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In order to have a better and valid negotiation, we need to have the market knowledge of the prevailing prices and also have 3-4 quotes ready from different vendors and strike a deal with the best price available and ensure that we quote the best least price and close the deal.
1- Analyse.2- Realize you have to win on your own "convince yourself this is the best solution"3- Move "Transfer" the struggle between you and yourself to your opponent his way and style.
In fact, all human interactions are characterised by some sort of negotiation between or among people trying to give to and take from one another. This process of exchange is continual and often goes unnoticed. Take time for a moment to consider why you occupy the position that you now do. How much negotiation did it take - at home, at school, at work, elsewhere - to enable your occupation of this position? Negotiating may be thought of as a process of bargaining to reach a mutually acceptable agreement. And the good negotiating skills are essential to the smooth running of your business. You need to be able to negotiate with many different types of people in many different business situations - whether you are negotiating a loan from your bank manager or the next pay rise with a union or staff representative. The skills, once learned, will stand you in good stead.
Understand the key requirement of other Party. Now prepare your strategy how you can cater to his ask. You need to go beyond his words and sentences he spoke to really understand what he is asking.
Sometimes even person himself is not aware of the various options that can be available.
Once you have done successfully you have won his hear and trust. Once this is done half of the dela is done.
Rate Negotiation depends for which commodity / Product / Service / Sector you are looking for. As I am into Exports & Imports we have to negotiate Air / Sea / Road freight from various 3PL service providers. My policy is to get at least 4 quotes from various forwarders. Once we have a forwarder on our vendor list. I clearly tell them that the first rate which you give will be the best rate. We will not come back to you with the rates received from other forwarders to match those rates. By following this policy 1. Every Forwarder tries to give best rates to grab the business as he knows that this client is not going to come back with the competitors rates. Secondly, this is ethical because every forwarder tries his best to get the best rates and sharing these rates with the competitor forwarder is unethical. After this I take as L1, L2, L3 & L4. Further I negotiate with the L1 who has given the best rate and the shipment is awarded to the L1. Yes... I thing is to be noted that only freight cost does not matters we need to take the service level provided by the forwarder. If the service is poor and rates are good still it is of no use, hence need to make a smart choice.
The true meaning of a win-win negotiated settlement is where the agreement reached cannot be improved by any further discussions. So your outcome cannot be improved for your benefit, and similarly, the agreement for the other party cannot be improved further for their benefit either.
In this way of new thinking, you consider negotiating as a way to expand the deal to include items that both parties want.Here are some rules for doing this:
Separate the people from the problem. In a traditional bargaining situation, the interaction proceeds based on positions and counter-positions. The discussion can easily turn adversarial as the customer raises objections about price or other difficult issues.
2: Identify the interests behind the position. In a traditional bargaining situation, people tend to take a firm position and stick to that position. The focus is on "what I want," and each side is intent on justifying their respective positions. In a principled negotiation process, the focus is on the interests behind the position-the range of issues that are at stake in the negotiation. Paying attention to interests helps uncover the "why" behind a position.
3. Invent options for mutual gain. The path to a win-win agreement lies in creating a bigger pie-exploring ways to expand the available options. Knowing the customer's interests will help achieve this objective. For example, suppose the offer on the table is a bundled solution at a certain price. The customer, however, has an interest in keeping costs low because of a company-imposed budget limitation.
4. Introduce independent standards. Independent standards are another way to align with the customer's interests. They represent objective criteria that can be used as a measuring stick for choosing among alternatives and defining some limits. Examples of independent standards might include accepted market value, industry performance benchmarks, other research, or credible third-party references.
Know your "BATNA." a BATNA stands for "Best Alternative To a Negotiated Agreement." In traditional bargaining, negotiation can reach an impasse when either side becomes inflexibly committed to a particular outcome; for example, when the salesperson cannot accept a price below a certain amount, and the customer is determined not to pay above a certain price. It is very important in situations like this that a salesperson has a BATNA.
