This contract tip is about budgeting your asks and gives in a contract negotiation.
Each side starts a negotiation with some bargaining power. Otherwise, there would be no discussion at all. I think of the amount of that bargaining power as a party's negotiation currency.
I like the money analogy because we all know how it feels when we don’t have much. When that happens, we budget it carefully. We plan our big purchases. We don’t waste it all on small extravagances. If we have very little negotiation currency in the deal, we have to be much more strategic in how we spend it.
Just like with our money, we should make a plan in advance. What are the most important points we need? What doesn't matter? We also need to watch our spending pace so we don’t run out before the end.
And if we really, really need something big in the deal, we save up. We might not make many asks and use all our negotiation currency for that one big thing.
Of course, when you have almost all the negotiating currency, you don’t worry about spending it. You know that you will get most of what you ask for when you ask for it.
I've also observed that the amount of our negotiation currency is not fixed. We lose some when we alienate the other side and gain more when we earn their trust.
I use this negotiating currency idea for my strategy on WHAT to ask for and WHEN to ask for it. It does not go to whether I should. That's a different question answered in the context of the bigger relationship with the counterparty.
What's your approach to balancing your negotiations?
