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How can one move negotiations (especially pricing negotiations) to being positive sum games?

StevenForth
StevenForth Managing PartnerFounding Partner | Expert ✭✭✭

Pricing negotiations are often high stakes with a lot that can go wrong for both parties. This is especially true for well differentiated offers.

Game theory offers a lot of insights into pricing. In B2B pricing negotiations there are three possible approaches:

Zero Sum Games where what the buyer gains the seller loses and vice versa.

Positive Sum Games in which good negotiation can lead to a win-win for both parties.

Negative Sum Games in which both parties can lose. (I think this happens more than is widely acknowledged).

For differentiated offers, what are the ways that we can move as many negotiations as possible to positive sum territory?

Answers

  • LexiProvost
    LexiProvost Member Success Coordinator Moderator | mod
    edited January 15

    Hi Steven! Thank you for your question. While we so not have research specifically around Game Theory, here are a few pieces of research that may be useful for upskilling salespeople for negotiations:

    The Future of Selling and Delivering Value - E-book by Martin Dove, our VP of Subscription Sales research

    The Need to Deliver Customer Outcomes Is Here and Now - Webinar by Martin Dove, our VP of Subscription Sales research

  • StevenForth
    StevenForth Managing Partner Founding Partner | Expert ✭✭✭

    Thank you Lexi. Will go through these on the weekend.

    As I think more on this the key things seem to be

    1. Avoid negative sum-games, especially as they play out over time (which implies that renewals are important)
    2. Convert zero-sum games to positive sum games if you can, this requires meaningful differentiation from alternative solutions
    3. Support positive-sum games through negotiations on the value exchanged between each parties, and the wider community, over time


  • LexiProvost
    LexiProvost Member Success Coordinator Moderator | mod

    @Sonu Natt and @Piyush Dogra @Lynn Fraser, do you have any insight to add to the conversation about pricing negotiations or implementation of Game Theory? The topic is mostly on net new contracts, but any renewals insights you may have are welcome.

  • Lynn Fraser
    Lynn Fraser Director, Strategy and Planning Global Services Sales Founding Member | Scholar ✭✭

    Hi Lexi - my quick response is: it's all about the value of the offer and ensuring you have a solid market analysis to back up the pricing. If the value is clear and meets the Customer's needs, its a win/win for all.

  • Randy Bastarache
    Randy Bastarache Senior Services Consultant Member

    Pricing negotiations are always challenging, my personal preference is to fully understand the business drivers and objectives and ensure the services are aligned to the customers outcome - if aligned correctly with the customers business leaders often the purchasing or IT department that is more focused on the cost is minimized. This approach may add to the front side of the scoping and solutioning however will greatly reduce the closing efforts due to the alignment of the senior leaderships vision. As with any business negotiation, both parties must have a positive view of the process.