ZOPA is the range at which both negotiating parties make a deal since they find the terms acceptable. However, finding this zone is a tedious process and requires some detective work. The seller of a product or service proposes and expects to fetch the highest maximum amount possible. However, the seller will also set the lowest amount they expect from the buyer which is referred to as the reservation price. On the other hand, the buyer wants to pay the least price possible but is still willing to pay a maximum amount which is referred to as the walk away or reserve price. ZOPA is when an overlap is reached between the seller and buyer price ranges.
As a seller, the most important aspect of ZOPA is to find out the seller’s walkway price without revealing your own. According to Harvard Business School Press (2005), after the seller has quoted the first initial offer which is higher than the reservation offer, they should let the buyer commit by allowing him to make the first offer. This first offer gives the seller information about the buyer before the negotiations kick-off. After that, the seller can ask the buyer what they think about the offer and listen carefully to the concerns that are raised.
The seller should be assertive when challenging any opposition from the buyer, but remember to remain respectful of the buyer’s interests while protecting their own. Ask the buyer probing questions regarding the price and listen carefully to the answers. After making an offer, observe a moment of silence that may be of 10 or 20 seconds to give the buyer time to think about it. Never accept the first offer from a buyer since they might think that it was too easy. All the above strategies will enable a seller to get information on the amount a buyer is willing to part with for the product or service.
References
Harvard Business School Press.,(2005). The essentials of negotiation. Watertown, MA: Harvard Business Press.