Let me introduce you to the ZOPA – the Zone Of Potential Agreement. If a negotiation is a dance, then the ZOPA is the dance floor, the space where you can move around.

This is a salesperson and this is a customer; they are both standing in the Zone Of Potential Agreement. The ZOPA lies between the seller’s minimum acceptable price, say $0.50 and the buyer’s maximum acceptable price, say $0.75. These numbers are the red lines of the negotiators that they do NOT want to go outside. So the ZOPA, where they can agree, is somewhere in between.

Let’s look at three common mistakes that the seller can make here:
1. Seeing only his half of the ZOPA as his area. Big mistake – when you negotiate, the whole ZOPA is your area. Make that clear from the start.
2. The second mistake is focusing on his red line. Big mistake – if his focus is there, that’s where he will end up.

It is important to know where your red line is, but your focus should be on the other person’s red line, which is where you want to go.

To see the third mistake, we must change perspective. Now we see the persons from above.

3. The third mistake is only seeing this narrow area of the ZOPA – ‘the price corridor’.
In the price corridor, if you take one step forward, the customer has to take one step back. That feels like losing. Do you like losing? I’m sure you don’t, and neither do customers. In the price corridor we only have two choices – make the customer feel like he/she is losing, or we back off and lose money.

That means that the dance floor – the ZOPA – can be much, much bigger than the price corridor. This is where you can find win/win alternatives that are better for the customer, which makes them more willing to pay. Other alternatives mean lower costs for NCAB, so you can accept a lower price.

If you have a strong relationship with the customer, you can get creative together and find even more value. Who knows how much your ZOPA can expand?

So, this is the ZOPA you want – plenty of room to have a productive dialogue with the customer about creating more value for them.

This diagram shows a real example: The circles are NCAB-quotes to a customer; we won the orange and lost the blue. The big order was lost because the other supplier had a shorter lead time. The smaller orders were lost because the other supplier got a meeting with the ODM’s R&D, and suggested a different design. None of the orders were lost because of price; instead, the other supplier had a better ZOPA.

In this course, we will show how you can expand your ZOPA, and then claim your share of the value you create here. By finding such value, we can get away from everything being about the price.