromise for a deal to happen. 

One party puts its position forward while the other will either accept or counter the position. The negotiation process continues until both parties agree or one walks away from the negotiation table. 

You must take note that negotiation has three possible outcomes which are:

  • Win-Win negotiation
  • Win-Lose negotiation
  • Inefficient but all items are shared equally by the parties

Many people are scared to negotiate, which is why they assume that prices and offers that are presented to them are final. However, it is not true and many are actually flexible. Negotiating can be a way to come to agreements in a variety of areas. Some examples are:

  • Reducing the sale price
  • Improving the conditions of a contract
  • Getting a better offer or deal

Key Elements in Negotiation

In negotiation, there are key elements that play a huge role in your negotiation if it will be a success:

1. The parties in the negotiation

This element of negotiation asks who are the parties involved and their interest in the negotiation. By knowing who are the parties in the negotiation, you will know your position and their background to perfectly initiate the negotiation.

2. Relationship of the parties

The relationship between the parties is an important part of the negotiation. You should know how your connection with them will play a part in the negotiation process. 

Of course, a well-founded relationship with the other party is likely to have the best possible outcome in the negotiation.

3. Communication

You should know how to best communicate your needs and position to secure agreements in the negotiation. You should also know the most effective way to convey the desired outcomes of the negotiation without the other party getting the shorter end of the stick. 

4. Alternatives in the negotiation

Alternatives in negotiation are very important. You should have a strong BATNA if a direct agreement is not possible. You must be able to find a substitute to reach a concession

5. Commitment

The commitment of both parties in the negotiation is very important. The right amount of commitment given by both parties will deliver a good outcome in the negotiation. In this key element, the efforts of the party will be discussed to achieve the negotiated results. 

The 4 Phases of Negotiation

Negotiation follows a cycle. It has four phases that dictate how negotiation runs. Each phase or stage coincides with the other. Thus, it is important to know about these phases. 

Below are the phases in negotiation:

1. Preparation

Everyone knows that you should always prepare for whatever you are going to deal with. Negotiating in business without preparation is like bringing a knife to a gunfight. 

The most important part of preparation is to collect information as much as you can. Every negotiation process starts with preparation and only through preparation can you make and execute your strategy for the negotiation.

2. Information exchange and bargaining

The second step is knowing how to open the negotiation the right way and having the right content-related skills in negotiation. The most important skill you should have in negotiation is financial expertise.

Having financial expertise will help you create a deal that fits your strategic goals. Knowing the unit economics of your business will help you understand whether you should focus on low prices or fast delivery time. Additionally, financial skills will allow you to use your BATNA better.

3. Conclusion of the agreement

This phase is where both parties finally reach an agreement. You must take note that it is important to follow up on whether the other party can commit to what you have discussed in the negotiation.

4. Execution of the agreement

The final part of the negotiation is the execution of the agreement. This is where all the deals in the agreement are executed and carried out. 

The negotiation phase is an integral part of procuring your company’s needs. Thus, if you know nothing about it, then you cannot start the negotiation effectively. Just click here to know more about the negotiation phase.

Negotiation Tactics

Negotiation tactics are important to create a deal that is favorable for their side or to establish a win-win situation for both parties. It can be used both ways; the tactics can be used on you and by you. 

These are some negotiation tactics that you can use at the negotiation table:

1. Drop the bomb

This is a suggestion that a failure to concede will lead to catastrophic consequences in the negotiation. 

2. Postpone

This tactic suggests putting off an item or issue that you did not plan for. Thus, pushing it to a later stage of the negotiation allows you to give more time on working on resolving the issue. 

3. Bluffing

Bluffing is very useful to avoid unwanted negotiation. Although you must be careful in using it as it may affect your reputation. Make sure that you have a backup plan if your bluff is called out. 

4. Deadlines

Deadlines are very helpful if you are going to close many deals. It can be imposed to encourage parties in the negotiation to concentrate on creative solutions. 

5. Silence

Silence is also a great tactic especially if you are going to diffuse temper or emotion in the negotiation. Many people are uncomfortable with silence. Thus, they will feel that they need to fill it which weakens their position. You can use it to advance your position at the negotiation table. 

Tactics are very useful in negotiation. However, you must also be wary of how it can be used on you. Thus, check out our negotiation tactics article to know more tactics you can use.

