In the Restaurant

Carl RITCHIE: It was awful, but what more could I have done?

Margaret PEAKE: Let us imagine that you are preparing for the same negotiation, but this time you set a specific target price, to take account of the market, your competitors, your production costs, and your sales policy.

Carl RITCHIE: Let’s say, $102.

Margaret PEAKE: You tell yourself that it will not be easy, but that is your target outcome.

Carl RITCHIE: As usual, I also calculate a minimum price—for example, $100—and a maximum price that I could present at the start of the discussions—$110, for example.

Margaret PEAKE: Then let us imagine that I start the discussions with the same statement as before: “Mr. Ritchie, you cannot be serious. You quote me a fantasy figure of $110, when currently the market price for such products is $98. You have a choice: Either you make me an offer very close to $98 or we are wasting our time.”

Carl RITCHIE: Knowing that I’m aiming for $102 changes everything! It’s light years away from those awful negotiations!

Margaret PEAKE (amused): Really?

Carl RITCHIE: This time I don’t feel like I’ve been undermined. I know that my true target is to clinch a deal at $102. I have quoted $110, which is all part of the game. You have responded with $98—and that’s part of the game, too.

Margaret PEAKE: So what happens now?

Carl RITCHIE: I’ll gradually try to convince you to accept a price of $102 at the end of the negotiations.

Margaret PEAKE: You see, Carl, just by setting a precise target figure, this time you feel that you are in a much stronger position. You are fighting the buyer on equal terms.

Carl RITCHIE: In other words, you need to know what you want.

Margaret PEAKE: That is the crucial prerequisite for all successful negotiations.