Escalation - And how to deal with it.
You and the other party are close to a deal. A price has been named, and you’ve all but signed the paperwork. Then, the other party shows up and calls off the negotiated deal, and asks for a higher price. You balk. Escalation has just taken place.
Escalation can be an effective tactic in negotiation. However, there are ethical and unethical escalations. The scenario in the first paragraph is generally considered unethical, and it probably created anger, and the deal fell through. It was unethical because the price escalation occurred once a firm agreement(understanding)had been reached.
An ethical escalation could take place at the start or early in a negotiation (not at the end). For instance, both parties believe they are going to be negotiating on a proposal with a $50,000 price tag. The seller revises his original price and explains the reasoning behind this need to increase the price. This technique is a way for the seller to add some 'negotiating space' to the proposal, so when negotiations are completed, and concessions have been made, the seller can be at or above the desired $50,000 price. This type of escalation can be used to help justify that the original price was a good/fair price.
What happens when you are facing an escalation? There are some escalation countermeasures to consider:
• Call the bluff—perhaps the other party does not really want to start over
• Counter the escalation by changing your offer or demand
• Give yourself time to think—don’t accede to every demand
• Demand assurances and guarantees
• Get the agreements signed by high-level people on both sides to make it more difficult to break or modify
• If the escalation is totally unreasonable, consider leaving the negotiation
How do you handle an escalation? Have you used escalation to obtain a better deal from the other party?
Escalation can be an effective tactic in negotiation. However, there are ethical and unethical escalations. The scenario in the first paragraph is generally considered unethical, and it probably created anger, and the deal fell through. It was unethical because the price escalation occurred once a firm agreement(understanding)had been reached.
An ethical escalation could take place at the start or early in a negotiation (not at the end). For instance, both parties believe they are going to be negotiating on a proposal with a $50,000 price tag. The seller revises his original price and explains the reasoning behind this need to increase the price. This technique is a way for the seller to add some 'negotiating space' to the proposal, so when negotiations are completed, and concessions have been made, the seller can be at or above the desired $50,000 price. This type of escalation can be used to help justify that the original price was a good/fair price.
What happens when you are facing an escalation? There are some escalation countermeasures to consider:
• Call the bluff—perhaps the other party does not really want to start over
• Counter the escalation by changing your offer or demand
• Give yourself time to think—don’t accede to every demand
• Demand assurances and guarantees
• Get the agreements signed by high-level people on both sides to make it more difficult to break or modify
• If the escalation is totally unreasonable, consider leaving the negotiation
How do you handle an escalation? Have you used escalation to obtain a better deal from the other party?
Labels: Negotiating Tips; negotiating techniques; negotiation; negotiation strategies
