strategy

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.

Sticky Prices
Sticky Prices Jonathan Poland

Sticky prices are a common phenomenon in many markets, and they can have a significant impact on the overall economy. These prices are often resistant to changes in supply and demand, and they can persist for long periods of time even in the face of economic forces that would normally push prices in the opposite direction.

One possible reason for sticky prices is the existence of contracts or agreements that lock in prices for a certain period of time. For example, companies in a particular industry may agree to maintain their prices within a certain range in order to avoid competition on price. This can lead to prices that are “sticky” because they remain unchanged even in the face of changes in supply or demand.

Another factor that can contribute to sticky prices is the existence of psychological barriers that prevent prices from changing. For example, consumers may be resistant to paying higher prices for a particular product or service, and this can make it difficult for companies to increase their prices even when it is justified by changes in the market.

Sticky prices can be a source of market inefficiency and can lead to suboptimal allocation of resources. However, they can also provide stability and predictability in the economy, which can be beneficial for businesses and consumers.

Here are some examples of sticky prices:

  • The prices of certain products, such as gasoline or food items, may remain relatively stable despite fluctuations in supply and demand. This is often because consumers have a strong preference for these products and are willing to pay a certain price, regardless of the market conditions.
  • The salaries of certain workers, such as teachers or government employees, may remain unchanged for long periods of time even if the demand for their skills increases. This can be due to the existence of collective bargaining agreements or other factors that prevent wages from changing.
  • The prices of certain assets, such as real estate or stocks, may remain relatively stable even in the face of economic shocks. This can be because investors are hesitant to sell these assets at a lower price, and they are willing to hold onto them even if it means accepting lower returns.

Upselling
Upselling Jonathan Poland

Upselling is a sales technique that involves encouraging customers to purchase higher-priced, add-ons, or upgraded versions of products or services that they are already interested in. It is a common tactic used by salespeople, particularly in industries such as retail, hospitality, and travel.

Upselling can be effective for several reasons. First, it allows businesses to increase their revenue by selling more expensive or upgraded products or services. Second, it can improve customer satisfaction by offering customers additional value or features that they might not have considered otherwise. Third, it can help businesses differentiate their products or services from those of their competitors.

However, upselling can also have drawbacks. If done improperly, it can be perceived as pushy or manipulative, which can damage customer relationships and hurt the business’s reputation. Additionally, upselling can be risky if it involves selling products or services that customers do not need or want. In these cases, customers may be dissatisfied with their purchase and may be less likely to return to the business in the future.

Overall, upselling is a common sales technique that can be effective for increasing revenue and improving customer satisfaction, but it should be used carefully to avoid damaging customer relationships.

Premium Versions
Offering premium versions of products such as flower arrangements that are sold at several levels of quality.

Options
Optional features such as a catalog of options for a car.

Customization
Allowing a customer to customize the design or look of a product such as color.

Services
Services such as support or professional services. For example, software may be sold with consulting services. This allows the vendor to establish a close relationship with the customer that may lead to extensive future business.

Risk
Risk related products such as an extended warranted or insurance.

Financing
Offers to finance a purchase with a credit product.

Complementary Items
Cross-selling items that complement the product. For example, offering wifi access plans with mobile devices.

Popular Items
Offering popular items that aren’t necessarily complementary to the product. For example, an ecommerce site may suggest a best selling book as an add-on for a purchase of strawberry jam.

Priority Items
In many cases, upselling is focused on selling items that are a strategic priority for the seller. For example, a store credit card may be difficult to upsell but may be the priority as it allows a firm to establish a long term relationship with the customer.

Price Optimization
Price Optimization Jonathan Poland

Price optimization is the process of using data and analytical methods to determine the optimal price for a product or service based on business goals and market conditions. It involves collecting data on factors such as market demand, competition, customer behavior, and cost, and using this data to develop pricing structures that maximize revenue, profit, or other objectives.

Price optimization is different from other pricing strategies, such as sticky pricing or premium pricing, because it relies on data and analysis rather than intuition or long-term strategy. By using formal methods to discover optimal pricing structures, businesses can more accurately predict the effects of changes in price on revenue, profit, and other metrics.

