What is Negotiation Power?
Negotiation power is perceived or real power which influences the outcome of negotiations. It is extremely rare for the power in negotiations to be one sided, or for the balance of power to remain consistent throughout negotiations. As people negotiate, power can shift from one side to the other in response to changing circumstances. Understanding how negotiation power works and how it can be manipulated is a critical part of negotiating successfully; numerous books and workshops cover this subject in exhaustive detail for people who negotiate professionally.
In negotiations, both sides have something the other wants. For example, when people sit down to work out the details of a real estate deal, one side wants the real estate, and the other side wants the money. Thus, each side immediately has some negotiation power, through manipulating their control over the thing the other side wants. Likewise, when someone negotiates over salary, that person has skills a company wants, and the company has a position that person wants to fill.
A number of factors can influence negotiation power. One is behavior during the negotiations; people who are confident and assertive, for example, generally have more perceived power even if they lack actual power. Likewise, different approaches to negotiations can cause ebbs and flows in negotiation power, depending on how these approaches are perceived by the target of the negotiations. Someone who works very aggressively, for example, might wind up backed into a corner without any power when the other side starts calling bluffs.
External factors also play a role in negotiation power. Individuals outside the negotiations may have an interest in how the negotiations proceed, and they may be able to influence the outcome of the negotiations. In the real estate example above, for example, someone else could make a better offer in the hopes of getting one of the parties to back out of the deal. This better offer could in turn be used for leverage to increase negotiation power.
Any time someone enters negotiations for something, it pays to research ahead of time to learn as much as possible about the other side, and to get some information about the balance of power. Having this information before one starts negotiating can be extremely valuable. This technique is used by everyone from diplomats to casket salesmen; knowing as much as possible about who one is working with increases the chances of working out a deal in one's favor.
@Comfyshoes -I know that my credit union has a service in which they negotiate the price of the car for you. You just have to tell them the make, model, color, and special features that you want and they will work with the dealerships that they have a relationship with and get you the lowest price possible for the car.
A lot of times the dealers will remove the dealer prep fee and some of the destination charges. It is a free service to members and one that I think is really worth it.
@Mutsy - I also try to know all of the market pricing so that I know if I am getting a deal or not. Competitive information like this lets the salesperson know that you did your homework so they are more likely to give you a better deal. I think that pricing the competition is really fun.
I know that when I buy a car, I first do a few internet inquiries from several dealerships to see who will offer me the best starting price. I also look at industry web sites that give you the basic price of the car. This is important because a lot of dealers will add all sorts of additional charges and since the car is financed most of the time they figure that people will not notice a charge of $400 here and there.
@BrickBack- Those are some great secrets of power negotiation. I think that once the salesperson knows that you love something it makes it harder for you to get a better deal because they won’t work as hard because they know that you are going to buy it.
I just wanted to say that one of my many negotiation strategies involve remaining stoic and unemotional during the negotiation process. It is sort of my equivalent to having a poker face. I do this when I buy a car. I act like I could care less about the car and usually get a better deal as a result.
This tactic works anywhere. I remember once I went into a mattress store and told the representative that I will just have to keep looking because the price is not right for me. When the representative saw that I was ready to walk out the door he stopped me and said that he would work with me.
I got a Queen and a Twin mattress for my vacation home for only $400 and it included free delivery. I think that sales negotiation like this works best if you are willing to walk away.
Sometimes it works and sometimes it doesn’t, but it doesn’t hurt to try because when dealing with high markup items like mattresses, and jewelry for example, the sales people expect to negotiate with you.
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