Why You Should Trade In A Negotiation
Haggling and negotiation – aren’t they the same thing?
It’s on of those, IYKYK (that’s “if you know, you know” for those of you who don’t understand contemporary text speak).
They are very different.
What sets negotiation apart from negotiation is, “trading”.
Trading is the process of exchanging items that each party values, to increase the overall value to both parties (“expanding the pie”) and to keep the negotiation moving forward and avoiding deadlock.
It involves securing elements that are of higher value to you that the other party can concede easily / cheaply, while conceding on aspects that are of lower importance to you but valuable to the other party.
There are 3 main reasons why you should trade.
Firstly, if you just concede and reduce your asking price (if you’re a seller) or increase the price you say you’re prepared to pay (if you’re a buyer) you’re literally giving away value to the other party without getting anything in return!
You’re giving them a free gift, perhaps in the hope that they’ll reciprocate.
Now, this might be appropriate in some cases, such as if you want to get the negotiation off to a good start and take the sting out of a negotiation counterpart with a bad attitude, but generally giving stuff away for free is a MASSIVE “no-no” in my book!
So you should trade conditionally. In practice, this means you giving something of value to the other party on the condition that you get something you value in return.
Secondly, trading conditionally prevents the other party from pursuing you like a shark who’s detected the scent of blood in the water. If you set a precedent of providing free concessions, you can bet that your counterpart will continue to hound you for more free goodies until they’ve snaffled every ounce of value from you!
Lastly, how does it make you feel if the buyer or seller simply concedes on price when you ask them? It can feel dishonest.
Seller – “My price is £1,900”
Buyer – “That seems very high”
Seller - "Oh, ok, I can do it for £1500”
Buyer - "So what was that opening price of £1,900 price all about?”
Making free concessions like this feels a bit dishonest, doesn’t it? Like the opening offer was made up to see how much they could get away with. What’s their real price?
This can harm trust and damage your relationship.
Here’s a real-life example. Last week I had some minor building work done on my house. The dialogue above is exactly how the conversation with my builder went.
If he had traded and said, “If you pay me up-front, I can do it for £1500” then that could have legitimized the price movement. He was getting something of value (immediate payment) in exchange for giving me a lower price. But he didn’t.
While I got a better deal from challenging the opening price, any trust I had evaporated there and then. I’ll never use that builder again.
And those are the reasons why you should always trade.