Bargaining Power.People frequently believe that they don’t have enough bargaining power in a negotiation and that the other side holds all the aces. This is very damaging, as if you don’t believe you have enough bargaining power you won’t bid ambitiously, and you may look and sound apprehensive. This encourages the other side to push you harder, and before you know where you are, the negative outcome you were fearing has happened.

It is normally a misconception that the other side has all the bargaining power since there are at least 10 sources of bargaining power and they are rarely arranged 10-nil in favour of anybody – you always have more aces than you think.

For example:

  • You may not be a big company but you may have “niche” marketing power – the power to command a particular desirable niche.
  • Your smaller size may make you more nimble or flexible than a bigger company.
  • Maybe you command a scarce resource even though you are small.
  • Maybe you are small but have worked out plenty of alternative options to this deal – that gives you a kind of market power too.
  • You may have expertise on your side or extra information – you often hear people saying that “information is power” – they are right.
  • You may have “authority” power – because you have seniority or reputation on your side, or even a uniform – the police rely on the power of their uniform to negotiate successfully with the public every day.
  • You may have “network power”. This is the power to plug into a network that can be marshalled in your support. If you have a big network that someone else wants access to that can be just as valuable as having revenues or profits at your disposal.
  • Having “numbers” on your side is a source of bargaining power. If you go into a negotiating room and there are four of you and only one person on the other side then you have four times as much thinking, listening and watching time as they do. If the numbers are the other way round then get out of there – you are in trouble.
  • You could have “standards” on your side. For example rules, or regulations or precedents or the law – or even some code of conduct which the other side has committed itself to. This is particularly useful if you are a small player dealing with a big customer-facing institution like a bank – make them rely on their own boastful standards in dealing with you (e.g. “We always put the customer first”).
  • If you are in an existing relationship then that will also give you a source of bargaining power – generally speaking if people have made a commitment to something or someone they are more likely to continue that commitment than abandon it.
  • There is also some evidence that “size” is a source of bargaining power – if you are a bigger person that can help. But of course that doesn’t achieve anything if you are slumped in your chair or mumbling to your shoes when you speak. You have to use your physicality, which means that smaller people can counter this advantage by making themselves seem bigger – e.g. by standing up, or using hand gestures, or moving around, or projecting their voice.
  • And of course you always have your “personal” power – your skills and abilities as a negotiator. That is there for you at all times regardless of the distribution of bargaining aces.

So, you don’t need to feel stuck just because you are dealing with a larger player – you always have more bargaining power than you think.