Many negotiators prefer to negotiate with an initial offer of a single figure, fearing that offering a range may result in a figure too low or too high for their client. But new research from the Columbia Business School indicates that some range offers can have benefits.
Researchers performed a series of studies trying to find out people react to negotiators making a variety of different offers. They compared single number offers (like a 15% discount) with three different kinds of range offers.
- Bolstering Range Offers: They start with a point and stretch it, a 15-20% discount instead of just 15%. You might think this wouldn’t work because the opposing party would only counter-offer a 15% discount but the research indicates these kinds of offers often resulted in better settlements for the offer-makers without harming their relationship with the other party
- Bracketing Range Offers: These offers span the particular point, asking for 13-17% instead of 15%. Researchers found those using this approach didn’t agree to worse deals compared to those using single point offers. They also got relationship benefits, such as being perceived as more flexible
- Backdown Range Offers: They start with the desired point on the high end and offer a more accommodating value, asking for 12-15% instead of 15%. Researchers found this wasn’t an effective approach. Those using it ended up with less value than those using single point offers and saw less relational benefits than those using Bracketing Range Offers.
The research paper, titled “Tandem Anchoring: Informational and Politeness Effects of Range Offers in Social Exchange,” appears in the February issue of the Journal of Personality and Social Psychology. Negotiation situations in the studies included bargaining with an event caterer, negotiating a salary and the price of a used car.
The results of the studies show that making bolstering range offers resulted in better deals than those using a single price and negotiators were not perceived any more negatively. Those who simply asked for more with a single higher price point didn’t end up any better with their final deal. They also were twice as likely to fail in reaching a deal because the other parties abandoned the negotiation.
If you’re a traditionalist who normally sticks to a single figure when negotiating, you should consider using a bolstering range approach. It may do you and your client some good.