In essence, the art of negotiation is based on the concepts of supply and demand. Someone wants to buy a product or service, and someone else sells that product or service, or a similar one, in order to make a profit.
The outcome should be a solution somewhere in the middle, satisfying more or less each side.
The determination of price is of central importance to the process of negotiation.
The term “price” is generic, and refers to the means of exchange that might be offered by the demand side, depending on its financial capacity, that may be accepted by the supply side, or not.
Therefore, the value attributed to the product or service under negotiation should be clearly determined by each side.
The right type of information that is available at the right time can be a precious factor, saving either side from unpleasant situations, like concluding an unfavorable agreement on a product or service of much less value than it was estimated at first place.
The previous points apply in cases when the object under negotiation is tangible, such as the purchase of a car or a house, or in auctions.
When the object under negotiation refers to any type of rights, relationships, and other intangible goods, in general, it could be argued that the conditions, under which the negotiation takes place, are more subjective.
However, in that case as well, the terms of the negotiation are determined by the product or service required by the demand side and offered by the supply side.
The time factor plays the most important role in the process of negotiation.
If there is compelling demand for a product or a service, this would result in a higher price.
Of course, the selling side must have the ability to determine, for example through targeted questions, the maximum amount of money that the buyer is willing and able to pay.
Therefore, the seller will refrain from setting a price too high, which would cause the negotiation to end early, and without reaching any deal, and the buyer to turn to another supplier, leaving the original supplier with unwanted stock surplus.
In fact, putting business negotiation skills into practice is an essential part of the exchange of any products or services between two parties: One party offers a specific product or a service, and the other party offers, e.g. cash to buy that product or service.
Optimally, the golden mean should be reached, or, in economic terms the “equilibrium”, at which both sides will be satisfied, and the exchange will take place.
The role of reliable and timely information should be highlighted again, as it forms the basis upon which each side can negotiate.
Another important characteristic of valuable information is objectivity.
Moreover, a knowledge of the other side’s negotiation skills and intensity of need for the required product or service can determine the outcome of the negotiation.
Thus, it is made clear that the negotiating side that has this type of knowledge will have a competitive advantage against the other side.
This article was originally published by me on Medium.com
You can read it here.