Bargaining Strategies When You’re Dealing With A Fixed Pie

To claim your fair share, you have to first take the time to prepare properly
To claim your fair share, you have to first take the time to prepare properly
Image Credit: Photo by Martin Reisch on Unsplash

As negotiators, we understand that when we enter into a negotiation we need to use our negotiation styles and negotiating techniques to both collaborate and compete with the other side of the table. It is our job to increase the pie of value for all parties, often by identifying differences across issues and making tradeoffs. At the same time, what we are trying to do it to claim as much of that larger pie for ourselves. So what’s the best way to make this happen?

How To Get The Biggest Part Of The Pie

Negotiators need to divide up the resource or group of resources that parties have identified. In many negotiations, that means haggling over issues such as price. The most effective bargaining strategies do not require you to sacrifice your integrity or resort to dirty tricks. Rather, they require you to set aside plenty of time before your negotiation to engage in clear-eyed preparation.

So the big question is what bargaining strategies are the most effective? The best predictor of “winning” outcomes in this distributive negotiation—claiming the lion’s share of the bargaining range—were a negotiators’ ability to create estimates of the other side’s bottom line. The more accurately a negotiator can estimate the other side’s bottom line, the more money that negotiator can successfully claim.

Negotiation studies have been performed that identified other important factors that may improve settlement outcomes in the real world, including setting high aspirations (or “targets”), making an aggressive first offer, and being willing to go to court if necessary. However, knowing your other side was one of the most important.

Strategies For Maximizing What You Get From A Negotiation

Most negotiators understand the value of evaluating their own bottom line—the least amount they would accept before walking away from the bargaining table. But we often overlook the importance of estimating the other side’s bottom line. To do so, take the time to research the other party’s bargaining strength and interests, which may include examining the outcomes of their past negotiations and their likely best alternative to a negotiated agreement (BATNA). Once at the table, ask lots of questions to determine their interests and constraints as well.

Another important part of your negotiation preparation is to set an ambitious yet realistic aspiration level or goal. That doesn’t mean making outrageous demands; rather, prepare arguments that will make your ambitious aspirations seem reasonable.

The negotiator who makes the opening offer in a price negotiation typically gets the better deal, negotiation research shows. Why? Because of the first figure named in a negotiation “anchors” the discussion that follows. If you are well informed about the value of the things that you’re negotiating, be prepared to drop an ambitious first anchor.

When you have a strong BATNA, you will be in a good position to reject a mediocre agreement. As a result, a strong BATNA is typically your best source of power in a negotiation. After identifying your BATNA, you should take steps to improve it, when possible, by conducting negotiations on multiple fronts.

What All Of This Means For You

In the end, when it comes to effective bargaining strategies, the difference between creating more value or trying to get more of what is available is not great. Both aspects of principled negotiation require you to engage in significant reflection and research before you sit down at the table. The more you know about the issues at stake, the other side’s interests and constraints, and your own preferences and limitations, the better positioned you will be to successfully deploy your bargaining strategies and claim value in your next negotiation.

– Dr. Jim Anderson Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You: What do you think are the best ways to capture the maximum amount of what is being negotiated?

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What We’ll Be Talking About Next Time

Every negotiation that we are involved in has two different components to it. The first is what is called “value creation”. This is, as its name implies, the process by which we attempt to put more issues on the table – we try to make the negotiation become bigger. The other part is called “value claiming” this is when we are involved in a single-issue negotiation and we want to get as much of the pre-existing value on the negotiating table for yourself—and away from the other side. When it comes time to claim value during a negotiation, are you going to know how to do it?