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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).

Getting Your Wish in Your Next Negotiation

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Getting Your Wish in Negotiations

Who doesn’t like getting their Wish?  Most of us dream of a life where all our wishes are fulfilled.  But did you know that you might be sabotaging your own success in negotiations if you don’t spend time on this fundamental step.  So what is a Wish? Well the Wish is just one of five interactive areas that make up what we call the Range in negotiations.  This article will focus on the value of being clear about the Wish, and how it contributes to creating and staying with an effective range in your negotiations

The Wish is powerful as it helps you uncover the value to you of the entity which is under negotiation.  The Wish is your dream goal.  This is where you can let your dreams soar and where you can allow your hopes to expand broadly.  In this stage of negotiations, you don’t want to restrict yourself to what’s possible or realistic.  You truly can attach any value you want to your entity – whether it’s a product, service or even your family cottage.  It’s important to allow your imagination to go wild as no one is likely to value you and your product as highly as you do.  It can even be helpful to enlist the ideas of a colleague known for their brainstorming skills to help out in this important phase of creating the Wish.

The Power of Your WISH:

In negotiations, the range should have both a top and bottom to it. Many negotiators on either side of the sale do themselves a disservice by starting the negotiation with a figure that is too low. For example, imagine you wanted to sell your beautiful family cottage.  You and only you know the joy that it has brought to your family, and the possibilities it can offer to a buyer.  Now, imagine that you have already established a range of asking $700,000 (with a bottom line of $670,000) for the family cottage.  What you haven’t created yet is your Wish.

The Wish helps you to think creatively during the preparation for the negotiation.  Interestingly, the Wish and the related figure is never revealed to the other party; it is set to guide you and your negotiations. So you must ask yourself, in the best case scenario, what would you like to get for your cherished family cottage?  If your dream of dreams is to get $750,000 for the cottage then that’s your Wish.  Even though it may feel unrealistic you are now thinking bigger and it will influence you throughout the negotiation process. Now that you have established your wish can now start your range at $720,000 instead of $670,000. Think about it; you will never get $750,000 if you start at $670,000. By leveraging the power of the Wish you can create more flexibility in each negotiation, allowing for give and take along the way.

Many negotiators focus only on the monetary aspect when thinking about creating their range. Use this same principle in all types of negotiations where concessions will be traded. For example, you might apply this principle when you are negotiating budget dollars, service hours, delivery times, or commissions.  Be creative in your negotiations! And, always think about how to focus on creating mutually satisfying outcomes that are truly win-win for all parties.  By doing so, you will find that those you negotiate will want to work with you again on finding outcomes that work for everyone.