Negotiation vs Bargaining: Master the Right Strategy for Better Deals

These days, almost every type of business requires employees who possess bargaining and negotiation skills.

But here’s the problem: bargaining is not the same as negotiation. They’re quite different and should be treated as such in business.

So, what’s the difference — and how do you know which one to use?

Keep reading to uncover:

• The distinct differences between bargaining and negotiation skills
• Why bargaining may hurt your organization over time; and
• How investing in negotiation skills training can improve every aspect of your business

What’s the Difference Between Bargaining and Negotiation Skills?

What’s the big difference between bargaining and negotiation skills? 

It’s simple. 

Bargaining focuses on one party being right. It creates a competitive, win-lose situation.

Negotiation focuses on finding what’s right for both parties. The process is usually more involved, but the outcome is typically win-win. 

Finding common ground and achieving a true win-win scenario through negotiation requires all parties to have trust and open communication throughout the process. Otherwise, one party will walk away feeling unsatisfied with the negotiation.

What Is an Example of Bargaining?

Imagine this scenario: you’re in the market for a used car, so you visit a local dealer who is advertising low prices and great interest rates. 

You find a car you’re interested in and sit down with the salesperson to discuss numbers. You’re already happy with the price and payments, and the salesperson isn’t offering much wiggle room, as they know their prices are competitive.

As a buyer, you may ask the salesperson to include an extended warranty or a new set of tires, or threaten to walk away from the deal.

This is bargaining. 

What Is an Example of Negotiating?

If you’ve ever been involved in a real estate purchase, you know it’s more complex than simply asking the agent to “throw something in” to sweeten the deal.

There are multiple layers in this type of transaction, and you might be competing with multiple offers. 

You might negotiate:

• The asking price
• The closing date
• What’s included (i.e., fixtures, office equipment, appliances, etc.)
• How many times you can inspect the property before closing
• Who pays the legal fees and closing costs
• Repairs or improvements to the property
• Real estate fees
• And more

Most often, your first offer is not accepted unless you are willing to meet the seller’s every expectation.

Negotiations are always more involved and require all parties to compromise.

Bargaining and Negotiation Differences: A Quick Comparison

What Are Basic Bargaining Skills?

Unlike negotiation skills, bargaining skills require less effort. They’re generally one-sided, self-serving, and ultimately produce a losing situation for one party involved. 

Most often, bargaining is focused on price only, whereas negotiation skills come in handy when dealing with more complex purchases.

Bargaining skills only get you so far. 

If your business is based on haggling prices, bargaining skills come in handy. However, if you’re negotiating deals for millions of dollars, bargaining simply won’t cut it. 

The Maker Group focuses on negotiation training skills for professionals in every industry and at every level of their careers.

By improving your team’s negotiation skills, you’re giving them the: 

• Power of confidence
• Ability to act on your behalf in a way that promises a better outcome for you and your clientele

If you’re ready to take your employees to the next level with customizable and effective negotiation training, call The Maker Group. 

The 3 Main Problems With Bargaining

Bargaining may seem like a quick way to get what you want, but it often creates more problems than it solves — especially in professional or high-stakes environments. Unlike strategic negotiation, which aims to build long-term value and mutual benefit, bargaining is typically short-sighted, overly aggressive, and focused on winning at any cost. 

Let’s break down the three biggest issues with this approach and why it often leads to poor outcomes.

#1: It’s Only About Winning

One of the biggest issues with bargaining is that it’s geared toward winning or coming out on top. 

For example, when one or both parties in a negotiation focus on one aspect of a deal without considering others, it becomes bargaining.

This is most common when commodities are involved, and when the parties within a negotiation don’t understand the concept of value.

#2: It’s Hyper-Focused on Price

Bargaining often becomes about nickel and diming, rather than focusing on the outcome. 

When there’s more involved than trading a commodity or service for a price, it’s important to open communication and listen to what each party has to offer.

Imagine your company is hiring a professional contractor to renovate your commercial buildings. You have an employee on your negotiation team who is so hyper-focused on price that the scope of work suffers, and you end up dissatisfied with the final product.

At the end of the day, no employee wants to be responsible for a subpar outcome.

Taking the narrow-mindedness out of bargaining can lead to true negotiation and ultimately become a win-win for everyone. 

#3: It’s Intended for Low Complexity Deals

Imagine that you’re at a local flea market. Bargaining makes sense in this scenario when you follow this structure:

1. You see a product you’re interested in.
2. You lowball an offer.
3. The vendor comes back with a higher price.
4. You stand your ground.
5. The vendor refuses.
6. You walk away.
7. The vendor calls you back and brings his price down a little.
8. You agree and walk away with what you want.