Price optimization is an important tool for businesses that want to maximize revenue, profit, or other objectives. By using data and analytical methods to determine the optimal price for their products or services, businesses can gain a competitive advantage and drive growth. The following are common types of price optimization.

Experiments
Experimenting with a variety of prices and price structures using techniques such as a/b testing. This is particularly common in industries such as online retail where it is easy to change prices on the fly.

Analytics
Using analytics tools to find patterns in historical data. For example, a fashion retailer might discover that their data indicates men in their twenties are price incentive to shoes under $100 but demand quickly drops after this price point.

Economics
Advanced entities such as nations or banks may model the prices of things such as commodities based on economic models that consider supply and demand curves and other factors.

Yield Management
Yield management is the practice of optimizing price at the level of an individual transaction. For example, airlines may attempt to optimize price for every seat in their inventory.

Pricing Strategy
Pricing Strategy Jonathan Poland

Pricing strategy is the process of determining the right price for a product or service based on market conditions, business goals, and the value perceived by customers. It involves considering a range of factors, such as cost, competition, market demand, and the value proposition of the product or service.

A pricing strategy is an important part of a business’s overall marketing plan, as it can have a significant impact on revenue, market share, and customer perception. The right pricing strategy can help a business achieve a variety of objectives, such as:

  • Generating revenue: A pricing strategy can be used to maximize revenue by setting prices at a level that maximizes profit margins while still being attractive to customers.
  • Penetrating the market: A pricing strategy can be used to gain market share by setting prices at a level that is competitive and attractive to customers.
  • Positioning the product: A pricing strategy can be used to position a product or service in a specific market segment by setting prices that reflect the value proposition and target customer demographic.
  • Building the brand: A pricing strategy can be used to build brand reputation and status by setting prices that reflect the quality and value of the product or service.
  • Managing inventory: A pricing strategy can be used to manage inventory levels by setting prices that encourage customers to purchase products before they expire or go out of stock.
  • Winning competitive battles: A pricing strategy can be used to gain an advantage over competitors by setting prices that are more attractive to customers.

Overall, pricing strategy is a crucial part of a business’s operations, as it can have a significant impact on revenue, market share, and customer perception. By considering a range of factors and aligning pricing with business goals, a business can develop a pricing strategy that maximizes value and drives growth. The following are common pricing strategies.

Algorithmic Pricing
Channel Pricing
Decoy Effect
Dynamic Pricing
Everyday Low Price
High-Low Pricing
Loss Leader
Market Price
Penetration Pricing
Predatory Pricing
Premium Pricing
Price Discrimination
Price Leadership
Price Points
Price Signal
Price Skimming
Price Umbrella
Price War
Pricing Objectives
Subscription Model
Value Pricing
Variable Pricing

Bargaining Power
Bargaining Power Jonathan Poland

Bargaining power is a concept in negotiation theory that refers to the relative ability of parties to influence each other in a negotiation. It is often measured by how much it would cost each party to fail to reach an agreement, or how much they stand to gain or lose from the outcome of the negotiation.

For example, in a job negotiation, a company may have a high bargaining power if it is hiring for a critical role and the candidate has rare skills that are in high demand. The company may be willing to offer a higher salary or better benefits to secure the candidate’s services. On the other hand, the candidate may have a low bargaining power if they are desperate for a job and have few other options. In this case, the candidate may be willing to accept a lower salary or worse benefits.

Overall, bargaining power is an important factor in negotiation, as it can determine the outcome of the negotiation and the relative satisfaction of the parties involved. People are typically stronger negotiators when they have little to lose and a lot to gain from the negotiation.

