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: email@example.com.