Final Offer

Final Offer

Final Offer Jonathan Poland

A final offer, also known as a best and final offer, is a negotiation tactic in which a party submits an offer on a take-it-or-leave-it basis. This means that the offer is presented as the final offer that will be made or accepted, and no further negotiation will take place. Final offers are often used in situations where the parties have reached an impasse and are unable to come to an agreement through further negotiation. By presenting a final offer, the party is attempting to put pressure on the other party to accept the offer, or risk losing the opportunity to reach a deal. Final offers can be effective in resolving negotiations, but they can also create tension and may not be suitable in all situations. The following are illustrative examples.

Goods & Services

A customer offers $500 for an antique. The sales person claims there is no way their manager would approve a price that low. The sales person requests the customer think about it and submit a final offer closer to $3500 before the item is sold to another customer. This puts the customer in a corner as the sales person is suggesting they will only accept one more bid that needs to be much higher.

Assets

Multiple buyers have submitted bids for a home. The seller requests all buyers to submit a best and final offer within three days. This prevents an incremental bidding war where each of the buyers can discover exactly how high the other bidders are willing to go. When each bidder is only allowed to make one more bid, they may bid high as they have great uncertainty about how high the competition will bid. This may work to the sellers advantage if they are confident the buyers are motivated to win the bid. Otherwise, bidders may simply resubmit their most recent bid as final.

Employment

An employer offers a candidate a salary of $90,000 despite a recent salary history of $140,000. The candidate claims they will not accept a salary under $140,000. The human resources representative claims it is very unlikely this would be approved as it is out of the range for the position. They ask the candidate to submit a final offer for the lowest salary they would accept. The candidate submits $140,000 as they feel the employer is bluffing and is willing to match their previous salary. This bid indicates the candidate will have to walk away from the offer if their salary demand is not met.

Agreements

Trade agreement negotiations hit a sticking point on the tariff rate for information technology services. One side claims a proposed rate of 25% is untenable and asks the other side to come back with a final proposal closer to 0% if they are serious about closing the deal.

Learn More
First Principles Thinking Jonathan Poland

First Principles Thinking

Overview First principles thinking is a method of reasoning that involves breaking down complex problems into their most basic and…

Data Breach Jonathan Poland

Data Breach

A data breach is a security incident in which sensitive, protected, or confidential data is accessed, disclosed, or stolen. Data…

Integration Risk Jonathan Poland

Integration Risk

Integration risk is a type of risk that arises when two or more entities, such as businesses, systems, or processes,…

Data Security Jonathan Poland

Data Security

Data security is the practice of protecting data from unauthorized access, use, modification, destruction, or deletion. It is a key…

Project Stakeholder Jonathan Poland

Project Stakeholder

A stakeholder is anyone or any group that is impacted by a project. This includes individuals or teams who are…

Grand Strategy Jonathan Poland

Grand Strategy

A grand strategy is a comprehensive and long-term plan of action that encompasses all available options and resources in order…

Economic Advantage Jonathan Poland

Economic Advantage

A competitive advantage is a feature or characteristic that allows a company to perform better than its competitors in a…

Competitive Intelligence Jonathan Poland

Competitive Intelligence

Competitive intelligence is the process of collecting and analyzing information about competitors, markets, industries, products, and customers in order to…

Ambition Jonathan Poland

Ambition

Ambition is the drive and determination to achieve a particular goal. This can apply to any type of goal, including…

Content Database

Search over 1,000 posts on topics across
business, finance, and capital markets.

Types of Infrastructure Jonathan Poland

Types of Infrastructure

In an industrial economy, the production of tangible goods and infrastructure plays a central role. This type of economy has…

Total Addressable Market Jonathan Poland

Total Addressable Market

A total addressable market (TAM) is the total potential revenue that a company can generate from its products or services…

Types of Efficiency Jonathan Poland

Types of Efficiency

Efficiency refers to the relationship between the amount of input used to produce something and the amount of output that…

Efficiency Jonathan Poland

Efficiency

Efficiency is a measure of how well resources are used to produce goods and services. It is typically calculated by…

Segregation of Duties Jonathan Poland

Segregation of Duties

Segregation of duties is a principle in internal control that aims to reduce the risk of fraud or errors by…

Brand Experience Jonathan Poland

Brand Experience

Brand experience refers to the overall perception and feelings that a consumer has while interacting with a brand. It includes…

Analysis Paralysis Jonathan Poland

Analysis Paralysis

Analysis paralysis, also known as “paralysis by analysis,” is a phenomenon that occurs when individuals or groups become so focused…

Human Capital Jonathan Poland

Human Capital

Human capital refers to the future productive potential of people, which is often difficult to estimate directly. Instead, it is…

Public Relations Jonathan Poland

Public Relations

Public relations (PR) refers to the practice of managing the spread of information between an organization and its stakeholders. The…