Negotiation Insights

A resource of quick tips and analysis of highly effective, real life negotiation strategies.

Price haggling: Strategies to position value

In this issue of Negotiation Insights we consider ways sellers can minimise price-focused negotiations and build more mutually rewarding agreements.

In 1932 Charles Revson founded Revlon cosmetics, and when asked what he sold said, “In the drug store we make cosmetics. In the store we sell hope”.

By understanding that the need to look more beautiful and glamorous is a part of a woman’s identity, Charles Revson was able to use influencing strategies that helped women imagine a future with greater social acceptance and status. By doing so, he made price less of a buying consideration.

So what other benefits come from moving beyond the single issue of price?

Firstly by having more issues to consider, the risk of a winning or losing mindset diminishes. Secondly those involved become more motivated to jointly problem solve and change the negotiation process to unlock value. Thirdly the ability to strengthen relationships improves because the negotiation process has fewer power imbalances and creates a stronger feeling of fairness.

Whilst it can be difficult to avoid discussing price, particularly when a buyer has many sellers to choose from, there are practical strategies that can be used. For example, a software seller could shift a buyer’s focus from price to the value of time by discussing the costs associated with a project’s delayed start and the availability of people for commencement.

Our quick tips now offer a few additional suggestions.

Quick tips – Shifting discussions from price to value

  • Prior to agreeing on the negotiation process ask questions to establish; “When will you be ready to buy, and is there an approved budget, or budget approval process?”.
  • Agree on a negotiation process that includes the opportunity to understand how you can add value and how it will be assessed.
  • To minimise the risk of a buyer anchoring the negotiations to the seller’s costs, ask the buyer to jointly complete a return on investment analysis.
  • To help enable a win/win outcome, look to exchange concessions that are low cost and high value to each side. For example, a service provider might accept a higher performance level in a contract for first right of refusal on any future work.