ELEMENT 71The Big Picture
If there is motivation, an open mind, and enough freedom for individuals in an organization to look for and find new paths, considerable NegoEconomics can be created if only negotiators know in which direction they are to look. NegoEconomics increases the room for negotiation and the pie that can be divided.
Room for Negotiation
The traditional room for negotiation can be defined as the difference between the highest price that a buyer is willing to pay and the lowest price to which a seller is ready to come down. For a deal to be struck, there must be a positive room for negotiation—the buyer must be willing to pay a price above the seller's threshold of pain.
If the maximum price that a buyer can pay is 12,500 and the lowest price to that a seller can come down is 11,900, the difference of 600 constitutes the room for negotiation within which a deal can be struck.
But the actual room for negotiation is normally larger. It consists of the sum of the traditional room for negotiation plus the NegoEconomics you can create. This allows you to reach an agreement even if the highest price that the buyer can pay is below the lowest price to which the seller can come down.
Simple NegoEconomics Model
Consider this simple model to help you locate the NegoEconomics. Good preparation is extremely important in your search for NegoEconomics. Very often we see negotiators making the following preparations when making an offer.
The Offer
- How are you going to ...
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