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Mastering Negotiations: Strategies for Optimal Trade Pricing and Relationships

Effective negotiation is crucial for successful trade, where pricing plays a pivotal role. Understanding price considerations helps companies maintain their survival, shape relationships with buyers, and create a strong product image. Negotiations revolve around setting prices between the seller's highest acceptable figure and the buyer's lowest target. Key factors include costs of production, market pricing, and ancillary elements. Preparation is essential; being informed about all aspects of the deal—from delivery terms to payment options—can significantly influence outcomes.

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Mastering Negotiations: Strategies for Optimal Trade Pricing and Relationships

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Presentation Transcript

  1. Negotiations for Trade Buying and selling at the best price

  2. Introduction • Price considerations are the key to a company’s survival. • Price considerations will affect relationships with buyers. • Price considerations may establish a product image.

  3. Pricing strategies • To establish relationships with other companies • To penetrate markets • To be used as a tool in competition

  4. Price considerations • Seller will want top prices • Buyer will want bottom prices • Negotiations will be about setting the price between these limits Seller’s target Seller’s costs of production Market prices Buyer’starget

  5. Other pricing considerations Pricing may also be used as a means to gain other objectives such as establishing long term intercompany relations, market penetration, or a decision to compete on a basis other than pricing.

  6. Sequence and Preparation • Once there is agreement in principle to do business together, negotiations will follow. • Know the costs of production • Know the market • Know the operations of the other party at the negotiating table

  7. What should be negotiated • Delivery terms • Payment options • Warranties and inspections • Risk factors • Ancillary elements which may be used in lieu of monetary payments

  8. Conclusion • Prices will be set at the lower end by the seller’s costs of production. • Prices will be set at the upper end by market considerations. • Pricing negotiations must be based on knowledge of both the costs of production and the market prices.

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