Here are a few examples of how bargaining power can affect negotiation outcomes:

  • In a real estate negotiation, the seller may have a high bargaining power if they are in a seller’s market and there are many interested buyers. In this case, the seller may be able to negotiate a higher price for their property. On the other hand, the buyer may have a low bargaining power if they are in a buyer’s market and there are few available properties. In this case, the buyer may be willing to accept a lower price to secure the property.
  • In a salary negotiation, the employee may have a high bargaining power if they have rare skills or expertise that are in high demand. In this case, the employee may be able to negotiate a higher salary or better benefits. On the other hand, the employer may have a low bargaining power if they are unable to find qualified candidates for the position. In this case, the employer may be willing to offer a higher salary or better benefits to secure the employee’s services.
  • In a contract negotiation, the supplier may have a high bargaining power if they are the only source of a crucial product or service. In this case, the supplier may be able to negotiate favorable terms and conditions in the contract. On the other hand, the buyer may have a low bargaining power if they are in urgent need of the product or service and have few alternatives. In this case, the buyer may be willing to accept less favorable terms and conditions to secure the supplier’s services.

These are just a few examples of how bargaining power can affect negotiation outcomes. The specific effect of bargaining power will depend on the context and the goals of the parties involved.

Decoy Effect
Decoy Effect Jonathan Poland

The decoy effect is a cognitive bias that occurs when people make choices based on the relative attractiveness of options. When faced with a list of options, the presence of an obviously inferior option, known as a “decoy,” can influence people’s decisions. For example, a marketer may include a decoy option in a price list to make the other options appear more appealing. This can lead to a higher conversion rate, as customers compare the options and choose the better deal, feeling more confident about their decision.

The decoy effect is a well-known phenomenon in psychology and marketing, and it has been studied extensively. Research has shown that the decoy effect can be highly effective in influencing people’s choices, even when they are aware of it. This is because the human brain is wired to make decisions based on relative comparisons, rather than absolute values.

Overall, the decoy effect is a powerful tool that can be used to influence people’s decisions. By including a decoy option in a list of choices, marketers can make the other options appear more attractive and increase the likelihood of a sale.

Here are a few examples of the decoy effect in action:

  • A restaurant offers three meal options: a budget-friendly meal, a premium meal, and a decoy meal that is more expensive than the premium meal but offers fewer options and less value. Customers are more likely to choose the premium meal because it appears like a better deal compared to the decoy meal.
  • A clothing store offers three shirt options: a basic shirt, a premium shirt, and a decoy shirt that is more expensive than the premium shirt but offers fewer features and lower quality. Customers are more likely to choose the premium shirt because it appears like a better deal compared to the decoy shirt.
  • A travel website offers three vacation packages: a budget-friendly package, a premium package, and a decoy package that is more expensive than the premium package but offers fewer amenities and less convenience. Customers are more likely to choose the premium package because it appears like a better deal compared to the decoy package.

These are just a few examples of how the decoy effect can be used to influence people’s choices. The specific use of the decoy effect will depend on the context and the goals of the person using it.

Active Silence
Active Silence Jonathan Poland

Active silence is the intentional and strategic use of silence in communication. It involves the ability to listen attentively and to pause speech for dramatic effect. In interpersonal interactions, active silence can be used as a social tactic, such as in negotiations when an uncomfortable silence is used to put pressure on the other party to make an offer first.

However, it is important to note that silence can be uncomfortable for many people, especially in social settings. Among social animals, such as humans, silence is often a sign of danger, as the group will pause and listen for potential threats. This instinctual response to silence may explain why it can have such a potent effect in social situations.

Overall, active silence is a powerful tool in communication that can be used to enhance listening skills, create dramatic pauses, and exert social influence. It is a skill that can be learned and developed through practice and awareness.

Here are a few examples of active silence in different contexts:

  • In a negotiation, a person might use active silence as a tactic to put pressure on the other party to make an offer first.
  • In a conversation, a person might use active silence to allow the other person to continue talking and reveal more information.
  • In a group setting, a person might use active silence to signal that they are listening attentively to what others are saying.
  • In a performance, such as a speech or a play, a person might use active silence for dramatic effect, to emphasize a point or create anticipation.

These are just a few examples of how active silence can be used in different situations. The specific use of active silence will depend on the context and the goals of the person using it.

