ARE YOU HAGGLING OR NEGOTIATING?
We have learned that negotiation is not about persuading the other guy and then making some concession in return for a contract. The term “negotiate” is overused. Very often we hear sales people saying, “We’re negotiating” when they are actually haggling over the price. Haggling is not negotiating; it is about offering your product for a reduced margin. When haggling there is only one variable: price; when negotiating there are more than one.
Haggling is like travelling through of a funnel. Many variables may enter through the top, at the beginning of the negotiation, such as price, quality, payment conditions, delivery date, maintenance or warranty. These variables are useless if you end up at the narrow part with one single variable: price. Too many think price is the only real issue and simply make concessions on other issues to move the negotiation forward. As a result they give away variables and price becomes the only real issue.
Don’t leave price until last
They feel that price is the tough issue, so they make concessions on other issues first, leaving the price one until last. Apparently, they may think they are actually negotiating and making a decent progress but the deal may fall apart when they reach the end of the funnel because they have nothing left with which to trade. Don’t make concessions before the price is discussed and do not handle price in isolation.
Settling the noncontroversial issues first removes the trades that are needed to protect your price
Likewise, negotiating is like travelling through a wide tube. Many variables may enter through the top, at the beginning of the negotiation, and you will exit the through the wide bottom part of the tube with more than one issue. Price will be part of the final deal because you will have other issues to help you shape the total package to enrich the deal. The more variables you add and keep active during the negotiation, the more you will protect your price. You will only gain flexibility with the number of variables you carry. Protect your price with variables and not with arguments.
Tradables widen the focus of a negotiation; the more tradables, the easier it is to avoid deadlock
The Home Owner Association argued with one of the neighbors because he had carried out an enclosure in the front of the building without the express consent of the association. They demanded that it be torn down. The neighbor refused because the cost of demolishing the enclosure amounted to $6,000. They threatened to sue him, and he threatened to sue all neighbors who had done similar work. Tear down the enclosure or keep it? If he tore it down, the community wins but the neighbor loses. It’s the funnel. What to do? One of the neighbors proposed something different: to keep the enclosure if the neighbor paid the HOA community expenses until reaching the amount of $6,000 and planted three palm trees in the community garden. All of them were satisfied and allowed him to keep the enclosure.
You need to fill the tube with many variables. Enter other tradables in play like the $6,000 of community expenses and the three palm trees. Price may be part of the final deal but now you will have other issues to help you repackage to enrich the deal. With the tube, both win. With a funnel, one wins and the other loses.
Don’t look solely at the price, consider the whole package
Haggling and negotiation aren’t synonymous. In pure haggling everything comes down to price. Price is a single issue, you either get it “very cheap” or you pay “too much” for it. Both parties are rivals. It is a competition with zero-sum. Negotiation enriches the deal; haggling impoverishes the deal.
Haggling is what most people do when they think they are negotiating