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Understand the bargaining range.
© iStockphoto/megatronservizi
Negotiating a great price for goods and services can seem to need the tactical skills of a chess Grand Master.
For example, where do you start bidding? You don't want to pay more than you need to, but if you start too low, will the other party decide that you're a time-waster? When should you pull out if things aren't going your way? And at what point do you announce your 'best and final offer'?
"Distributive Bargaining" can help you answer all of these questions. Applied successfully, it should mean that more value is "distributed" to your side. In many situations, this is vitally important for profitability and business success.
Distributive Bargaining is all about compromise and accepting that not all negotiations can end in a win-win situation. It's used when the goods or services on offer are fixed, and you're simply negotiating on price. In fact, it's often described as a "win-lose" approach because every dollar that you reduce the price by (if you're buying) or increase it by (if you're selling) is simply a direct "win" for you and a "lose" for the other party. Having said that, both parties can still end up feeling satisfied that the final price they've agreed is a fair one.
Distributive Bargaining assumes that, before entering a price negotiation, the participating sides will each have three critical figures in mind:
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