Welcome to the New Rules for Negotiating Ten Minute Learning series, a short but comprehensive series of contract negotiation webinars specifically designed for people who negotiate complex customer/supplier agreements. The webinars are based on materials covered in my corporate training sessions, New Rules for Negotiating corporate training manuals, or one of my three books. You should have in front of you Chapter 5 from my New Rules for Negotiating manual, a Money Map, and pen to take notes. If you don’t have the downloaded material, go back to the download page to get your copy.

1. Slide 1
Lesson #1
January 2016
Mapping the
Money
ConversationJeanette Nyden
January 2016
New Rules for
Negotiating:
10 Minute
Learning Session
Welcome to the New Rules for Negotiating Ten Minute Learning series, a short but
comprehensive series of contract negotiation webinars specifically designed for people who
negotiate complex customer/supplier agreements. The webinars are based on materials
covered in my corporate training sessions, New Rules for Negotiating corporate training
manuals, or one of my three books. You should have in front of you Chapter 5 from my New
Rules for Negotiating manual, a Money Map, and pen to take notes. If you don’t have the
downloaded material, go back to the download page to get your copy.

2. Slide 2
Many of us are familiar with the
price tug of war.
(c) Jeanette Nyden 2015 2
Many of you are familiar with the price tug of war. It doesn’t have to feel like a tug of war when
you understand the predicable patterns when negotiating price, and only price. Understanding
these patterns will give you a tremendous advantage at the bargaining table.
I say price and only price because the discussions become much more complex as we
incorporate tradeoffs, like expedited shipping, and contractual terms and conditions, like
unlimited liability. Tradeoffs and T’s and C’s impact price. We’ll be talking about that in future
learning sessions.

3. Slide 3
Jeanette Nyden
Author
Educator
Negotiation Coach
(c) Jeanette Nyden 2015 3
I am Jeanette Nyden, the author and co-author of three books including, Getting to We:
Negotiating Agreements for Highly Collaborative Relationships, the Vested Outsourcing Manual
and Negotiation Rules. I work with supply chain professionals to maximize key
customer/supplier relationships by providing tactical, customized contract negotiation training
and coaching from the planning phase through to execution.
I’ve worked with both sales and purchasing, usually at the same company at the same time, so
my advice is a balanced and multi-faceted approach to supply chain negotiations. That dual
approach to supply chain negotiations (customer and supplier facing at the same time) gives me
an exceptional view into translating customer demands into supplier performance.

4. Slide 4
Terms
Asking Price
Anchor
Bottom Line
Walk Away Point
Target Price
Zone of Agreement
(c) Jeanette Nyden 2015 4
Let’s define some common negotiation terms so we are all on the same page.

5. Slide 5
(c) Jeanette Nyden 2015 5
This my Money Map. If you don’t have one, please visit the downloads page to get your copy.
Please refer to this map for the rest of this webinar.

6. Slide 6
(c) Jeanette Nyden 2015 6
A Bottom Line (or the discomfort zone) is the point at which the
negotiator could accept the price, but he or she is not
comfortable with the price.
Looking at the map, the discomfort zone or your bottom line lies immediately within the vertical
bars for the seller and the buyer alike. It is also the negotiator’s bottom line—the point at which
they were uncomfortable with the price, but still making money on the deal.

7. Slide 7
The key is not to go
lower(seller) or
higher(buyer) than your
“bottom line”
(c) 2011-2014 Jeanette Nyden 7
The key is not to go lower (seller) or higher (buyer) than your “bottom line”

8. Slide 8
A walk
away point
is the point
at which
your
company
will lose
money on
the deal.
(c) 2011-2014 Jeanette Nyden 8
A walk away point is the point at which your company will lose money on the deal. This is not a
bluff point but a number that your accounting team can validate. Cost accounting can be tricky,
but someone somewhere in your organization will know this number. Looking at the map, each
company has its own walk away point. You’ll only ever know your walk away point. That is what
makes negotiations somewhat difficult—you never really know how close you really are to your
counterpart’s walk away point.

9. Slide 9
The Zone of Potential Agreement (ZOPA) is the statistical
mean, and where each party would like the price to land in
order to reach an agreement.
(c) Jeanette Nyden 2015 9
The Zone of Potential Agreement (ZOPA) is the statistical mean, and where each party would
like the price to land in order to reach a profitable agreement. Referring to the map again, it is
the area in the middle between the two company’s bottom lines.

10. Slide 10
An asking price is the
price quoted by the
vendor.
(c) Jeanette Nyden 2015 10
An asking price is the price quoted by the vendor. It is normally the highest price. Occasionally, a
buyer’s tradeoffs or T’s & C’s will raise an asking price, especially when those tradeoffs and T’s &
C’s are not disclosed to the seller at the time the seller sets their asking price.

11. Slide 11
(c) 2011-2014 Jeanette Nyden 11
The asking price acts like an anchor.
Buyers often take short
cuts in the negotiation
and make a counteroffer
relative to the asking
price (anchor). For
example, when a buyer
asks for a 10% discount
rather than doing the
calculations to establish
a target price.
The asking price acts like an anchor. Anyone hearing the asking price-for this discussion-is a
buyer. Buyers often take short cuts in the negotiation and make a counteroffer to the seller
relative to the asking price (anchor). For example, when a buyer asks for a 10% discount rather
than doing the calculations to establish a target price.
A price anchor acts much like a boat with only one anchor. The price negotiations revolve
around the asking price. I’ll show you an example in a few slides.

