Don't Let Your Negotiation Value Get Eaten Away!

Imagine sitting down at a fast-food restaurant, finally about to take a bite out of that juicy burger you've been craving. But when you unwrap it, you notice something shocking—someone in the kitchen has already taken a bite out of it, leaving you with less than what you paid for. What would your reaction be? Shock? Anger? You certainly wouldn’t accept paying full price for a partially eaten meal.

Yet, in negotiations, we often find ourselves in a similar situation—accepting less value than we deserve.

Someone in the negotiation often benefits disproportionately, creating an asymmetry between the cost we bear and the value gained by the other side. This often takes the form of unnecessary concessions, unplanned discounts, or missed opportunities for mutual value creation—and most of the time, we simply let it happen. No questions asked, no objections raised. This is what I call the problem of 'NegoEconomics.'

NegoEconomics is the asymmetric value between a party's cost versus the value of the counterpart. Studies have shown that up to 42% of potential value in negotiations remains uncapitalized when parties are unaware of the award-winning concept of NegoEconomics. It’s like discovering someone took the best part of your burger before you even had a chance, leaving you with less value for the same cost. It might feel small in the moment, but those bites add up, eventually costing you more than you'd imagine.

In negotiation, we too often accept this asymmetric distribution of value without pushing back, unaware of the true cost of letting others capitalize on our potential. It doesn’t have to be that way.

What if, instead of conceding, we turned the situation around and created more value for both sides? What if, instead of watching others take from us, we made the burger bigger—enough for everyone to enjoy, without anyone feeling like they've lost out?

That's the essence of NegoEconomics. It's about recognizing the hidden bites and changing the dynamics to create a bigger pie rather than shrinking our own share. Because just like you'd never let someone take your burger without protest, you shouldn't let anyone nibble away at the value you bring to the negotiation table.

Here's an illustration of NegoEconomics in a commercial negotiation:

Imagine a supplier and a retailer negotiating a deal. The retailer needs a bulk supply of products, and the supplier has the capacity to fulfill the order. The retailer requests a 5% discount for purchasing in large volume, and the supplier agrees, expecting increased future orders. The initial order value is $100,000, so with the discount, the retailer pays $95,000. The supplier calculates that this discount is manageable based on expected cash flow.

The above example is a traditional zero-sum negotiation. The retailer is winning $5,000 at the expense of the supplier.?

What the parties could have done instead is look for NegoEconomics, the asymmetric values between the parties. Let's assume the retailer requested a 90-day line of credit, which would save the retailer $1,000 but cost the supplier $6,000. By changing the line of credit from 90 days to cash on delivery, the supplier would save $6,000 at a cost to the retailer of $1,000. The resulting NegoEconomics value is $5,000. In this example, the supplier could grant the retailer a reduction of $5,000, if the terms of payment are changed to cash on delivery, at no expense to themselves, and cover the retailer's 'loss' of $1,000. This is NegoEconomics in a SMARTnership negotiation.?

This is an example of the asymmetric value exchange central to NegoEconomics—where one party's concessions result in greater costs than expected, while the counterpart reaps the benefits.

Recognizing and addressing these disparities is key to ensuring fair value is maintained on both sides of the table.

How do you guard against losing value in your negotiations? Are you letting others take a bite without realizing it?

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Dr. Keld Jensen, an acclaimed and award-winning author of 27 books, is a leading expert in SMARTnership Negotiation. He advises globally on negotiation strategies, teaches NegoEconomics and TrustCurrency, and collaborates with top professionals to enhance negotiation practices. A sought-after speaker, he regularly conducts keynotes and webinars, empowering individuals and organizations to achieve optimal negotiation outcomes. Jensen's innovative approaches and extensive research have transformed traditional negotiation methods, making him a trusted advisor in both the public and private sectors. His work emphasizes collaboration, trust, and mutual value creation, setting new standards in the field of negotiation.?