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3 Negotiation Strategies Pricing Experts Can Use to Let Someone Else Have Your Way

May 11, 2019

Lydia M. Di Liello / CEO & Founder

Capital Pricing Consultants

Advisor, speaker, trainer and author with 23+ years experience leading Revenue Management initiatives for the automotive and industrial markets. My leadership roles include manufacturing, pricing and procurement with nine years of executive pricing leadership in custom plastics manufacturing.

No matter what your role is or who you are, negotiation is polarizing – either you love it or you detest it; no one is lukewarm on this subject. Negotiation is the art of letting someone else have your way. Yes, you read that correctly. The whole point of negotiation is getting what you want while having the other person walk away thinking that they got what they wanted as well. No wonder most people fear attempting this “dance” of words.

What makes it so challenging for the vast majority of us? Why do we often avoid “negotiation” and any discussion that forces calculated tradeoffs? Often it’s due to fear of embarrassment – wondering if someone “got the best of us” or perhaps a lack of skills for the required back and forth verbal dynamics. Negotiation doesn’t have to be a win/lose game and if you are prepared and view it in the right perspective it can be painless (ok nearly painless) with outcomes that are exactly what you want and expect.

Did you ever stop to think about how many times a day you negotiate without even thinking about it? We do it all the time, often thoughtlessly. Every relationship we are in, partner, co-workers, spouse, boss, friend, requires continuous negotiation. And frequently without considering the outcomes as in “Oh I wish I hadn’t said that!”

Asking the boss for a raise, convincing sales to take a price increase forward, persuading the group to go to your preferred lunch place, defending your price to a client, and influencing a customer to accept a price increase are all forms of negotiation.

Imagine this scenario: a salesperson (John) has been charged with raising prices by 5 percent on his largest customer; he believes he can realistically get 2.5 percent. John heads to the pricing department to discuss the situation. John tells Patty (pricing), “look, the best I can get is a 1 percent increase or we will lose the business!” Patty responds “they didn’t take the price increase last year. We aren’t a not-for-profit business here. At least get 3 percent.” Seem familiar? Have you ever had an exchange like this one? What dynamics are at play? What techniques were being used?

1. Define what you want
While this may seem obvious, in my 25 years of working with clients across all industries and functional areas, it isn’t obvious at all. In fact it’s the first hurdle to get over. Because it is so obvious most people sail right past this step and end up with a poor outcome. How can we determine if we are happy with the results of a negotiation if we aren’t really sure what we are willing to accept to begin with? Notice I said “Willing to accept.” That implies that we are not likely to get “exactly” what we want but rather what we compromise on.

2. Forecast what the other side wants and will accept
It’s critical to understand very clearly what the other side A) wants and B) is likely to accept. This is where the fun begins though it is often perceived as the most difficult step. Trying to forecast what “the other side” wants and ultimately will accept is no easy task. Yet, as kids we were experts at this step.

We knew Mom wouldn’t let us have a bunch of cookies before dinner, so we purposely asked for 3 or 4 cookies (Mom’s want = no cookies, Mom’s accept = 1 cookie). We expected that she would say “NO” to our “want” yet hoped she would agree to our “accept.” The 1 cookie that she acquiesced to was her compromise and we still got the cookie that we were after in the first place.

3. Be prepared with trade off options
Make a list, ahead of time, of things you are willing to “give up” or “trade off.” Negotiation implies a back and forth process in which each side gains and gives up something. Thinking through this strategy when you are at the negotiation table is way too late. Ever hear of a sales person who takes a price increase forward and ends up offering a decrease? That’s because they didn’t prepare for the third step. (Truth be told here, they likely didn’t prepare for steps one or two either). This step is critical as both parties must engage in the “give” and “get” or one of them will walk away feeling “cheated” or taken advantage of.

Negotiation is a lot like dancing. You either like it or you don’t. You need to know where your feet are and your partners’ next move and already have a response ready when that move is made. The goal for both of you is to get through the “dance” without stepping on each other’s toes.

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