ChatGPT & AI in
Free Preview Lesson
Price Negotiation — The Ultimate Guide
Price Negotiation: What is it?Everyone in the procurement industry is familiar with price negotiation as it is a usual occurrence when procurement professionals purchase materials or supplies. During price negotiation, there are two roles that arise: buyer and seller. The purpose of price negotiation is to discuss a price that is agreeable or acceptable to both parties. Upon the end of the negotiation, either accept or lose the deal. In a price negotiation, procurement professionals also face another dilemma of losing the sale. Therefore, the obvious BATNA will be to walk away from the deal. However, there is always room for haggling strategy.. Your BATNA will help you calculate your reservation price which is the highest price you are willing to pay in the negotiation. It is also important to be polite and sincere throughout the negotiation process. You must also be willing to accept no for an answer. Effective price negotiation skills are critical for every procurement professional. Thus, our Negotiation Course For Procurement Professionals can help you master your skill in negotiating prices effectively. Enroll now and be the best negotiator that you are meant to be!
How to Negotiate Price?Do you want to pay less or sell more in a negotiation, then these are some negotiation techniques that you can use in negotiation:
1. Ask questions as a negotiating skillsWhen you are asking the price and the other party tells you the price, you can stop for a moment, look surprised, or even shocked, and tell if that is the best that they can do. After that, you can remain silent. If there is any flexibility in the price, which usually occurs, the other party will drop or raise their offer immediately. If they lower the price in response to your “is that the best thing you can do,” you can then say, “is that the very best you can do?” This technique adds an element of urgency and triggers the fear of the other party losing the sale.
2. The nibble negotiationNibbling is one of the most common tactics used in negotiation. In nibbling, you ask for small items, one at a time, and agree on each until you get a lot. Because each request is small, which seems painless for them, the other party may give in.
3. LowballingWhen they ask you for $500, you can lowball your answer and say, “ I will give you $450 cash right now.” Whenever you offer cash instantly, the resistance of the other party diminishes drastically. This is due to three obvious reasons which are reduced inventory, no credit card fees, and the feeling of instant gratification.
Preparing For Price NegotiationsOf course, you should not bring a knife to a gunfight. Going into a negotiation well-prepared is one of the best ways to increase your desired outcome. here are some ways to prepare for your upcoming negotiation:
1. Choose a strategyYou should decide on a strategy to use in a negotiation so you know how to approach the other party once the negotiation starts. Having a strategy shows the other party that you know what you are doing and gives you a predefined structure for your dialogue.
2. Know what you want to achieveYou should know what you want to achieve before you enter a negotiation to properly steer the negotiation in the proper direction. Setting the price that you want and refusing to settle for anything less strengthens your position and encourages the other party to adjust to your requirements.
3. Due diligenceDue diligence is a way to investigate the other party to know vital information about them. When you perform due diligence, you discover useful information relating to what the other party wants from you or how much they are willing to pay for something.
Tips on Preventing a Heated Price Negotiation
1. PlanPlan all your negotiations in detail. Planning is an important aspect of successful negotiation. Additionally, if you plan things, you will know what to avoid to prevent a heated price negotiation.
2. Negotiate on valueYou should know the value of what you are selling and the issues that you can negotiate. You should be prepared to communicate all the tangible value of those issues to your customers.
3. Shared interestYou should not forget that the other party’s at the table because he or she has something to gain from it. Use this shared interest as a common ground when things go off track.
4. TradeYou should ensure that you get something of equal or greater value if you give something up. Know the value of the negotiable items on the table. If you do not know the cost of the trades you are making, you may give away more than you should.
5. Walk away positionKnow the issues that you are not willing to negotiate and at what point it is not worth it to continue the negotiation. You should remember that you can always walk away from the negotiation, especially if you reach an impasse.
6. Not taking it personallyEveryone has a job to do. Getting defensive will only serve to increase the distance between you and the other party. You should know that you are talking about your and the other party’s interest in the negotiation and not their personal matters.
+ What is price negotiation?
It is a discussion seeking to get an agreeable or acceptable price for both parties.
+ Why is it important?
Negotiating price is important so you can get the best possible price you can get in the negotiation. Thus, allowing you to save more and invest the additional funds for other things that will enable your company to grow more.
+ How do you negotiate prices?
The golden rule in negotiation is to get the right information about the other party. If you know their background and interest, you will surely know how to position yourself which will allow you to steer in the direction where you want the negotiation to go.
Negotiation Course For Procurement Professionals
You'll get a certificate after completing the course
Rated 9.2/10 ★★★★★