10 Big Negotiating Mistakes Pharmacies Should Avoid

10 Big Negotiating Mistakes Pharmacies Should Avoid by Elements magazine | redleafstyle.com

Negotiating intimidates the best of us.

One wrong move can lower your margins or cost you customers.

As an independent community pharmacy owner or manager, you’re negotiating all the time. Whether with a wholesaler, employee, third party or front-end supplier, the negotiating doesn’t stop.

Pharmacy school didn’t teach you the skills of an expert negotiator. But that doesn’t mean you can’t pick up a few tricks of the trade.

Avoid these common negotiating mistakes to up your game.

Mistake 1: Trying to “win” a negotiation

Negotiation isn’t a competition.

In fact, in the best negotiation, both sides win.

You want to be the bigger winner, but your goal should be to reach the best possible deal and to satisfy the other person—especially if you’ll do business with that person again.

One simple way to appease the other side is to make small concessions on points less valuable to you and to remain firm on the points you value most.

Mistake 2: Playing the short game

A hardline approach can create adverse effects down the line.

People who feel shorted by a deal often act irrational on the next deal, even to their detriment—and yours.

Conversely, the more satisfied a person leaves the negotiation, the more open he’ll be on the next negotiation.

Sometimes it pays to give a little now, so you can get more later.

Mistake 3: Talking too much

Active listening is one of the most underrated (and difficult) aspects of negotiation.

When you listen (instead of talk), you’ll learn the other person’s most important concerns that you need to address. Listening also makes the other person feel understood and valued, which softens her to negotiation and compromise.

Improve your negotiations by becoming a better listener with these tips.

Mistake 4: Not knowing what you want

Sometimes you’re wrong about what you think will make you happy.

Psychologists call that impact bias.

In negotiation, impact bias can cause you to make negotiating mistakes when choosing or refusing terms you think will make you happy or upset.

So, think carefully before the negotiation and write down how different outcomes will affect your business.

Include several possible outcomes, so you’ll know what you want from the negotiation.

Mistake 5: Making a reasonable offer

Start off negotiations with an offer you know the other party would never accept.

The natural order of negotiations is to work down from the initial offer to something in the middle. The more you ask for, the more you’ll get.

It may seem too obvious to be effective, but research shows this maneuver works.

Most negotiators aren’t prepared to be miles apart when making a deal. An absurd starting offer will put pressure on them to give more concessions to close the gap.

Mistake 6: Not building relationships

Relationships with patients are the cornerstone of your independent community pharmacy, but what about your relationships with those who you do business with?

Not building relationships is one of the biggest negotiating mistakes you can make. Learning the other party’s concerns, goals and reasons for the negotiation in advance provides crucial information when making a deal.

The more your offer addresses their concerns and needs, the more likely they’ll sway to your terms.

A relationship goes two ways. Share information in an open, truthful manner. Doing so fosters trust, which lowers defenses and makes people more receptive.

Even small talk helps build trust while also revealing insights into how to handle the person.

Mistake 7: Getting emotional

Negotiation is like fine china—delicate and expensive.

Emotions are bulls.

They can wreck a negotiation in an instant, killing any chance you had of reaching a deal.

Emotions, like anger, put the other party on defense. Or, they can cause you to make an irrational move that ultimately hurts you.

Some alternative reactions include:

  • Before the negotiation, come up with the best alternative to a negotiated agreement (BATNA). Use this BATNA as a guide to decide whether the offer is out of line or not.
  • Keep your cool by putting the negotiation in perspective. Sometimes, it isn’t worth getting worked up over.
  • Step away and take a break from the negotiations. Breathe deeply and practice mindfulness to reduce stress.


Finally, keep in mind that most of the time, it’s not personal.

Mistake 8: Giving an ultimatum

Ultimatums can sometimes be effective in a one-time agreement when you’re in a position of power. But usually, they’re a big mistake.

Ultimatums end negotiations. They convey that the other party is less important than you, which can cause them to walk away—even if it hurts them.

And they may never come back.

Occasionally, ultimatums are used to end negotiations that aren’t progressing. Instead of an ultimatum, try agreeing to a deadline for the negotiations.

Mistake 9: Not having enough knowledge

Knowledge is essential to understand your position in the negotiation, the value of what you’re negotiating and the motivations of the other party.

If you’re in the dark, you’re making a big negotiating mistake. You won’t know what you could—or should—receive from the deal.

For example, to get the best deal with a primary wholesaler, you should know all the terms in the contract, understand what each term means for your bottom line, and know if other pharmacies are getting similar terms.

Often, independent pharmacies don’t have the resources they need to get a great deal.

You can significantly improve your primary wholesaler contract by seeking assistance from organizations with negotiation experience. Look for organizations that work for the interests of independent community pharmacies, such as buying groups.

Mistake 10: Lacking leverage

Negotiating hinges on what you can offer. The more valuable your offering, the more power you have.

If you try to negotiate without leverage, the other party can simply walk away. Or, they can stack the deal to their side.

Lack of leverage is a major negotiating mistake many independent pharmacies make when it comes to negotiating their primary wholesaler contract.

Consider partnering with an organization, like PBA Health, that has expert negotiators who regularly work with wholesalers to get independent pharmacies the best possible contract. Through its ProfitGuard service, PBA Health forms regional groups of pharmacies and negotiates on their behalf to get the best overall deal.

The negotiation experts with ProfitGuard know what to look for in a contract—payment terms, rebates, generic ratio—as well as the other little (and hidden) contract details that add up to a lot of money.


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Elements is written and produced by PBA Health, a buy-side solutions company.

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