Negotiation Styles You Can Use

We all have our own styles when we are negotiating in business. However, it is also important to know these styles to blend them with our unique styles. Thus, creating an exceptional style that can help you land every deal. 

We decided to create a simple table for you to understand the negotiation styles better. So without further ado, these are the 5 main negotiation styles that you can use:

Negotiation Style
Competitive negotiation style
Accommodation negotiation style
Avoidance negotiation style
Compromising negotiation style
Collaboration negotiation style
What is it?
This negotiation style is often described as a win-lose approach. In this approach, one party is looking to get what they want without considering the other party.
Some negotiators refer to this as a soft negotiation style. It is an interesting option when the negotiation is not important to you but to the other party.
From the word itself, this style completely ignores the negotiation.
In this negotiation style, both parties do not get what they want. However, nobody is on the losing side either.
Also called an integrative negotiation style, it is characterized by the intention of a win-win for both parties.

These negotiation styles are important to remember. Identifying them will allow you to know the interest of the other party in the negotiation. Check here to know more styles in negotiation. 

Skills A Great Negotiator Must Possess

A great negotiator is not born overnight, he or she enhances the talents and skills that he or she has in order to reach success. Although, there are some skills that you must possess in order to become a great negotiator.

These are the skills you must have in order to be a great negotiator:

1. Negotiation preparation skills

The most important thing in negotiation is preparation. You must gather as much information as you can for you to know the overview of the negotiation, the interest of both parties, and how you can achieve your goal. 

Additionally, preparation in negotiation also includes analyzing your BATNA. Having a BATNA will make you confident if the negotiation does not work out. Thus, you will not feel forced to make a bad deal.

2. Content-related negotiation skills

This skill includes technical, financial, and legal skills. Having technical expertise in a negotiation is needed to make a good deal. If you do not know the technical details of your negotiation, you will always be at a disadvantage. 

Financial skills will also help you to create a deal that fits your strategic goals. Additionally, legal skills will ensure that you know the legal aspects of your deals. Thus, allowing you to avoid any breach of a contract.

3. Observational negotiation skills

Observational negotiation skills are crucial if you want to have a smooth negotiation transaction. Being able to actively listen to what the other party says will allow you to know what you should do to make the negotiation work. 

4. Interpersonal negotiation skills

Interpersonal skills are very important, especially if you want to start a relationship with the other party. Additionally, it allows you to make well-informed decisions allowing you to make the best out of a deal. 

5. Negotiation questioning skills

Questioning is a skill that will give you a lot of value, especially in negotiation. It allows you to steer the negotiation in your preferred direction. Questioning is a great way to manipulate your negotiation opponent. 

Having the right skill set is what makes a great negotiation. To learn more about the skills you need in negotiation, check it out here.

Additionally, if you want to expand your knowledge and be a great negotiator, you must check out our Negotiation Course For Procurement Professionals which will allow you to bring out the best in you when it comes to negotiation. 


Successful negotiation in business involves strategic discussion and compromise for mutually beneficial outcomes. Mastering negotiation phases, tactics, styles, and essential skills ensures effective deal-making.

Embrace preparation, foster relationships, prioritize communication, explore alternatives, and ensure commitment. Understanding negotiation phases—preparation, information exchange, conclusion, and execution—guides successful outcomes. Negotiation tactics, from “drop the bomb” to “silence,” empower negotiators but demand caution.

Recognizing negotiation styles, such as competitive or collaborative, aids in understanding parties’ interests. Skills, including preparation, content expertise, observation, interpersonal, and questioning, define a great negotiator.

Continuous learning, like our Negotiation Course for Procurement Professionals, enhances negotiation prowess amid evolving business landscapes. Master negotiation to elevate your business and forge enduring relationships.

Frequentlyasked questions

What does negotiation in business mean?

It refers to a strategic discussion between parties to resolve an issue that is acceptable for both parties.

Why is negotiation important?

Negotiation is important not just to businesses but our everyday lives as it is used to meet halfway or find a solution to resolve conflicts and issues.

Why are many scared to negotiate?

Many are scared to negotiate as they think that the conditions offered to them cannot be changed. However, this is not true at all as negotiation can help you reach a concession with the other party.

About the author

My name is Marijn Overvest, I’m the founder of Procurement Tactics. I have a deep passion for procurement, and I’ve upskilled over 200 procurement teams from all over the world. When I’m not working, I love running and cycling.

Marijn Overvest Procurement Tactics