Negotiation: Costs and Benefits


Before getting engaged in negotiation, you should be sure about how much you are willing to lose.  What people can offer is placed between a maximum and minimum: the maximum is represented by the cost of what is given and the minimum is represented by the interest the person has in giving.  This creates tension because, on one hand, each party wants to preserve what they already own, and on the other hand, they do want to offer the thing in question.  When negotiating, the aim should be to increase the minimum, namely, to make the other more willing to offer what they have to give.

Shall the other party give their number first?

When the other person is the one who puts the number in the negotiation of fees, you can obtain the maximum that they can offer.  This may be a little or a lot, but you do not have to think that you did something wrong; the client or potential client had no more to gain in the context of a sustainable relationship.  Moreover, the party that does not set the amount of money in a negotiation does not feel anxious.  This is why it is advisable to let the other party establish the amount.

When negotiating, you should analyze what the other has to lose, even more than what you have to gain.  Things given and received are only made up for if they were defined within a concrete negotiation framework; otherwise, they are not compensated at all.

Analizing the cost-benefit relation

Analyzing the cost-benefit relation entails doing it with the other party, this means to analyze how much the other will lose, how detrimental it will be for them if the transaction is not carried out.  In a negotiation, the parts only take into account the potential damage that could be suffered or the potential benefit that could be obtained rather than the other party’s logical arguments; except for those which explain the potential damage or benefit.  For some, the only logical argument considers what can be obtained and what can be lost.

In the cost-benefit relation you must be clear about what can be lost and what can be gained and earned.  You need to invest time, but there must be an effort  to manage the lowest possible cost.

Very often, you must choose between the risk of damaging the development of your own company and the risk of offending the sensibilities of some people.

After analyzing the cost-benefit relation, the short, medium and long- term risks, and after identifying the benefits, the logic between the causes and consequences, you can get into the negotiation.

What happens when you feel you are losing

The instinct of self-preservation comes before the instinct of conquest, which is why people prefer not losing to winning.  Some defeats bear more dignity than some victories.  Sometimes you feel that you are losing something, but that something was never really yours.  It was actually something you wanted but not something you owned.

There are situations in which there is a lot to lose and a little to gain. There are battles that are not worth fighting, because by winning, you lose.  You may face many other cases in which there is a lot to gain and a little to lose.  And finally, there are many more cases in which there is a lot to gain and nothing to lose.  These are the ones which must be identified.

Continue reading: Win – win negotiation