More Power To Your Negotiating Punch

Negotiating has a lot of persuading involved.  You present an offer and try to persuade the other party why that is a fair offer and a good one for both you and them.

Now, question:

"Is it easier to persuade an offer based on subjective whim or objective criteria?"

In case you're wondering what "subjective whim" and "objective criteria" are, let me bring an example.

Subjective Whim

You're planning to put your house for sale, and you couldn't care less about hiring a broker -- you're a "born negotiator."  You secretly know that you want $1,000,000 for your house, but you open with a ballpark figure: say, $1,200,000 (...just because you fancy that number).

You receive the first offer from a buyer, for $800,000.  Meeting with her, you start bargaining, or the "dance of concessions": you go down to $1,100,000, she goes up to $900,000, and little by little you two go down and up on your offers until you come to a middle point... $1,000,000.  This is the figure you wanted all along, so you happily close the deal.  You've won.

Objective Criteria

You're planning to put your house for sale, and you decide to engage a professional broker to come up with a reasonable asking price.  He looks into market price by checking the sales of similar houses in the area -- built around the same time, similar size, similar condition -- over the past five years and comes up with a recommended asking price of $1,200,000.

You receive the first offer from a buyer, for $800,000.  Meeting with her, you reason that the $1.2M price is grounded on hard facts and figures.  Further, by projecting past figures into the future, you show that the price of the house is bound to nearly double in 10 years' time and that it's a worthy investment.  You close the deal at or near your asking price, and no one feels cheated.  You've both won.

Losing Face

Given the two scenarios above, you may be thinking:

"But in both cases, your opening price is $1,200,000, and you eventually get the price you were really looking for."

On the outside, that's true.  But let's take a closer look.  Once your counterparty understands that your offer is based on subjective whim, you start losing legitimacy (and face) very fast.  "If $1,200,000 is just a wild guess, then my guess for $800,000 is just as good as yours."  Once you lose legitimacy, any further offer you bring is seen as just a random, "I want this, I want that..." kind of offer.  Also, once you finally arrive at a middle point ($1,000,000), both parties would be thinking: "could I have gotten more out of this deal if I had been more stubborn?"

Gaining Legitimacy

If instead your offer is based on hard facts and figures, or objective criteria, then you've already won by bringing legitimacy to your words.  "Look, this offer isn't just a random one that I fancy.  It's based on external criteria, independent of my own will, so that you and I can feel sure that the deal is a fair one and a good one for the both of us."

Essentially, you're outsourcing the legitimacy and persuasiveness of your offer to an outside source: market price, industry practice, professional opinion, independent research, etc.  By agreeing with your offer, the counterparty isn't agreeing with you personally.  She's agreeing with those outside, objective factors, which also makes it that much easier for her to present ("sell") the agreement to her own constituents, if any.

Criteria > Whim

It seems like an easy choice: when you have the chance, you should come up with hard grounds to make your offer legitimate.  However, many negotiators fail to do so.  Why?

Simply put: supporting your offer with independent factors requires systemic preparation and investing time and effort.  Sometimes, people are too lazy for this and instead succumb to the temptation of bargaining, where your only preparation involves coming up with a secret, desired number and a higher, whimsical opening offer.

Don't be lazy.  Prepare by doing your homework and picking the right objective critera.  You'll be doing both yourself and the other party a favor by not only removing randomness and subjectivity from the negotiation process, but also strengthening the relationship and the feeling of collaboration between you too...

...and adding more power to your negotiating punch as you do so.

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Stepan Khzrtian is co-founder and Managing Partner of LegalLab Law Boutique (www.legallab.co) and co-founder of the Center for Excellence in Negotiation: Yerevan (www.cen.am). For nearly 10 years, he has been engaged in training and consulting on negotiation, working with clients to successfully close deals with Fortune 500 companies and empowering officials and officers to best serve constituencies. 

He writes on law, negotiation, and strategy.