In today’s market, consumers are often the more powerful parties in negotiation with sellers.
Six Strategies for Creating Value at the Negotiation Table
1. Explore your alternatives (and know your best alternative to a negotiated agreement, or BATNA).
Sometimes business bargaining opportunities pop up on the fly, such as David Burke’s “wine auction” or a one-of-a-kind piece of jewelry you stumble across while traveling. You can be forgiven for plunging into such bargaining situations without doing much, if any, negotiation research.
But in most haggling negotiations, thorough preparation is advisable to help ensure a positive end-result.
Suppose your television breaks and you’d like to get a replacement quickly, but you don’t want to pay the full asking price.
Before you march into the nearest electronics superstore, you should always take time to conduct the same type of research you would if you were in the market for a larger purchase such as a house or a car.
Otherwise, you could sacrifice more value than necessary or pass up a good deal.
Begin with a thorough consideration of your BATNA, or best alternative to a negotiated agreement—the action you’ll take if a particular negotiation ends in an impasse.
In the case of a television, your BATNA might be a low, no-haggle price from an online retailer or it might be to repair your current TV.
Even when negotiations are impromptu, as in the case of a bargaining wine director, you can still ask for time to think through your BATNA.
If your negotiation fails, will your group buy a cheaper bottle of wine off the regular wine list or order wine by the glass?
Knowing what you will do if you can’t get a good deal will give you bargaining power during the bargaining that follows.
Your BATNA also helps you calculate your reservation price or reservation point—the highest price you’d be willing to pay for that bottle of wine, television, or washing machine in the current negotiation.
Suppose your neighborhood electronics store is selling the TV you want for about $1,100 and Amazon.com is selling the same TV for $900 as part of an electronics sale that will end the next day.
(For simplicity’s sake, assume taxes and shipping are included in these prices.)
Buying from Amazon.com becomes your BATNA in your negotiation at the electronics store.
As for your reservation price, you might decide that it’s $975, or $75 above Amazon.com’s price, for the added benefit of taking the TV home that day and not having to worry about shipping it back if you don’t like it.
Below are the final five haggling strategies, with links to related articles.
What are your favorite dealmaking strategies? Share them with us in the comments.
Adapted from “Master the Art and Science of Haggling,” in the August 2009 issue of Negotiation.
Originally published in 2014.