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What is a Negotiation Letter?

Mary McMahon
Updated May 16, 2024
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A negotiation letter is a letter which is used in negotiations over a business matter such as the terms of a job offer, a salary, or a debt. Negotiation letters are used to neatly outline points of interest and concern so that the other party has a clear picture of what is being asked and offered. There are numerous templates online which people can use to draft basic negotiation letters, and they can also be drafted from scratch.

Some people are surprised to learn that negotiating over salary when offered a job can actually be advantageous, and that a negotiation letter is an excellent way to open negotiations with a potential employer. Some employers may offer less than they are willing to pay in the hopes that a potential employee will accept the lower salary. In these cases, politely requesting a higher salary in a negotiation letter can sometimes yield better pay. Negotiation letters can also be used when someone wants to work out details of a job offer, such as who will pay for relocation expenses, which benefits will be available, and so forth.

When negotiating over a job, a negotiation letter should clearly demonstrate the credentials of the letterwriter, showing the employer that engaging in negotiations is worth it, and providing standards for the company to compare against. For example, someone could state that she or he holds an MBA, and is therefore entitled to a better salary, which allows the company to go into its records to examine the compensation it is offering to current MBAs on the payroll.

Negotiation letters can also be used when someone is balancing several job offers. In this case, offers from multiple employers can be played off against each other with the goal of negotiating a good deal at a company someone is interested in working for. However, this tactic can sometimes backfire, and it pays to proceed with caution when engaging in this type of negotiation.

In debt negotiation, the goal of a negotiation letter is to get a creditor to accept less than the full amount of the debt. In this case, the letter clearly outlines the proposed method for paying the debt and how much is offered. For a settlement, it is usually best to be able to offer cash immediately, although some companies will work out a payment agreement if they feel that a debtor is likely to fulfill the terms of the agreement; showing that one has cash in savings, for example, can be an assurance that there are no plans to renege on the payment agreement before it has been completed.

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Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a SmartCapitalMind researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

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Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

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