12. Slide 12
(c) Jeanette Nyden 2015 12
What is
your
A target price is the preferable price that a buyer wants to pay (or the supplier wants to sell). By
setting a target price, you take some control over the money conversation.

13. Slide 13
(c) Jeanette Nyden 2015 13
Distributive bargaining happens when money gets divided or distributed between two or more
organizations. Let’s map out some common distributive bargaining scenarios.

14. Slide 14
Money Map
$
$$
Anticipated Zone of Agreement
Sellers
bottom line
Buyers
bottom line
(c) Jeanette Nyden 2015 14
The is always middle ground for negotiations.
We have two overlapping circles superimposed on the money map. To the far right is the
buyer’s walk away point. To the far left is the seller’s walk away point. The middle represents
each company’s price target. If you’ll notice, that price target lies within the zone of agreement.

15. Slide 15
Anticipated Zone of Agreement
Sellers
bottom line
Buyers
bottom line
Buyer'sWalkaway
point
Seller’sWalkaway
point
Seller’s Asking PriceBuyer’s Price Target
Mapping Money – Typical Scenario
Ideal Scenario
(c) Jeanette Nyden 2015 15
Final Price
This is the idea scenario. The seller sets an asking price close to the buyers bottom line. The
buyer then sets its price target close to the sellers bottom line. Then the companies agree on a
final price within the zone of agreement.

16. Slide 16
Anticipated Zone of Agreement
Sellers
bottom line
Buyers
bottom line
Buyer'sWalkaway
point
Seller’sWalkaway
point
Seller’s Asking Price
Asking Price Too High
(c) Jeanette Nyden 2015 16
In this scenario, the vendor sets an asking price that is in the buyers walk away point. That
means that the buyer will lose money if it were to agree to the asking price.
Unfortunately, this does happen. One of my manufacturing clients will often receive quotes on
widgets that exceed the price that they pass on to their customer. In other words, my client
quotes a price to the customer which includes 10 screws. My client then sends out a request for
quote to their vendor pool to buy the 10 screws, but the quotes literally come back at a higher
price than my client is charging their customer for those 10 screws. In that scenario, my client is
losing money buying the 10 screws at the vendor’s asking price.

17. Slide 17
Anticipated Zone of Agreement
Sellers
bottom line
Buyers
bottom line
Buyer'sWalkaway
point
Seller’sWalkaway
point
Seller’s Asking PriceBuyer’s
Price
Target
Buyer’s Target Too Low
(c) Jeanette Nyden 2015 17
In this scenario, the buyer sets a target price that is in the seller’s walk away point. That means
that the seller will lose money if it were to agree to the buyer’s price target.
I see this happen when my client’s procurement department sets a price target on INTERNAL
data only. In other words, the buyer looks to historical purchase prices without taking into
consideration, time of purchase, quantity or supplier’s production schedule.

18. Slide 18
Anticipated Zone of Agreement
Sellers
bottom line
Buyers
bottom line
Buyer'sWalkaway
point
Seller’sWalkaway
point
Seller’s Asking PriceBuyer’s counteroffer
price
Final Price
The anchor.
(c) Jeanette Nyden 2015 18
This is the anchor. In this scenario, the supplier sets the asking price. The buyer then counters
based off of the asking price. The buyer has not set the price target.
This happens when a buyer (or a seller) counters with a percentage off of the asking price. A
buyer will have a “rule of thumb” that she shaves 10% off of the asking price. Maybe that’s fair
and maybe its not. She’ll never know if she does not set her price target. On the other hand, the
seller will counter to the buyer’s request for a better price by shaving 10% off of the asking
price. Maybe that’s fair and maybe its not. She’ll never know if she does not set her price target.

19. Slide 19
Your Turn!
Map out a Money Conversation
• Choose a recent price
negotiation.
• Place the following on the map
(use Chapter 5 as your guide)
1. Your walk away point
2. Your bottom line (or discomfort
zone)
3. Your Price Target
4. Asking Price
5. Proposed Final Agreed Price
(c) Jeanette Nyden 2015 19
Now you have some preliminary tools to help you understand the back-and-forth process when
negotiating money. In future sessions, I’ll build on this concept by talking about how tradeoffs
and T’s & C’s impact price negotiations.

20. Slide 20
(c) Jeanette Nyden 2015 20
If you have any
comments,
questions or
concerns about
an upcoming
negotiation, set
up a 30 minute
appointment
with me.
jn@jnyden.com
If you have any comments, questions or concerns about an upcoming negotiation, set up a 30
minute appointment with me. I work with both buy-side and sell-side teams who negotiate a
range of contracts from traditional transactions to more complex performance based
customer/supplier relationships.

21. Slide 21
(c) Jeanette Nyden 2015 21
Thank you for listening to the New Rules for Negotiating Ten Minute Learning series and see
you next time.