Notes on Negotiations
By Marty Latz, Latz Negotiation Institute
I recently reached a dead-end in a negotiation largely involving one major price issue. I didn’t want to come down – and my counterpart wouldn’t go up. And I knew he had reached his end point, because he had already gone back to his boss twice for more, and we had a longtime friendship so I know he wouldn’t lie to me.
How did we resolve this? We brainstormed options that could satisfy our mutual interests and found some non-monetary items that had value to me and didn’t cost him much. In fact, their value to me was worth much more than the price difference involved.
Here are four common non-monetary items you might consider in similar situations.
Get Contacts or References
Sales guru Harvey Mackay, author of the bestseller “Swim with the Sharks Without Being Eaten Alive,” often writes about the powerful value of a strong sales pipeline. He has also suggested that our counterparts can usually add to our pipeline at virtually no cost to themselves.
Don’t underestimate the value of introductions to possible clients or customers. If you’re a lawyer and your client requests a discounted fee, perhaps offer them a one-time discount in return for a personal introduction to a new client or two.
Keep in mind we are almost all in some sort of sales, too. We could be selling expertise, products, services or even ourselves if we might someday want a new job.
Change Your Scope of Work
A colleague recently received a proposal to develop some software that was way out of her budget. After rejecting it, she suggested they work together to modify the scope of work involved.
By collaborating, they may very well find a solution that fits in her budget, better satisfies her needs, and provides a significant amount of work at a fair price for the developer.
Interestingly, the developer’s response to the initial rejection was to ask for her budget number. It was a smart negotiation request. After all, he could then modify the scope to fit that budget and protect his profit margin.
Importantly, my colleague did not share her budget number – thus preserving her negotiation power and ability to get more scope for less money (part of her goal).
Negotiate Cash Flow/Payment Terms
Many parties have a significant cash flow interest or interest in payment terms that should be addressed at the same time as the price negotiation.
Many years ago a large corporation hired me to do some training. While they agreed to my standard fee, they insisted on their standard agreement. In the small print of their agreement was a 2% automatic fee discount they received due to utilizing electronic funds transfer into my bank account. I didn’t realize it until after I had pretty much agreed to do the work – a mistake.
Large entities often aggressively manage their cash flow and payment terms, including these types of terms as well as pushing payments to vendors out 60 days or longer. Consider adding cash flow and payment terms as a counter if you reach impasse on a relatively small difference in price.
Timing or delivery
When I started my business I often had gaps in my schedule that ideally would be filled. And I was willing to provide fee discounts to fill in those gaps.
If you reach impasse on price, explore changing the performance time in a way that satisfies your – and their – interests.
Latz’s Lesson: Creatively explore mutual interests and options to break early price impasses and result in true win-win deals.
Marty Latz is the founder of Latz Negotiation Institute, a national negotiation training and consulting company, and ExpertNegotiator, a Web-based software company that helps managers and negotiators more effectively negotiate and implement best practices based on the experts’ proven research. He is also the author of Gain the Edge! Negotiating to Get What You Want (St. Martin’s Press 2004). He can be reached at 480-951-3222 or Latz@ExpertNegotiator.com