The concept of “aiming high” is perhaps one of the most well-known and abused negotiating techniques. So many deals are undone by the opening gambit when it is unrealistically high, yet many jaw-dropping deals are completed (see Alex Rodriguez’s $250M+ contract and the $750B bailout of Wall Street) with a high opening offer. So what is the right way to aim high?

Aim Reasonably High

In the normal course of business (let’s leave major league baseball and Hollywood aside for now!), offers should be set within reason. Since almost every business has competition with similar products and services, an unrealistically high opening offer will merely push your prospect to explore other vendors and use your offer as the “ceiling” for future negotiations with others. Aiming too high will give you the reputation of being overpriced, which can lead to missed opportunities to bid on future projects and orders.

So how can you aim reasonably high? The primary goals of aiming high are to:

• Leave room for negotiations if necessary
• Set a nice high “anchor” for the negotiations
• Build value around your services with a premium price point

The trick is find that “sweet spot” where the offer meets these three criteria, yet is not so high that it scares the other side off from engaging in negotiations. Here are some tactics for establishing the reasonably high offer:

1. Use Precedents

One tried and true technique for aiming reasonably high is to employ precedents in support of your offer. By having examples of past deals that had similarities to the one you are currently negotiating, you can provide justification for the “reasonableness” of your offer. These do not have to be deals that you personally negotiated, but comparable deals that you uncovered during your preparation.

You can also use these precedents to highlight the differences between the current deal and past negotiations in the event that your opening offer is rejected quickly. This opens the door to creating options and alternatives that will allow you to adjust your pricing, terms and conditions without having to “concede”.

2. Use Wide Ranges When Asked for “Ballpark Figures”

When I am asked to negotiate in a competitive situation, one technique that I always consider is to start the negotiations with a nice wide range of pricing. For example, if someone is asks me for a “ballpark figure” on how much it would cost to plan a retreat for 100 people, I usually respond that “it depends on a lot of things, such as the amount of customized activities, the travel involved, prduction costs for materials and how long the retreat would be.” If they press me for a number, then I would tell them that it can be as little as $10,000 and as much as $50,000.” This range is wide enough so that it cannot “stick”. It is also useless as column fodder, since I reserved the right to adjust my “offer” based on the prospect’s answers to my questions.

When a range is too narrow, the other focuses on the end of the range that benefits their interests while you are likely focused in the end of the range that fits your own. This can quickly deteriorate into “positional bargaining” which almost always leaves one side feeling as if they “lost” the negotiation. Using a wide range gives negotiators the chance to ask more questions and explore highs and lows to to gauge the other side’s responses.

3. Do Not Use Disclaimers to “Soften the Blow”

In a competitive selling situation, many salespeople feel pressure to get the deal done no matter what the cost. So even in situations where a salesperson aims reaonably high, there is a real risk of “losing” the negotiation by adding a disclaimer to the offer, such as “But of course, everything is negotiable” or “We’ll work within your budget.”

One of my collegaues always asks his audience, “Does anyone know what it means when someone advertises an item at a price and adds “OBO” to the ad? What does OBO mean?” Of course, someone calls out “Or Best Offer!” My colleague’s punch line is that OBO actually stands for “You’re a fool if you pay me the price I’m advertising!” The “offer disclaimer” has the same effect. It robs your reasonably high offer of all credibility and now the negotiation will start downward from your offer.

We hope these proposing techniques help you to maximize your returns in your negotiations, and for more information on effective negotiating, selling and influencing, please visit www.shapironegotiations.com.