Providing ranges in a negotiation

In a negotiation, it’s important to develop a view on the range of outcomes which your counterpart will accept. You can either do so indirectly, by building up a view based on a combination of placing yourself in your counterpart’s shoes and interpreting the signals that they’re sending you, or do so directly by asking them. This post is a short observation on the latter approach.

For the sake of simplicity, let’s assume a single variable negotiation where that variable is the deal value. When directly asked for the value at which they’re ready to do a deal, many people respond by giving a range.

The problem with this answer is as follows:

If you’re a buyer, the upper limit of your range indicates what you’re willing to pay and your counterpart can ignore the lower figures. It’s then up to them to try to get you to pay more.

Similarly, if you’re a seller, the lower limit of your stated range reveals what you’re willing to sell at. Your counterpart can then try to get you to sell at a lower figure.

As a result, if you’re asked for the terms at which you’re ready to do a deal, and you feel comfortable sharing this information, it’s better to simply share a specific figure.

If you’re not, you might want to ask the same question directly to your counterpart. Maybe they’ll respond with a range.


Originally published at Thoughts of a VC.