Negotiation
Negotiation
What is negotiation?
- Reaching agreement on terms both sides accept
- Not cutting the price, but 'growing the pie'
- BATNA and understanding interests are key
Negotiation doesn't begin when the other side asks 'How much?' It begins before we write the proposal. If you design in advance which terms to put on the table and which concessions to hold back, you change who leads the conversation. Walk in unprepared and you end up trading cuts and add-ons around whatever number the other side threw out first; walk in with a design and you can move the conversation to variables other than price. Negotiating power comes not from a silver tongue but from the number of cards you can put on the table.
Negotiations fall into two broad types: distributive, where a fixed sum is divided, and integrative, where terms are combined to grow the total value. In distributive negotiation, the width of the range both sides can accept (ZOPA) and the fallback if talks fail (BATNA) decide the outcome. The side with the weaker BATNA lowers its number first. To move to integrative negotiation, you need at least three items the two sides value differently, such as contract term, number of trainees, payment terms, and number of follow-up coaching sessions. Items that are cheap for us to give but look costly to the other side are the currency of exchange.
A discount is the most expensive concession. On a contract with a 15% operating margin, cutting the price by 10% wipes out two-thirds of the profit. That is why skilled negotiators always attach a price to every concession — a three-year term, upfront payment, or consent to a published case study. If closing is the act of asking for a decision, negotiation differs in that it is the work of creating the conditions that make that decision possible.
The most common slip in practice is offering a discount before the purchasing team even asks. The moment you say “Would this work?” and cut 5%, that 5% becomes the new starting line, and the other side asks for another 5% from there. A price once lowered never goes back up. Another is mistaking win-win for “splitting the difference.” If you concede for the sake of goodwill without setting a walk-away point, you end up with deals you won that leave the instructors working at a loss. Only someone who goes in with the line they cannot cross written down as a number can say no with a smile.
John KimAuthor of “B2B Marketing Design” and CEO of Nanum Consulting
Sangmi LeeInstructor specializing in CS, leadership, and communicationThe interest-based approach and the BATNA concept were established in works such as the Harvard Negotiation Project’s “Getting to Yes.”
Let’s look at a hypothetical case: negotiating an annual leadership training contract with Company A, an auto-parts manufacturer with 420 employees. The quote was KRW 90 (≈ US$1) million, but at the first meeting the purchasing manager said flatly, “Last year we spent KRW 70 (≈ US$1) million, so you need to take KRW 20 million (≈ US$15,000) off.” Three weeks remained until the contract deadline.
- The sales rep didn't answer on the spot. They met separately with a manager on the talent development team and drew out that the early departure of the 38 newly promoted team leads was leadership's real concern.
- In the second meeting, we put success criteria on the table before price. When we said, 'Let's judge this by the retention and team-member ratings of the 38 team leads six months from now,' the head of procurement finally opened their notebook.
- Instead of a single-page quote, they brought three options combining duration, headcount, online share, and number of follow-up coaching sessions. Option B was a two-year contract with the online share raised to 40%, settled at KRW 76 million (≈ US$56,900) a year.
- When the purchasing manager pushed again for KRW 70 (≈ US$1) million, the team replied, “If you agree to a two-year commitment up front and to a published case study, we can come down to KRW 74 (≈ US$1) million,” attaching a price to the concession.
- In the end, they agreed on a two-year contract at KRW 74 million (≈ US$55,400) a year with two follow-up coaching sessions added. A deal that was about to end at KRW 70 million (≈ US$52,400) for one year became a KRW 148 million (≈ US$110,700) total contract. Six months later, 36 of the 38 team leaders remained, a retention rate of 94.7%.