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6 Approaches to Contract Negotiation

Offer Valid: 03/31/2022 - 04/30/2024

When it comes to contract negotiation, you won't find a one-size-fits-all strategy — each deal demands a different tactic. Great negotiators know how to choose the approach that's most effective for the stakes of the situation and the personalities involved. Whether you're buying a house or crafting a corporate merger, these contract-negotiation techniques can help you secure the most appealing terms.

Offer-Concession Strategy

The offer-concession approach is one of the most common negotiation tactics. The idea is simple: when making an offer, ask for more than you need. This creates a buffer zone that enables you to make concessions. The other party walks away feeling great, and you get what you wanted all along.

Getting to Yes

This strategy comes from the book Getting to Yes: Negotiating Agreement Without Giving In. It emphasizes a collaborative approach; both parties strive to find fair, mutually beneficial solutions. To do so, you must:

  • Understand the other party's point of view

  • Identify each party's interests rather than their hardline positions

  • Avoid strong reactions to proposals

  • Express emotions honestly and without judgment

The Getting to Yes approach isn't adversarial. Instead, it requires you to consider the other party's needs in addition to your own. To satisfy both sides, you may need to come up with creative opportunities and novel solutions.

Research-Based Strategy

Before you go into a negotiation, research the other party thoroughly. Then, use that information to craft an attractive offer that satisfies pressure points — one that's impossible to refuse.

Look for details such as:

  • True decision-makers

  • Motivations for the deal

  • Current financial position

  • Recent or upcoming shifts in the company

  • Timing constraints

  • Viable alternatives to your deal

When negotiations stall, a research-based approach makes it easier to identify areas of resistance. In some cases, the most effective tactic is to eliminate these sticking points and narrow the scope of the contract.

Controlling the Negotiation

Negotiate from a position of power by taking control of the process. This strategy requires you to do more legwork; in return, you get more input when setting the agenda and structuring the deal.

Ways to take control of a negotiation:

  • Choose the time and location of each meeting

  • Set the topics, order, and pace of the discussion

  • Write the first draft of the contract

With this approach, impeccable contract presentation is crucial. When you offer a detailed first draft that looks polished and professional, the other party may be less likely to push back. Don’t forget to merge PDF​ files - this will help you produce one high-quality and easily accessible document.

I'm Only Asking for What's Fair

With this negotiation tactic, your side makes an offer that's aligned with standard practices and prices in the industry. Since you're proposing fair, widely-accepted terms, there's no need for further justification — that burden shifts to the other party. If they want different terms, they must come up with compelling reasons or counteroffers.

Choosing the Best Negotiation Strategy

When you approach a negotiation with a clear framework, it's easier to make smart, strategic moves. By staying agile and alert, you can adapt quickly and walk away with a successful deal. As you develop effective negotiation skills, other business owners can provide a wealth of useful insight and experience.

To make contacts and jump-start the learning process, join your local chamber of commerce.

 

This PACC Member Hot Deals is promoted by Peabody Area Chamber of Commerce.

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