Negotiation is simply a discussion between two or more people, and is aimed at reaching an agreement. Negotiation is a common occurrence in our everyday life, and cuts across several aspects of life. The business part of negotiation however is very important for every business owner, no matter how big or small the business is.
Mastering the art of negotiation/bargain helps you to maximize all the factors that surround a business deal to secure a profitable deal for your business. In the business of service delivery for instance, no two deals are the same, as there will be factors peculiar to each one, which will affect the price agreed upon to execute it.
The art of negotiation is not learned in any school, but individuals develop expertise in it on the job, after doing many deals. Some people however just have a natural negotiation skill. This post elucidates some of the important rules of price negotiation that will benefit your business deals.
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Everything is Negotiable
The first important rule of negotiation is that everything is potentially up for negotiation, be it goods or services. Some business owners/clients fail in this aspect, and therefore get less favorable deals compared to other people in the same line of business. Even when some goods have price tags, they are often still open for negotiation, especially when you are getting in larger scales than normal.
Negotiation in business goes beyond price, but might also involve getting goods in advance, and paying later, or payment in percentage installments.
Know What You Want
Before you begin a business negotiation, you need to have a definite idea of what you want, so that your negotiations are tailored towards achieving it. This doesn't however mean your idea or point of view has to prevail, but you will be able to work around what is in your best interest. Without an idea of your break even point or profit margin, you are likely to make a bad deal.
In the case of trying to purchase goods, a market survey is important, especially when you are buying that product for the first time. A comparison of prices (in offline and on online stores) gives you an idea of the approximate market value, with which you can work out your offer.
Negotiation is a Game
You must treat negotiation as a game, and as a result, the best player wins most times. Apart from presenting facts and figures that surround your business deal, a negotiator may also present an idea that appeals to your emotions. If you fall for this, you are tending towards making a bad deal. This is common among micro business deals, and in the sale of consumer goods. This is also one of the reasons why you do not bring family affairs or friendship into business.
Aim for a Win/Win Position
Despite negotiation being like a game, no one wants to feel cheated. It is therefore important to aim for a position that benefit both parties in a negotiation. Try to get the standpoint of the other party, and juxtapose it with you own reasonable terms. Then find a common ground that benefits both sides, so that everyone leaves happily, and want to do business again in future.
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Another very important aspect of negotiation is asking questions. Never refrain from asking all question that pertains to a particular deal, so as to know all the terms, and factors that are associated with that deal.
Although the art of negotiation is not taught, these steps can guide you in making better negotiations as a startup, while you learn as you gather experience. An inevitable part of business negotiation is coming to a compromise. You must be flexible in your terms, and be ready to make adjustments, but not at the detriment of your profit.