This simply doesn’t work when you’re trying to negotiate a high-complexity deal with a major corporation, wholesaler, retailer, or other complex business.

What Are Basic Negotiation Skills?

More and more often, companies require their employees to possess good negotiation skills. 

But it’s not as simple as it used to be. 

The new economy is making negotiations more difficult than ever, so many organizations are looking for employees who excel at negotiation skills, such as:

• Communication and active listening
• Rapport building
• Adaptability
• Empathy
• Integrity
• Emotional intelligence
• Problem-solving
• Decision making
• Influencing skills 
• Confidence
• And more

The good news is that negotiation skills can be learned. 

The Maker Group focuses on bringing bespoke negotiation training and workshops to organizations across the U.S. 

Our courses are designed for everyone in a negotiation role, whether your employees are in the beginning stages of their careers or they’re veteran negotiators who could use a refresher.

For more information or to schedule your workshop or training today, contact The Maker Group.

5 Reasons Why Negotiation Skills Are Far More Valuable Than Bargaining Skills Alone

Negotiations are an everyday practice in some businesses, making negotiation competency among employees extremely valuable. 

For most organizations dealing with high-level and complex negotiations, bargaining is only one step of the process. 

#1: Negotiations Are Focused On a Win-Win Outcome

When a settlement has been reached, the negotiation is complete. However, if one party walks away feeling like the loser, you have not reached a win-win outcome. 

How do you get there? 

You do it by only agreeing to a settlement that benefits all parties involved and cannot be improved by further discussions.

In a negotiation, there should be little to no value left on the table that’s worth arguing for or losing the deal over. When all creative options have been explored, and everyone feels confident in the agreement, you have succeeded in a win-win negotiation.

#2: Negotiations Help Build Relationships and Inspire Trust

Negotiations require a high level of communication. Each party must be willing to actively listen to the other party’s wants and needs and be willing to compromise their own.

Most high-level negotiations start with discussions. The focus is on building rapport and forming trust. The contract won’t happen until much later in the deal. 

Consider the agreement made when Lucasfilm sold the Star Wars empire to Disney. 

The amount of trust needed for George Lucas to hand over his creative legacy to Disney didn’t happen in a day.

Discussions began in early 2011, but the deal wasn’t formalized until October of 2013 — more than two years later.

In the end, thanks to the rapport and trust built over time, both parties reached an agreement that satisfied each of their needs.

#3: Negotiating Helps Manage Expectations

Communication, rapport building, and trust are all imperative to managing expectations. 

Two parties often enter a negotiation with very different ideas of a perfect outcome. Without preliminary discussions and effective communication, it’s nearly impossible to understand the other party’s expectations.

In bargaining, you’re only focused on your outcome. Successful negotiators will work toward an outcome that satisfies all parties.

#4: Negotiating Is Integrative

Negotiation includes bargaining as a key step in the process. 

However, successful negotiations are integrative and may include multiple steps, such as: 

• Preparation for the negotiation
• Discussing bargaining issues
• Negotiating each contingency
• Overcoming any negotiation breakdowns
• Reaching an agreement
• Ratifying the agreement
• Administering the agreement

#5: Negotiating Is Intended for High-Complexity Deals 

The fact is, you cannot handle high-complexity deals with bargaining alone. Some deals may take days, weeks, or even years to reach an agreement, and that simply can’t be done if both parties aren’t coming to the table with a compromise.

Surviving complex negotiations takes patience and a lot of preparation. Each party involved must take the time to identify their preferred outcome and any possible barriers before even coming to the table.

But even if you’ve followed best practices and have a stellar negotiation team, you must still be prepared to adapt and go with the flow.

Learning to maneuver roadblocks when things don’t go as planned will help you achieve a win-win solution.

Bargaining and Negotiation Skills: The Bottom Line

At the end of the day, negotiation skills will always outweigh the importance and power of bargaining skills. Bargaining is just one cog in the much bigger wheel of negotiation.

Making the distinction between the two and training your employees accordingly can save your company a lot of lost profits in the long run.

The Maker Group Offers Negotiation Skills Training for Professionals at Every Level

The Maker Group is a team of commercial negotiators with combined decades of experience, which has positioned us as leaders in negotiation training. We’re ready to help you.

We tailor our negotiation training workshops to meet your organization’s specific needs and demands. Using proven behavioral methods and our proprietary Maker Framework, we consistently meet our clients’ expectations.

Ready to elevate your team’s negotiation skills?

At The Maker Group, we specialize in results-driven training tailored to your unique business challenges. Contact us today to schedule a consultation and unlock your organization’s full potential.