To have a win win situation for negotiation firstly we need to understand the current market price of the product by comparing with order vendors. have a clear picture with the current vendor with whom your negotiating.
carefully listen to his pro and cons and put ahead your price assuring him further business.
Explain our intents and our purposes during negotiation honestly.
Open discussion for other party explanation.
Know what / how the position of us and also position of the other party in the market (financial, sales, profit, etc) for good bargaining position.
Take the other party to give their contribution to meet the purposes. Always assume them as a partner.
Also be transparent for good relation in the future.
Be Honest and Friendly but some time you have to little tough .Its like carrot and stick" approach.
In my years of experience in negotiating contracts I noticed that when you implement some of these tactics described below, you can accomplish a negotiation more effectively and more efficiently which transform a negotiation into a win-win situation for the contracting parties. Some of these tactics are described below:
(1) Listen to the Counterparty. Listen carefully and respectfully the counterparty and play special attention to their special needs and circumstances, and to the context in which the contract is being negotiated.
(2) Assess All the Provisions. Assess all the provisions, and what would be a reasonable contract for your organization. e.g. which provisions are a priority (non-negotiable), and which provisions are negotiable, where you can concede some benefits to the counterparty. In this context, ensure you are following the company's guidelines and you are protecting company's best interests. Discuss internally with the stakeholders of your company (normally the C-Level executives within your organization), which provisions are non-negotiable and which ones are negotiable. When you have a clear scenario of the universe of provisions you will negotiate, you can assess better which provisions you will insert (if you negotiate in a counterparty’s template), which ones you must redline and negotiate, and which ones will be open to discussion and somehow conceivable.
(3) Segregate the Legal Terms from the Business Terms. Normally, negotiate the legal terms separately from the business terms, otherwise, the negotiation will take more weeks (if not months) that what you expect. Try to organize the contract in two sections: (i) the body of the agreement, where you include all the legal terms; and (ii) a statement of work, where you include all the business terms. This segregation will allow your internal business unit and the counterparty’s business unit to review easily the business terms and ensure the legal department have captured all the parameters, the technical specifications, the timelines, and the deadlines required in this contract.
(4) Prepare the Counterparty Ahead of the Negotiations. Before you disclose your first edits to the counterparty, ensure you have discussed verbally with this party how you are planning to review and redline the contract. This will show to the counterparty that you have the good faith in handling an amiable negotiation and will allow you to have a better sense of their position and viewpoint in this negotiation in an early stage.
(5) Be Discrete. Ensure you are sharing the negotiations terms discretely, and you are disclosing the details of the negotiations only to the stakeholders in your organization that have the authority to determine the boundaries of the terms negotiated, and to the extent necessary. Prevent any leaking of information to any other third person within the organization that does not have a direct interest in the matters negotiated.
(6) Identify the Authority of the Counterparty’s Contact. Be informed of whether your counterparty contact has the authority to negotiate the terms and conditions of the contract, and to which extent this party can take her own decisions, or to which extent it must escalate the contract for approvals. This will allow you identify the provisions that if redlined, would extend the term of the negotiations, and assess whether that waiting is worth it or not. Consider that any escalation of the contract may take one to three weeks, so prevent escalations whenever is possible.
(7) Be Organized when Redlining and Commenting the Contract. Be organized when you are redlining a contract. You must ensure the redlines are easily readable by the counterparty and you briefly explain in bubbles the underground of the most critical redlines. If you are going over multiple rounds in the same contract, ensure you work systematically, where you clean the provisions already agreed in each round, and highlight or identify the provisions that still in discussion for the next rounds. This, will allow the other party to understand better the purpose you accomplished when you redlined the contract, and will allow the two parties to move forward the negotiations smoother.
Be a good listener in order to define the motivations and what makes value to your client's - partner company. With that knowledge you can make an strategies of working together not only for achieve the goals, but think in long partnership