Curiosity Drive
Curiosity Drive Jonathan Poland

Curiosity drive, or the desire to obtain new information, is a fundamental human motivation that drives learning and exploration. In business, curiosity can be a powerful tool for driving innovation and growth. Some potential applications of curiosity in business include:

  • Encouraging employees to seek out new knowledge and learn new skills.
  • Fostering a culture of experimentation and risk-taking.
  • Researching new markets and customer segments to identify potential opportunities for growth.
  • Developing new products or services that meet the evolving needs of customers.
  • Collaborating with other organizations to share knowledge and expertise.
  • Investing in technology and tools that support ongoing learning and development.
  • Seeking out feedback and insights from customers, employees, and other stakeholders to inform decision-making.

Overall, embracing curiosity and the drive to seek out new information can help businesses stay ahead of the curve and adapt to changing market conditions.

Marketing & Sales
In-depth product information tends to improve sales as it reduces the ambiguity surrounding a product. In some cases, customers will eliminate a product from an initial shortlist simply because they can’t easily find an obscure detail that perks their interest.

Organizational Culture
Generally speaking, employees are happier when they aren’t kept in the dark. Information that is lacking may spread as rumors and conjecture.

Change Management
Information such as the pressing competitive forces that drive change reduces resistance to change.

Customer Service
When a flight is delayed, customers appreciate knowing the reason. When a customer request is denied, customers may want to know why.

User Interfaces
Minimalist user interfaces that serve up tiny chunks of information or hide details deep in a hierarchy may be unsatisfying to those driven by curiosity.

Competition Jonathan Poland

Competition

Competition is a term that refers to the act of engaging in a contest with others in order to determine…

Recursive Self-improvement Jonathan Poland

Recursive Self-improvement

Recursive self-improvement refers to software that is able to write its own code and improve itself in a repeated cycle…

Prototyping Jonathan Poland

Prototyping

A prototype is a preliminary version of something that is used to test and refine an idea, design, process, technology,…

What is Supply? Jonathan Poland

What is Supply?

Supply refers to the amount of a product or service that is available for purchase at a given price. In…

Knowledge Value Jonathan Poland

Knowledge Value

Knowledge value is the value that is derived from knowledge, skills, and information. It can be a measure of the…

Business Model Examples Jonathan Poland

Business Model Examples

A business model is a framework for capturing value. The term is most often applied to organizations who seek to…

Overhead Costs Jonathan Poland

Overhead Costs

Overhead costs, also known as “indirect costs” or “indirect expenses,” are the costs that a company incurs in order to…

Time To Value Jonathan Poland

Time To Value

Overview Time to Value (TTV) is a business concept that refers to the period it takes for a customer to…

Corrective Action Plan Jonathan Poland

Corrective Action Plan

A corrective action plan is a process designed to identify and address problems or issues within an organization. It involves…

Jonathan Poland © 2026

Enter your
text here

Learn More

Taxes Jonathan Poland

Taxes

Taxes are mandatory financial contributions that are levied by a government on individuals, businesses, and other organizations. The money collected…

Competitive Advantage Jonathan Poland

Competitive Advantage

Competitive advantage refers to the unique advantages that a firm possesses over its competitors. In a highly competitive industry, firms…

Mass Marketing Jonathan Poland

Mass Marketing

Mass marketing, also known as mass media marketing, refers to a marketing strategy that involves using a single marketing message…

Innovation Process Jonathan Poland

Innovation Process

Innovation refers to the process of making significant improvements by taking bold steps forward, rather than making incremental progress. This…

Agile Change Management Jonathan Poland

Agile Change Management

Agile change management is the practice of leading continuous delivery processes in which changes are shipped within weeks. This approach…

Concept Selling Jonathan Poland

Concept Selling

Concept selling is a approach to marketing and sales that involves framing unique selling propositions as a story that customers…

What is Risk Communication? Jonathan Poland

What is Risk Communication?

Risk communication involves informing people about potential hazards and the steps that can be taken to prevent or mitigate those…

Customer Experience 101 Jonathan Poland

Customer Experience 101

Customer experience (CX) refers to the overall experience that a customer has with a company or brand, from their initial…

Capital Jonathan Poland

Capital

Capital is an asset that is expected to produce future economic value. It is a productive resource that is used…