Leadership

Peer-to-Peer: Should I make the opening offer when negotiating?

Written by PROFIT-Xtra

Question

“Negotiating is obviously a big part of being in business, and lately I’ve been thinking about what works and what doesn’t. Right now I’m wondering about opening offers. Is making the opening offer a wise thing to do? Or is it better to let the other party make the first offer? Maybe it depends, but if so, on what?”

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Reader responses

Kelly J. Ramsay:

Regardless of what you’re negotiating, you’ll be playing one of two roles: buyer or seller. If you’re the buyer, you should remember the ‘Golden Rule’: he who has the gold, rules. Thus, you are in a somewhat stronger position. When I’m the buyer, I always make the opening offer, since my goal is to get the most for the least and I want to establish what value I place on the offering. When you’re the seller, your goal should be the exact opposite: to maximize the price by focusing on the value the other party places on the offering.

Thus, it is better to let the other party make the first offer. But you should only do so after you’ve done two things: clearly understood the value they place on the thing being offered and provided the buyer with an ‘idea’ of what you are prepared to accept expressed in terms of value for them. Other factors that can strengthen or weaken your negotiating power are the urgency to buy or sell, the location of the negotiations — home, foreign or neutral turf — and your ability and willingness to walk away.

Negotiation is a business transaction, and as such should not involve emotion. With practice and patience, this skill, like most others, can be learned and improved upon.

For her answer, Kelly J. Ramsay will receive a copy of Managing Your Image Potential: Creating Good Impressions in Business by Catherine Graham Bell.

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Originally appeared on PROFITguide.com