Price Negotiation & Deal Management Flashcards
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Read the first 7 Price Negotiation & Deal Management flashcards as text
What does BATNA stand for in price negotiation?
Answer: Best Alternative to a Negotiated Agreement
BATNA (Best Alternative to a Negotiated Agreement) defines a negotiator's fallback position and establishes the minimum acceptable outcome before walking away.
Which negotiation tactic involves stating an extreme initial price in order to influence the final negotiated outcome?
Answer: Anchoring
Anchoring sets a high or low initial reference point that exerts disproportionate influence over the final negotiated price.
What is the 'zone of possible agreement' (ZOPA) in a negotiation?
Answer: The overlap between the seller's minimum acceptable price and the buyer's maximum acceptable price
ZOPA is the range between the seller's reservation price and the buyer's reservation price, representing the space where a mutually acceptable deal is possible.
In deal management, 'price leakage' refers to:
Answer: Revenue lost through unauthorized discounts, exceptions, and off-invoice costs
Price leakage describes the gap between the quoted or list price and the actual revenue received after all discounts, allowances, and off-invoice deductions.
What is a 'walk-away price' in a negotiation?
Answer: The threshold price beyond which a party will not finalize a deal
The walk-away price is the point at which a negotiator concludes that no deal is preferable to the proposed terms, serving as their absolute limit.
Which negotiation strategy focuses on creating additional value for both parties rather than dividing a fixed amount?
Answer: Integrative negotiation
Integrative (win-win) negotiation seeks to expand the total value available by addressing both parties' underlying interests rather than simply splitting a fixed pie.
What is 'nibbling' in the context of price negotiation?
Answer: Requesting additional concessions after the main deal appears to be closed
Nibbling involves asking for small additional concessions—extra discounts, added services, or improved terms—after the principal agreement has been reached, exploiting the counterpart's commitment bias.