PRICE™ System for Negotiation

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When you are ready to do a deal, do you jump in and negotiate?  Many people do and they do not fare as well as they could.  Negotiations can be approached many ways. A good way to be consistently successful is to have a systematic process.  I have broken the negotiation process into five basic elements that I call  the PRICE™ System for Negotiation. This is an easy way to remember the steps and how they relate to each other. It consists of the following: Preparation, Relationships, Initial offer and Investigations, Creating alternatives and the End game. These are the steps or process for a negotiation strategy. Here is a brief synopsis of the elements.

Preparation: The first and most important step to any negotiation is preparation. Preparation is critical.  How much time do you spend preparing for a negotiation typically depends on the scope. If you are buying a major item like a car; you might spend a lot of time researching the type of car you want, SUV versus a van or the make versus the models within a certain class, safety record, fuel usage, maintenance costs, manufacturers retail price versus invoice cost, etc. If you are buying a small value item and you only want to get a better price; you may not spend much time other than to set a price that you will want to pay.  A good rule of thumb is to spend half the time on preparation as you would spend on the negotiation

Relationships: This is the second most important part of negotiation. How you deal with and treat the other person is going to influence how well you are able to persuade them. A lot of people think that negotiation is just trading dollar amounts back and forth, such as “I want $500.00”; “No, I will pay you $300.00”. That’s not really negotiating; that is haggling or hard bargaining. What you want to be able to do is have the other side to see your viewpoint and you also want to be able to see and understand their viewpoint.  A good way to get people to see it your way is to develop a relationship with them.  People will do business with you if they know, like and trust you.  Sometimes it takes a while to build these and other times you can hit it off with a person and establish a good relationship with them very quickly.

Initial offer and investigation: How well you set your initial offer will determine the conduct of the negotiations. If the other party says “No”, then you will need to investigate what the other party’s needs and wants are in order to reach an agreement.  Crafting a good initial offer does several things.  First, it keeps the other party interested.  A ridiculous initial offer that is so high that the other side feels it is useless to negotiate does no one any good.  On the other side, an unreasonably low offer can make the other paarty wonder if there is something wrong with the item or that you don’t know what you are doing and they then try to take advantage of you.

Creating the deal: If you make a compelling initial offer, it might be accepted and you get an agreement.  But what do you do if you get a “No”?  This is where you need to be imaginative. Based on the information you learned as part of developing the relationship with the other party and what the other party’s wants and needs are, you need to figure out how can you help them obtain them while still meeting your goal.

End game: The final stage of the negotiation is getting a “yes”.  But, it does not end there.  You must document the agreement, execute the contract, and take time to evaluate the negotiation.

This is a quick overview of the PRICE™ System of Negotiation.  If you wuld like to learn more about the PRICE system or have a question, please contact me at: bill@businessnegotiationservices.com.

 

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Comments

  1. Good for you for setting out your winning system, Bill.

  2. Just in time… I’m going to negotiate on a new car. I have been spending a lot of time doing the research… I hope that means I’ll spend less time negotiating 😉

  3. Bill, I like your acronym. Thanks for the tips.

  4. Great that you have broken what can be a challenging process into a clear, step by step one! Love the idea of the PRICE™ System for Negotiation.

  5. Great tips, Bill. Your PRICE acronym makes it very easy to remember the steps involved in successful negotiation.

  6. I’m learning a lot of from you. In our culture we’re not really taught to negotiate (or haggle as my Grandmother used to call it) but it can be an important skill to learn. Thanks for the tips.

    • In the US traditionally girls are taught to be accommodating while boys are rewarded with being aggressive and asking why. Part of my mission is to help women learn it is okay to ask for more and not be content to with what ever is “given” to them.

  7. Great tips and great acronym – thanks for spelling it so well. I really like the examples you use.

  8. Great tips Bill. Practical and easy to remember.

  9. Great tips, Bill!

    And, if you ever need a wingman on negotiations, call upon my 9-year-old son. He’s a natural master at negotiations, always has been! He often reminds me of that line from My Cousin Vinny: “you like to negotiate as you go along!”

    When done right, negotiation is a joy for all parties and ends with WINs all around!

    Love,
    Katherine

    Katherine C. H. E.
    Author, Be True Rich

    • Children are great negotiators. They learn how to maneuver because they are coming from a position of low power, until they get older, so they are always looking for alternatives.