During the first quarter of the year especially, as a business owner you may find yourself positioning and negotiating prices with suppliers and clients.
The ones who are going to be most successful are those who have learned the gambits of power negotiation. Not just negotiation, but power negotiation.
Let me explain what power negotiation means, and share with you the powerful opening gambit that savvy business owners are using on the negotiating table…
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This strategy is just one of the many power negotiation techniques that I have been teaching to my clients. These strategies are usually extremely simple, but many business owners just haven’t been told yet that they exist.
A few simple changes and you could be picking up money that’s being left on the negotiating table.
What I’m going to talk about today is Power Negotiation. In fact, just this week, I had a very interesting workshop with my clients where we discussed how to go about negotiating with suppliers and with their clients. As it is the start of the year, you can imagine that there are suppliers who are positioning price increases to their clients or vice versa.
One needs to become comfortable with the whole negotiation process – you need to understand the strategies, the gambits, and the moves.
I wish I could cover all the strategies that we talked about in the workshop I did, but that would take too long. I do want to talk about one core, fundamental, opening gambit that you and every savvy business owner needs to be aware of.
It’s a very simple, very common sense thing but many people miss out on this.
The Difference Between Negotiation and Power Negotiation
First things first, let’s discuss the difference between negotiation and power negotiation. In both, the objective is to win at the negotiating table.
However, in power negotiation, you make the other person feel that they have won. It’s the feeling that you leave the other person with. They should actually want to come back and negotiate more with you, even though you have met your own objectives.
When opening a power negotiation, the first bidders always ask for more than they expect. That’s the first thing.
Now I’m sure you’ll be like, “Yeah, that’s how it should be.” However, the question really is, how much more?
To answer that, you need to understand something called “Bracketing”.
What is Bracketing?
For Bracketing to come into play, you need to enact another rule in power negotiation; you have to ensure that it’s the other person who is stating his or her position to you first. That’s really important, because if that’s not happening, then you will pretty much lose out in the negotiation process.
So, for example, there is a buyer who is willing to pay, say, £20,000 for your service. In your mind, you know that you should be looking at around £24,000. But now you have made the buyer state his or her position first at £20,000.
Now you need to brack your position. Your opening position should be equally distant from the final place you want to be, in the other direction from their opening position.
So, in this case, the difference between where you want to be and the price that’s been offered by the buyer is £4,000 (£24,000-£20,000). So you go in the other direction, 4000 more, which is £28,000.
Your opening position, therefore, becomes £28,000 and now the negotiation range is from £20,000 to £28,000.
If you continue with the negotiation, following the gambits, and using the right moves, and the right strategies, then you will most probably land somewhere very close to £24,000 – hopefully on a higher side!
I hope you can see how this opening gambit of making the other person state his or her position first becomes the most important thing. When you do, you can bracket against your objective and let the game begin!
If you would like to discuss any of the points covered here, please feel free to request a free call below.