The Negotiation

In bold: key vocabulary. Tap any word in the text to see its definition.

At four in the afternoon on the last business day of the year, the screen in the conference room was split into two rectangles. On the left was Mr. Adeyemi, the purchasing director of Kestrel Retail, who had asked for this call and who looked like a man who had already decided what he wanted. On the right was Sofia Lindgren, sales director of Northvale Foods, who had flown in from another time zone that morning and who had been rehearsing her opening sentence for a week.

"Let me be direct," said Mr. Adeyemi. "We are prepared to renew the contract for one year, provided that you reduce your prices by twelve percent and give us exclusivity on the northern region." He paused for a moment, to let the number settle. "I should add that two other suppliers have approached us." Sofia, who had expected precisely this move and had prepared for it on the flight, did not flinch. "I appreciate your frankness," she said. "May I ask what is behind the request? Is it the price itself, or the price relative to your margins?"

There was a short silence, for Mr. Adeyemi had not expected the question, and for a moment he looked less like a man who had already decided. "Our margins are under pressure," he admitted. "The price is the simplest lever we have." "Understood," said Sofia. "Then I'd like to propose something different. We cannot reduce the price by twelve percent, as that would make the contract unprofitable for us. But we could offer a reduction of five percent, which is significant, in exchange for a three-year commitment rather than one."

"Three years is a long time," he said. "It is, and that is why I am prepared to make it worth your while," she replied. "In addition to the discount, we would extend your payment terms from thirty days to sixty. For a business of your size, that is a substantial improvement in cash flow, probably worth more to you than another three percent on the price." Mr. Adeyemi wrote something down and then remained silent for so long that Sofia began to wonder whether the connection had frozen.

"And exclusivity?" he asked at last. "I can't agree to exclusivity," said Sofia. "We have other clients in the north, and I wouldn't want to damage those relationships. But I can offer you first refusal on any new product we launch in the region, on the understanding that you commit to a minimum volume. That protects your position without restricting ours." There was another pause, and she could see that he was doing the arithmetic.

"Let me check a few numbers," said Mr. Adeyemi. He left the call for four minutes, which felt like forty, and when he came back, his expression had visibly changed. "Five percent, sixty days, three years, and first refusal," he said. "Subject to legal review, of course." "Of course," said Sofia. "I'll have a draft to you on Monday."

They ended the call five minutes early, which, in Sofia's long experience, was the surest sign of a good agreement: a deal in which both sides believe they have won something, and neither has lost anything they really needed.