Negotiation preparation is the work done before the table: separating positions from interests on both sides, defining the best alternative to a negotiated agreement, the limit (floor or ceiling) and the target, estimating the range of possible agreement and listing items of exchange, with an opening and concessions plan. A preparation sheet cuts improvisation, guards against deals worse than your alternative and makes room to create value.
How to use
- Describe what is being negotiated, your role in the value (receive or pay) and the unit for the numbers.
- List the parties with their roles (no names) and your mandate.
- Separate positions and interests on your side and the other side's, and write down each side's alternative without an agreement.
- Enter your limit, target, the other side's estimated limit and your opening, and list the items of exchange with their value to each side.
- Review the warnings and the checklist, adjust the concessions plan and export the sheet.
What each field asks for
| Field | What to enter |
|---|---|
| What is being negotiated | The subject of the negotiation, in one sentence. |
| Our role in the value | Decides whether your limit is a floor or a ceiling. |
| Unit for the numbers | Currency, time, quantity: the same for every number. |
| Parties and roles | One side or team per line, with each one's role (no personal names). |
| Mandate | How far you can go without consulting anyone, and what needs approval. |
| Our position | What we will ask for at the table. |
| Our interests | Why we want it. One per line. |
| Our best alternative to a negotiated agreement | What we will do if there is no agreement. It is what sets your limit. |
| The other side's position | What they are likely to ask for. |
| The other side's interests | Why they want it, from what you know or assume. |
| The other side's likely alternative | What they would do without an agreement with you. |
| Our limit (floor or ceiling) | The worst value we still accept, better than our alternative. |
| Our target | The value we realistically aim for. |
| The other side's estimated limit | How far you think they will go. |
| Item | E.g. 24-month contract |
| Value to us | |
| Value to them | |
| Our opening | The first number we will put on the table. |
| Concessions plan | In order, each with its return: "if you..., we...". |
| Questions to ask | To uncover interests, limits and who decides. |
| Risks | What could go wrong at or away from the table. |
Example
A software company is renewing an annual licence with a haulage firm. Its floor is 400 thousand per year, its target 460 thousand and the client's estimated ceiling 450 thousand: the range of possible agreement runs from 400 to 450 thousand (a width of 50 thousand), and the target sits above it. The opening of 490 thousand lies outside the range, and the tool warns that it needs an objective criterion. Of the five items of exchange, the tracking integration and extended support are worth more to the client and go in as offers; the 24-month contract, advance payment and case study are to ask for.
When to use
- Before renewing a contract with a client or supplier.
- Before negotiating time, scope or budget with leadership or another team.
- Before a conversation about a job offer or a pay rise.
- To align a negotiating team on limits, mandate and roles.
Frequently asked questions
What is the best alternative to a negotiated agreement?
It is what you will do if the negotiation does not close, often known by the acronym BATNA. It sets your power at the table and your limit: no deal worse than it is worth taking. Without a clear alternative, the risk is accepting anything.
What is the difference between a position and an interest?
A position is what is asked for ("an increase to 480"); an interest is the reason ("predictable revenue"). Interests open up solutions that positions hide, such as trading contract length for price.
What is the range of possible agreement?
It is the interval between your limit and the other side's limit, when they overlap. The tool works out this range from your estimates. If the limits do not overlap, there is no deal on price alone: widen the conversation or use your alternative.
How should I use items of exchange?
Offer what is worth little to you and a lot to the other side, and ask for what is worth a lot to you and little to them. Every concession asks for a stated return, in the form "if you..., we...".
Should the opening lie outside the range of agreement?
Opening beyond the range anchors the conversation in your favour, but it only works with an objective criterion behind the number, such as market price or cost. Without one, the other side may read the opening as a lack of seriousness and walk away.
What is a mandate?
It is how far you can go without consulting anyone, and what needs approval. Agreeing the mandate beforehand stops you promising what you cannot deliver and gives you a legitimate reason to pause when an offer goes past the limit.