Trader or Negotiator

What are you, a trader or a negotiator? Is there a difference?

Trading is the exchanging of comparably valued items, not negotiating. To trade is the exchange of commodities, assets or services on a par value. Negotiating contemplates the exchange of disproportionately valued commodities.

2_hands_holding_up_cash.jpgTraders focus on the intrinsic cost basis. Negotiators look to minimize cost or maximize their return. There are times when it may be better to trade then negotiate. Consider these examples.

Power or control over a situation often makes a transaction a simple trade. The person with the power establishes the rules and the rate of return. Those who find the terms acceptable participate. If not, they will seek another venue.

four_hands_holding_up_cash.jpg Limited availability of a commodity also creates a demand driven market. Sellers who hold such a commodity have the power to demand a high rate of return. Buyers who must have the commodity, oil comes to mind, have little choice but to pay the high rate while they develop alternative sources.

Hospitals and doctors enjoy another hedge against having to negotiate with you. Because you have insurance, you are not paying the bill (other than a small co-payment). That means you have little control over what is paid for the service rendered. More important, the provider has little incentive to negotiate with you or remain competitive. Bag_of_groceries.jpg And the insurance company has little incentive to negotiate a unique rate for you as they spread their risk over all the people they are covering.

Simple trading is also appropriate in many situations where time and convenience are more important than price. At the grocery, for example, you simply exchange money for a loaf of bread. There is no negotiation because you are too busy to try and the amount you might save is negligible. But no one says you could not negotiate with the manager if you wanted to do so. In fact, if you are contemplating a very large purchase for a party or office event there is absolutely no reason not to contact the manager, explain the situation, and inquire about wholesale pricing or other possible discounts he or she might offer to avoid risking that you might go to a competitor.

To answer the question, are you a trader or negotiator, the answer is 'both' depending on the situation, your time, and the balance of power.