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transactional negotiation

What is Transactional Negotiation?

A transactional negotiation is one in which two or more parties attempt to find common ground on a deal to trade something of value, whether a tangible item or an idea.

People often think that transactional negotiation strategies require adversarial bargaining, such as making tough demands, threats, or bluffs. But in fact, the most effective bargaining strategies do not require you to sacrifice your integrity or resort to dirty tricks. Rather, they require you to set aside plenty of time before your negotiation to engage in clear-eyed preparation.

When you’re approaching a transactional negotiation, in addition to determining your own best alternative to a negotiated agreement, or BATNA, and reservation value, it is also important to try to estimate the other party’s BATNA and reservation point. When you do so, you can estimate the zone of possible agreement, or ZOPA—the range of deals that both parties would accept. 

For example, 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. 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.

Learn how to negotiate like a diplomat, think on your feet like an improv performer, and master job offer negotiation like a professional athlete when you download a copy of our FREE special report, Negotiation Skills: Negotiation Strategies and Negotiation Techniques to Help You Become a Better Negotiator, from the Program on Negotiation at Harvard Law School.

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The following items are tagged transactional negotiation:

The Paradox of Positions

Posted by & filed under Dispute Resolution.

It’s not difficult for negotiators haggling over seemingly finite resources to become entrenched in their positions. Sometimes the only way to get unstuck is to think appreciatively and creatively about the other side. Rather than trying to determine why a person has taken a particular position, consider what she wants, appreciate it, and try to … Read The Paradox of Positions

Do You Need a Broker?

Posted by & filed under Conflict Resolution.

According to conventional wisdom, you should always hire a real estate agent when you’re trying to buy a house. The broker’s market expertise will help you decide what moves to make and what price to pay. Because the seller usually has his own broker, the motto “fight fire with fire” applies as well. Perhaps most … Read Do You Need a Broker?

Bringing Mediators to the Bargaining Table

Posted by & filed under Conflict Resolution, Daily.

Adapted from “Mediation in Transactional Negotiation,” first published in the Negotiation newsletter, July 2004. We generally think of mediation as a dispute-resolution device. Federal mediators intervene when collective bargaining bogs down. Diplomats are sometimes called in to mediate conflicts between nations. So-called multidoor courthouses encourage litigants to mediate before incurring the costs—and risks—of going to trial. Scott … Read Bringing Mediators to the Bargaining Table

How to Avoid a Do-Over

Posted by & filed under Business Negotiations.

Remember that big sales contract you negotiated last fall, the one that got you a fat year-end bonus? Well, your manufacturing department has just told you that delivery will be two months late. So now it’s your job to persuade your customer to accept a new date without canceling the deal. And that’s not all. … Read How to Avoid a Do-Over