“How To Win More Negotiations Increase Perception of Value Proposition”

 

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When you negotiate, do you know how to increase the value of your offer, while not adding anything to it? Do you know how to increase the value of it by increasing the perception of its value proposition? Value proposition is the perception one has related to an offer.

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In a negotiation, the opposing negotiator may reject your offer, because he doesn’t sense its value. Thus, he may dismiss it because he needs/wants more from you.

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One way to enhance the value of your offer is to increase the perception of its value proposition. This is done by attaching and implied or explicit intrinsic value to your offer. The intrinsic value can be anything perceived as valuable that he associates to you. I’ll highlight this strategy in the following example.

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Imagine you’re negotiating with an art dealer that sells fine art. You see a painting, question the dealer per its price, and he says its ten thousand dollars. You’ve done your research and placed its value at six thousand dollars; that’s the offer you make. The dealer scoffs and says, “Please don’t insult me.” You smile and ask why he thinks you’re attempting to insult him. He says the art is worth much more than six thousand dollars. You ask, how much more is it worth? He says, four thousand dollars more. You ask why it’s worth four thousand dollars more. Negotiation Tip: Always seek to obtain and understand the other negotiator’s perspective of value. Do so to better understand why he’s making the requests he’s seeking. Having that insight will allow you to offer something that had not been thought of, something he wants that won’t cost you anything to give.

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To keep the example simple, let’s assume he responds by saying, he has to cover the time he’s had the art in his gallery, the cost of associates that work for him, make a profit, etc. You paraphrase that into, “oh, you mean your overhead”, he says yes.

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This is the point where you use the strategy of value proposition tied to intrinsic value. You do this by asking what his overhead is. He may be reluctant to give you that information. Again, you’ve done your research and know, in an environment such as his, the overhead is about 20% for the cost of doing business. You inform him of this and he says, I never understood the whole ‘overhead thing’. You tell him that he can run his business more efficiently by having such data and using it to better determine his markup (i.e. implied gain). Then you offer to teach him how to make such calculations (i.e. explicit benefit).

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At that point, you’ve increased the perception of your original offer, but you haven’t added anything to that original offer. You’ve increased the perception of your value proposition. The intrinsic value lies in the fact that you’ll teach him how to calculate his overhead, which will allow him to run his business more efficiently. You then say, as you extend your hand to conclude the deal, can we agree on the six thousand dollars? In return, I’ll show you how you can increase your overall business operations tenfold.

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In the above example, be it a little long :), you see how one’s value can be increased just by finding what’s of value to the other negotiator, and considering other ways that you can reach agreements, even if initially it appears that you’re far apart.

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If you incorporate this strategy, you’ll enhance your negotiation outcomes … and everything will be right with the world.

Remember, you’re always negotiating!

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