Thursday, October 6, 2011
The Negotiator
During Wednesday's class period we practiced the skill of negotiation. I was deemed a Seller and was aiming for a price above $16. The higher i was above $16 the better i would look to my employer. When I began the activity I had no insights into what the Buyer's scenario was. I did assume however that the Buyer would know that the market price for the product was around $30. I believed that as long as I could make a profit, it really did not matter how close I was to the market price. As a result, I started my negotiation price at $30. In hindsight, I think I should have started my negotiation prices much higher in order to maximize profits. In the end, I was able to make a sale at the price of $25. I did not think it was a bad price at the end of the negotiation time because it was $5 less than the market value, and $9 profit. After going over the negotiation process and analyzing it in class, I believe I could have gotten a much better price on the product. If I would have started the negotiations by anchoring the discussion at a higher number, I may have gotten more. I think that with the new knowledge from class, i could do much better the next time.
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I wish I would have better understood those negotiation techniques before the scenario on Monday. I also set my starting price very low, but much worse than you. I started at $20, assuming that since it was a fairly new product I could not get much for it. I only went down to $18 on it, which is fortunately still a profit, but after finding out the figures that the buyers were working with, I realized I sold the product excruciatingly short. I wish I would have considered starting very high and negotiating it down to a more profitable deal.
ReplyDeleteI feel the exact same way. Prior to entering the negotiation, I didn't even think to start with an extreme offer. My partner, however, did and I thought he was nuts for making an offer that was so ridiculous. I did not understand the benefits of starting with an extreme offer, and now that I look back on it, I wish I would have also better understood the initial extreme offer concept. However, I am glad I learned this lesson in the classroom, and not in the business world where my lack of negating skills could have had a serious negative impact on my career.
ReplyDeleteI agree, better knowledge of the extreme offer technique could have also helped my negotiations. The offer I made was modest at best, but if I would have made a much lower offer than the one I first presented, I think I would have been able to get a much better result than the final offer I accepted.
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