Practical Negotiating: Tools, Tactics & Techniques

Settlement Range

Every negotiation involves one or more issues. Successful negotiators plan a settlement range of acceptable outcomes for each issue. Less skillful negotiators will go in with just an opening position and any concession or movement from that position feels like a loss. Developing a settlement range is the best insurance against this feeling. The settlement range, generally displayed on a continuum, consists of three main points:

1. Desired settlement point (DSP) represents the point on the scale where you believe a “fair deal” can be executed. Ask yourself, “Realistically, where are we likely to settle?” You can look at indices such as market conditions, precedents, comparables, previous deals, and so on. Always set this point first in developing your settlement range.

2. Opening position (OP) is the point at or above your DSP that you believe meets two criteria: (1) high (but not excessive) and (2) defensible (i.e., can be argued by using objective criteria or independent sources of information).

3. Walk-away (WA) point represents the point at which the other party’s OP is unacceptable. Determining your WA is a critical part of your planning that prevents you from making a bad deal. Among successful negotiators, there is a saying, “No deal is better than a bad deal!”

In a negotiation for the purchase of a computer, monitor, and printer, the comparative settlement ranges for both the Buyer and Seller are shown in Figure 3.4.

Figure 3.4. Buyer-Seller: Settlement Ranges (Assume ...