Phase Two — Bargaining

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Now we have reached the heart of the negotiation process. This phase — bargaining — is what most people mean when they talk about negotiation. This module explains what to expect when you begin to bargain and what to do if you run into an impasse. It also describes some common bargaining techniques used by experienced negotiators.

What to Expect

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In addition to learning about the pressures, targets, and needs that might influence your opponents, you might also want to try to get some idea of their usual negotiating approach.

  • Do they typically start out with an unreasonable offer?
  • Do they try to rush the negotiation?
  • Do they try to frame the issues to their own advantage?

Finding this out can be a process of trial and error, but if you have any contacts in the same business who have negotiated with your opponent you can ask them for a rundown of how the negotiation went. This is something which will be familiar to any sports fan, in that teams and players will “scout” their opponents to exploit any weaknesses and prepare to deal with any strength that might make their opponent formidable. 

If an opponent has a reputation for always looking to rush the negotiation, it is possible to use that to your advantage. By remaining firm on your bargaining position you will be able to place pressure on them to get the deal done on your terms. If they want it to be over quickly, they will be less likely to spend time wringing concessions out of you and will have to either spend longer in negotiations than they would ordinarily wish (potentially making them uncomfortable and prone to rash decisions) or make a concession in order to get the arrangement in place quickly.

Finding out – and analyzing – your opponent’s pressure, targets and needs is something that should be done if possible prior to your negotiations with them. If they give information in the preliminary stages of a meeting that may be of use to you, then by all means you can duly note that information and bring it into play later in negotiations at a key point. The more information you can find out in advance, the better for you. It will all be useful in negotiation settings.

Techniques to Try

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Some of these techniques are what you might expect to encounter when dealing with a street vendor, but that doesn’t keep more sophisticated business people from using them. The important thing is to recognize them and be prepared to respond to them if they are used against you in a negotiation. As long as you recognize the technique when it is used, you can actually turn them to your advantage in a pressurized negotiation setting.

One thing that many of the techniques have in common is that they tend to be used more in hope than in expectation. The Exaggerated First Offer technique is typically made in the full awareness that that offer will not be met, and the hope that somewhere between the $1000 you will settle for and the $2000 you have asked for, the dealer will make an offer which is as high as you can hope for. Experienced negotiators recognize this technique, and will usually respond with what may be an equally exaggerated counter-offer which undercuts what the car is worth.

The techniques tend not to have a lot to do with realism, essentially trying to create a circumstance whereby a customer feels rushed, belittled, or harried in some way into accepting a situation which is beneficial to the person using the technique. If a customer feels that it is a choice between paying $1,500 today or $3,000 next week, they will usually plump for the former – regardless of how true the pitch was in the first place. As well as this, some negotiators will attempt to flatter you by saying “OK, normally I wouldn’t go anywhere near this low, but because I like you, here is what I’m going to do”. If you have a firm line to hold to, keep holding it in the face of these techniques and you will hold the power.

Ten Negotiation Techniques:

  1. Prepare, prepare, prepare. 
  2. Pay attention to timing. 
  3. Leave behind your ego. 
  4. Ramp up your listening skills. 
  5. If you don’t ask, you don’t get. 
  6. Anticipate compromise. 
  7. Offer and expect commitment. 
  8. Don’t absorb their problems. 
  9. Stick to your principles. 
  10. Close with confirmation. 

How to Break an Impasse

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The dictionary says an impasse is a noun which describes: “a situation in which no progress is possible, especially because of disagreement; a deadlock”.

There are a number of ways to break an impasse in negotiations.  Here are a few:

  • If the impasse involves money, change the terms: a larger deposit, a shorter pay period, etc.
  • Change a team member or the team leader.
  • Agree on easy issues and save the more difficult issues for later.
  • Change the list of options being considered.
  • Agree to adjourn for a fixed period of time to try to come up with other options. 

The risk with an impasse in negotiations is that it can become a point where any movement from either party will be seen as weakness. The impasse can become the overall focus of the spell of negotiations, where the actual focus should be that which is set out in the initial framework as agreed in the preliminary stages. Sometimes in politics, negotiations take years to reach their fruition, because sticking points are occasionally unavoidable. In business, it tends not to take that long – but it is essential that you deal with impasses as they occur.

If you want to get around an impasse, the realization needs to be made that it is happening for a reason and that overcoming it will necessitate changing something about the way you are negotiating. If you can see the sticking point, then by all means make that the focus of your change, but failing that it can be a good idea to place to problem on the back burner and deal with something else – something manageable which will enable the momentum to be put back in your negotiations.

Case Study

Mark was a housing development agent and was always looking for more land to develop. He was in the process of buying a 30 acre parcel of undeveloped land from a older gentleman named Russ. The posted price for the parcel was $38,000. When Mark sat down with Russ to discuss the purchase, Mark low-balled his offer, knowing it would throw Russ off. Russ told Mark that his offer was obviously too low, and suggested $34,000 for the parcel.  Mark noticed that Russ seemed anxious, so Mark offered $30,000, and he’d pay up front rather than through a payment plan. Russ agreed, happy to have sold the land before his retirement. Thanks to Mark’s bargaining, everyone walked away happy.