Tag Archives: negotiating

How to Expand Your Negotiations with a Bottom Line

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Now that you’ve considered your Wish and your Aspiration for your negotiations, you are ready to consider your Bottom Line.  What is a Bottom Line and how should you apply it to your negotiation?  Remember that we have already discussed that an effective negotiation range is made up of 5 parts; part 3 is the identification of the Bottom Line.

 

Understanding the Bottom Line

What is the Bottom Line?  It is known as the total value of the negotiation; in other words it involves all elements under negotiation.  While it might involve a price, it could also involve elements such as warranties, service provision or timelines.  Your bottom line is your absolute, final offer on each issue under negotiation. It’s the point at which you need to stop the negotiation and leave.  We recommend that you establish your bottom line prior to beginning to negotiate so that you resist agreeing to a deal that doesn’t work for you.

 

The Power of the Bottom Line
The Bottom Line in negotiations is the least you will accept as a seller or the most you will pay as a buyer. Many professionals report that they have gone past their bottom line, mainly by not having established it fully in advance.  This can lead to feelings of regret or even buyers remorse.  So to avoid feeling dissatisfied with the outcomes, do your prep work fully to know what your limits are prior to any negotiation. And if you have a limit, make sure it is your limit.

 

Downsides of a Bottom Line

Are there any downsides to establishing a bottom line?  Some say that having a bottom line might be too black and white, discouraging creativity as new data comes to the table.  So it’s helpful to keep your creativity flowing as the negotiation unfolds.  Bottom lines can also become rigid so it’s important to get a reality check from a colleague to avoid setting your walk away point too high. In addition, we may find that our bottom lines are unduly influenced by emotion.  Remember the example of selling the family cottage?  When we are selling emotionally laden items like homes, cottages or our services it’s easy to overestimate their value – leading to the creation of an unrealistic bottom line.

 

How to Learn More
Want to learn more about negotiation skills and the key elements of range? Stay tuned for parts 4 and 5 of this series on creating range in your next negotiation. All five of these elements work together in successful negotiations.

 

Create Great Aspirations in Your Next Negotiation

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During a skillful negotiation, there are five interactive areas that make up the range: the Wish, the Aspiration, the Bottom Line, the BATNA, and the WATNA.  We wrote about the power of the Wish in our last blog and how it’s important to brainstorm a powerful wish as part of your preparation phase.  But what about setting your Aspiration? What does it mean and how does it apply to your negotiation?

 

Remember the Power of the WISH

As we wrote in an earlier blog, a range has a top and bottom to it. Many people on either side of the negotiation process start with a number that is too low.  Remember how we set a Wish when selling the family cottage – realizing that in our dream of dreams we would love to get $750,000 for its sale?  We concluded that the Wish helped prevent us from starting too low in our negotiations; and how we would never get $750,000 if we started at $670,000.

 

Leverage the Power of the Aspiration

When you brainstorm a big Wish, then your starting point will be bigger. In negotiations, the amount of money (and other concessions) left on the table because we start with a low number (for sales) or too high (buying) is incalculable. So dream big and create that Wish.

Next you need an Aspiration Point. The Aspiration Point represents the monetary equivalent of your ideal set of terms.  Setting a specific target point (rather than a range for your Aspiration) is important. For example if you tell someone you’ll take between $5 and $20 for an old toaster at a garage sale, they will probably offer you $5.00 – the bottom of the range – if you’re lucky.  So selecting a target number, rather than a range is critical here.  You might wonder how to go about determining your Aspiration. We recommend a four step process:

  1. Identify Your Goals
  2. Research Data & Comps
  3. Brainstorm Options
  4. Plan Your Moves

In negotiations, the Aspiration needs to be realistic.  Aim for the “biggest realistic” number that will fly without offending the other party. In the case of selling the family cottage, the seller’s Aspiration is $720,000.  They would really like to get $720,000 for the cottage and they go into the negotiations with that figure clearly in mind.  By preparing well in advance, following the four step process, and setting a value for your Aspiration you are well set up for a successful negotiation.

As you keep reading this blog you will find more articles on all five elements that help you make up your Range.  Use all of the negotiation tools and you will be much more successful in your next negotiation (while ensuring other parties are satisfied also).