Negotiation essentials may seem basic and cumbersome, but they can make a huge difference to the value of your deal. Prior to a negotiation, few things are as essential to nail down, as these three numbers:
1. Acceptable Minimum:
This is your walk-away point, and is often the same as your BATNA (best alternative to negotiated agreement). Be clear on what your acceptable minimum is, and make a specific commitment to the alternative course of action that you will take if you can’t achieve it. Beyond that, this number should play no part in your negotiation plan.
2. Target Value:
Base your target on what you think their acceptable minimum could be and plan your moves to close in with increasingly small steps. Your target may be their BATNA, or a number below or above it depending how you think they will value your proposal vs their best alternative. In the “sell” or “conditioning” phase prior to the actual trading, your primary goal is to understand and shift this number in your favour.
3. Opening Position:
This depends entirely on the style of negotiation you want to adopt and will often signal that style to the other party. An extreme, competitive opening gives lots of room to haggle and coerce, and by definition must be significantly beyond their acceptable minimum to give you the space to pull them all the way to that point. In contrast, a collaborative opening will be close to, or in line with your target as the negotiation will be less about moving, and more about combining different variables and creating new options to build the best deal for both parties.
BOTTOM LINE: An unclear minimum or an ill-prepared alternative will lead you to accept deals which damage your business; a poorly researched target is guaranteed to leave money on the table; and a misjudged opening is the fastest way to lose value, trust or both. The best deals only happen when the basics are in place.