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Negotiation | Base Price | Target Price | Negotiation Approach

Negotiation – the dialogue between opposing parties (customer vs vendor) to a deal whereby they attempt to reach an agreement. Virtually every business process requires some degree of negotiation. To progress in business and in most personal endeavours, negotiation must be employed. Negotiation starts after the successful technical meeting on the item or garment to be ordered. 

negotiation-base price-target price

Base Price: While negotiating, customers start with a minimum price of the target item which is termed as the base price of the negotiation. Anyway, customers usually have to raise the price from the base to reach the win-win situation. 

Target Price: In negotiation, vendors start with their target price of the item which is usually higher than the normal price as vendors know that they have to lower their claimed prices. They include profits at every stage of costing the garment.

Example: Let’s consider a price negotiation for a t-shirt. Customer may initiate the negotiation with 0.5$ per pcs, while vendors claim 2.5$. After a thorough logical discussion, they both agreed on 1.70$ per pcs. 
Base price= 0.5$
Target price= 2.5$ 

Approaches to Negotiation? 
Win-Lose Approach: This is also called competitive, zero-sum, or claiming value approach. This approach is based on the premise that one person can win only at the expense of the other. 

Lose-Lose Approach: This type of situation arises when the negotiating partners ignore one another’s needs and the need to hurt each other outweighs the need to find some kind of an acceptable solution. This is the most undesirable type of outcome and hence this negotiation approach is best avoided. 

Compromise Approach: This approach provides an outcome which is some improvement over the lose-lose strategy outcome. To avoid a lose-lose situation, both parties give up a part of what they had originally sought and settle for something less than that. A compromise is the best way out when it is impossible for both parties to convince each other or when the disputed resources are limited. 

Win-Win Approach: This negotiation approach is also called as collaborative, Integrative or creating value approach. It is superior to all negotiation approaches. It results in both parties feel that they are achieving what they wanted. It results in satisfaction to both the parties. 

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