Do you often feel your negotiations leave value on the table? If so, you’re not alone.
Many managers frequently underestimate the range of reason and throttle their high aspirations to avoid the fear of being perceived as too unreasonable or ostentatious. These feelings can constrain your goals, impose limits on your perceived value, and ultimately take you further away from your best-case scenario.
Setting and meeting high expectations in real-time dynamic negotiations might seem tricky, but there’s a science to it. Skilled negotiators can nudge negotiations towards their target price by paving the way for a more efficient and straightforward discussion.
The Value of High Aspirations
Simply put, those who ask will typically get more. Those who don’t, don’t.
- Positive anchoring: Communicating a higher value range for your product or service can positively influence the other party’s perception of your position’s value.
- Clarity: A negotiation anchored by high aspirations creates more explicit intentions for both parties.
- Increased flexibility: By testing all the relevant boundaries of a deal, a skilled negotiator is able to have a direct understanding of what sort of flexibility they can offer on other terms such as volume, delivery, schedules, communication, payment terms, etc. Low aspirations shrink your range of reason leaving you with less negotiable territory to work with, and ultimately, a less favorable settlement.
The Range of Reason
The range of reason is the range of price and value that is reasonably entertained by the buyer and seller. Something outside this range of reason is where the other party just cannot see the possibility of the deal getting made.
For example, if the general market rate for 1,000 widgets is around $600 to $1,200, offering $10,000 (as a seller) or $0.50 (as a buyer) is well outside the range of reason. Offering $1,500 (as a seller) or $400 (as a buyer), however, might be outside the general market assumption but not necessarily outside the range of reason, especially if this number can be supported by flexibility in other aspects such as payment terms (net 30 instead of net 90), commitments, and delivery.
Ultimately, setting high aspirations help you make the otherwise incredibly vague range of reason more tangible. Skilled negotiators are able to set parameters on the range of reason and streamline the discussion around unambiguous and focused needs.
The Three Targets
When it comes to setting high aspirations, all you need to know are three targets:
- Asking price: The opening offer expressed to the other party that anchors the rest of the negotiation. If you don’t start near your high expectations number within the range of reason, you’ll ultimately have less maneuverability later.
- Target price: The price and terms you want.
- Walkaway price: The price where you cannot reasonably do the deal and must respectfully decline.
Remember, if you have targets, it’s likely the other negotiator does as well. Setting these targets prior to the discussion helps you gauge your own range of reason, and the negotiation itself serves as a calibration between your goals and those of the other party.
To better understand these targets, ask yourself the following questions:
- What are my company’s needs?
- What are all the different categories in which I want something from the other party?
- What are my targets in each of these categories?
- What are my walkaways?
- What should my opening demands be?
- How can I test the other party’s perception of what is reasonable without hurting the relationship or breaking the deal?
Don’t Fear Conflict
In order to feel completely comfortable in a real negotiation in a competitive environment, you need to understand the dynamics in play. Both negotiators are looking to fulfill their own self-interest, and sometimes a difference in target prices causes friction.
Skilled negotiators understand the competitive dimension of negotiation is not about conflict; it’s about protecting your interests and gaining clarity.
Once your high aspirations are communicated, they can always be lowered. However, raising them in a negotiation once they are known is very difficult. The best way to verbalize your aspirations is to make demands that are precise about what you want, need, or expect.
- Specific, clear, and to the point. Demands aren’t requests. They are incredibly precise instruments to uncover hard issues and set boundaries, which help make for a smoother negotiation.
- Be assertive, not aggressive. Aggressive negotiations often reflect a judgment, which can be easily refuted by your opponent. Skilled negotiators know better than to put themselves in corners where they must justify or defend themselves. That’s why it’s best to stick to demands where no defense or justification is required.
- Begin with “I.” The best way to state your demands is with “I” statements. These help the other negotiator better understand and frame the discussion in their head, and either accept or counteroffer your terms. For example:
- “I want a commitment from you for a minimum of one year.”
- “I need more payment flexibility on your part.”
- “I need a higher price than that.”
- “I want you to reduce your delivery time by 30%.”
The ability to set and negotiate high aspirations is one of the core skills that separate a skilled negotiator from an amateur.
By applying the above knowledge to your negotiations, you’ll be able to reach a more favorable target price, form a stronger long-term partnership, and ultimately establish a stronger mental framework for future negotiations.
Our blog series, RED BEAR’s 6 Principles of Negotiation, covers the traits of high-performing negotiators. These skills and behaviors have been used by more than 25% of Fortune 100 companies for over 3 decades to significantly improve business results. Download our Negotiating Profitable Agreements white paper to learn more about RED BEAR’s guiding principles. Or, if you are looking to transform your team into world-class negotiators contact us today to get started.