"The used car" and "Knight Engines - Excalibur Engine Parts"

First negotiations in the class are gone,  

so I write a little summary about them.

"The used car" was a total disaster. I don't know anything about cars, even though I made a small research before the class. My partner was a real-life cars seller so everyone could imagine what would happen to me. He somehow went on me with the information about the price, which was $12.029 and that totally blew me off. I've given him a comparison to the Jeep Cherokee, but I really went to the role of the buyer and felt like "I really want that Pontiac!" That made me quite close-minded. I know I am a lot of emotional person, but this time I lost. So, putting that simple - I wasn't prepared enough.

"Knight Engines - Excalibur Engine Parts" was a little bit game changer today. My partners were Zach and Tyler which gave me a little bit of concerns about success. Two reasons:

1. English is not my first language,
2. There are two guys against me that had enough time to make a strategy before the negotiation.

After the first negotiation I paid much attention to the lecture (which was some sort of "explanation why you, Filip, weren't rational at all"). The information of BATNA, reservation point and first offer was a significant sign for me that my knowledge of negotiations is close to zero.

So this time I was more prepared. I set the highest price I can pay ($600 including the mark-up) and created a small strategy.

Because I was in a worse position, before they could say anything, I started. I asked them if they are interested in making a long-term contract with me. They said "yes" so that was a sign that I can consider buying more than 8000 pistons (the Knight company in which I'm employed may one day be in a position to acquire this small company). They offered a first price and I told them that I don't want to talk about money at this point. I knew that if we make a price now, there'll be no choice for me to manipulate them.

About the manipulation itself - I threatened them with a competition that could make Class A pistons for $450 (that wasn't true, they could have made them for $470). I didn't tell them that their competition isn't that fast and won't meet the government deadline. I thought they shouldn't know that at this point. They believed me and their faces became sort of sad.

They asked me about the number of pistons I'd like to buy - when I said 8000, Zach told me that 2 weeks may put a big stress on their machines. That concerned me a little. If they say something like that, the price should go lower! Anyway, I asked them about the guarantee - I didn’t want to pay a cost of non-valid units, right? Their reaction was a 10% maintenance fee which gave a total of 15% (10%+5% of mark-up). That wasn't a deal breaker.

We went to the price. Their offer was $600 per unit, which was too much for me (if you count the additional 15% cost). I refused and told them that with that price I can go straight to their competition, buy these pistons for $450 per unit, maybe have a little delay but (!) I have a 5 years of experience in the industry + I already had contracts with the US government in the past which could result in a good position for deadline negotiations. At this point Tyler started to count many things and I thought that I shouldn't talk to him much + Zach was more talkative which led me to the conclusion that he may make a mistake (and he did - Tyler was counting something and wasn't paying much attention).

They really wanted to make a deal. I really wanted to have a good price and maintenance, and I was considering a contract with them. All in all, we ended up with a price of $510 per unit and a number of 10000 pistons, 3 years contract, pistons signed with Excalibur's name and a 100% guarantee that they will have no errors (which means Excalibur paying the price of invalid units).

To summarize - I have used following techniques in this negotiation:

• Fait Accompli and Association  - which was a price and government contract manipulation,
• Surprise - I stared first,
• Change the subject - with the price at the beginning,
• More psychological - I paid attention to the person that was speaking more and seemed to be less focused.

Considering my success was determined by two factors:

1. The average price per piston agreed upon, ($510, where research price was $500-600 and maximum price was $600)
2. The type of quality-control guarantee obtained (100% guarantee and I don't have to pay for their errors)

This went quite well. Well, at least MUCH better than the first negotiation.