The Importance of Negotiation in Achieving the Best Price

How do you achieve the best price?

There are a lot of factors specific to pricing alone, but price is not something that exists in a vacuum. We talk about the ‘7 Ps of marketing’ – product, price, place, promotion, people, processes and physical evidence. They all work together, price is only one of them.

And one of the most important things is the ability to negotiate. If you sell direct to the consumer, particularly via ecommerce, then this might not apply; but for everyone else who sells to other businesses, or to consumers via retail channels, then negotiation is crucial.

I listen to a weekly podcast called Nudge by Phil Agnew, and a recent episode is what inspired this article. If you are in marketing, you 100% absolutely should be listening to Phil. Each week he covers what academic research tells us about human psychology and behavioural science, and how it applies to communication and persuasion. It is gold.

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You can find it here, and on your usual podcast feeds: https://www.nudgepodcast.com

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So, negotiation.

It is often viewed as an art, but in reality, it’s a skill grounded in preparation, strategy, and communication. While many studies on negotiation are conducted in controlled lab settings, they don’t always reflect real-world complexities. However, one study stands out: Neil Rackham’s research on 102 actual negotiations, which analysed what separates skilled negotiators from average ones.

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What Sets Skilled Negotiators Apart?

Rackham studied professionals in high-stakes negotiations, including union representatives, managers, and contract negotiators. The key distinction he found was that successful negotiators consistently demonstrated specific behaviours that led to long-term success, strong relationships, and agreements that actually held up over time. Here’s what they did differently:

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1. Preparation is Everything

One of the clearest differences between skilled and average negotiators was the amount of preparation they did beforehand. Skilled negotiators:

• Considered?twice as many possible outcomes?(5.1 vs 2.6 for average negotiators).
• Spent?three times longer?thinking about areas of agreement. That means understanding what value means for the other party, what outcomes they might be looking for, is crucial.
• Focused?twice as much?on long-term implications rather than just short-term gains.

This preparation gave them flexibility, allowing them to pivot when needed, avoid deadlocks, and find win-win solutions that increased the total value of a deal. It also built confidence and trust by demonstrating they had thought through the deal from multiple angles.

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2. Language and Communication

Skilled negotiators were far more deliberate in their use of language, avoiding words and behaviours that could provoke negative reactions.

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Avoiding “Irritating” Language

One of Rackham’s most interesting findings was that skilled negotiators avoided using certain self-referential words like?fair, reasonable,?or?generous?when describing their own proposals. These words, though seemingly harmless, often irritate the other party because they imply that any resistance is unfair or unreasonable.

• Skilled negotiators used these so-called “irritators” only?2.3 times per negotiation.
• Average negotiators used them?five times more often (10.8 times per negotiation).

The lesson? Stick to neutral, objective language when discussing proposals rather than trying to frame your offer as inherently fair or generous.

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Minimising Immediate Counter-Proposals

Average negotiators tended to respond immediately with counter-offers, which could come across as dismissive and block open discussion. Skilled negotiators:

• Made?half as many immediate counter-proposals?as average negotiators (1.7 vs 3.1).
• Took time to acknowledge the other party’s position before presenting alternatives.

The takeaway? Avoid rushing to counter an offer - listen, acknowledge, and then respond.

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Reducing Verbal Attacks and Defensive Behaviour?

Contrary to what’s often shown in films, aggressive tactics don’t work well in real-life negotiations. Rackham found that:

• Skilled negotiators engaged in?three times fewer verbal attacks and defensive responses?than average negotiators.
• Avoiding confrontational language helped de-escalate tension and kept discussions productive.

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3. The Power of Framing and Acknowledgement

Using Positive Behaviour Labelling

Skilled negotiators were?five times more likely?to highlight positive behaviours in their counterpart’s approach. Phrases like:

• “That’s a really well-thought-out proposal.”
• “I appreciate that you’ve considered these factors.”

This helped reinforce a collaborative atmosphere, making the other party more open to working towards a mutually beneficial deal.

Conversely, skilled negotiators?avoided negative behaviour labelling?(e.g.,?“You’re being unreasonable”), which was three times more common among average negotiators and often led to unnecessary conflict.

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Sharing Internal Thoughts and Intentions

Another key behaviour was transparency. Skilled negotiators made their feelings, motives, and concerns clear to the other party, reducing uncertainty and building trust.

• They shared their internal state?50% more often?than average negotiators.
• Simple statements like?“I’m unsure about this aspect”?or?“This point really matters to me”?helped improve communication and collaboration.

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4. Asking More Questions and Clarifying Understanding

A common misconception is that negotiation is about making demands. In reality, the best negotiators ask more questions and listen carefully. Rackham’s study showed that:

• Skilled negotiators asked?twice as many questions?as average negotiators (21.3 vs 9.6).
• They regularly tested their understanding by paraphrasing or asking clarifying questions: “Just to check, is this what you’re looking for?”

By asking more questions, they gathered better information, reduced misunderstandings, and ensured both parties were aligned - leading to better outcomes.

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Key Takeaways for Achieving the Best Price Through Negotiation

1. Invest time in preparation?– Think through multiple outcomes, potential points of agreement, and long-term considerations.
2. Be mindful of language?– Avoid self-referential words like?fair?or?reasonable; let your offer speak for itself.
3. Acknowledge before countering?– Taking a moment before presenting a counter-proposal leads to more productive discussions.
4. Avoid verbal attacks or defensive responses?– Conflict rarely leads to a better deal.
5. Highlight positive behaviours?– Recognising constructive actions encourages collaboration.
6. Be transparent?– Share your concerns and motives to build trust.
7. Ask more questions?– Gathering information and testing understanding leads to better negotiations.

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The best negotiators don’t rely on manipulation or aggressive tactics. Instead, they focus on thorough preparation, thoughtful communication, and fostering long-term trust.

Given the importance of preparation, there are a few tips worth sharing.

The first is, you have to be absolutely clear what value means to whoever is on the other side of the table – the consumer, the professional buyer, the business owner, etc.

Value can be both financial and non-financial; and, in B2B, there will be personal aspects of value for whoever you are talking to (“will this make me look good, will it help my career?”) as well as value for the company. When preparing, you should consider all aspects:

Buyers rarely focus on price alone; they care about?total value - including service quality, reliability, and long-term cost-effectiveness.?

Second, the first price mentioned in a negotiation often sets the tone. It creates an anchor, a reference point against which future prices are compared. If you state a premium price first, that reference point is higher, making any discounts seem more generous.

Your ability to negotiate is often one of the most crucial aspects of pricing. Put the time into getting it right.