Example of a Completed Negotiation Planning Checklist

This example of a completed planning checklist uses the following scenario from Chapter 3 in Negotiating for Success:

You have decided to sell your car and are preparing to negotiate with a potential buyer, Kyle. Kyle is the only person who responded to your sales ad. You need at least $4,000 from the sale of the car to finance the purchase of a truck you have ordered. You want to keep your car for three more weeks, which is when the truck will arrive. The reasonable value of the car (based on several online calculators) is $5,000. If you can’t find a buyer willing to pay at least $4,500, you will sell the car to your friend Terry for $4,000. You know that Terry will let you keep the car for the next three weeks.

Negotiation Planning Checklist*

Use the following checklist when planning for negotiations.

Great negotiators are able to look at a negotiation from the other side’s perspective. Several questions below ask you to take this perspective. These questions are underlined. Your answers to these questions will in most cases be estimates until you can obtain additional information by questioning the other side during the negotiation.

For background information, see Chapters 3, 5 and 6 in Negotiating for Success:

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Goals and Best Alternatives

  1. What is my goal in this negotiation? Why do I want to achieve this goal?
  2. My goal is to sell my car. I want to sell the car so that I can finance the purchase of a truck that is on order.

  3. What is my best alternative for achieving this goal if this negotiation is not successful?
  4. I will sell the car to my friend Terry for $4,000.

  5. Will I disclose my best alternative to the other side during this negotiation? (Usually “yes” if your alternative is strong and “no” if your alternative is weak.)
  6. I might disclose that another buyer is interested, but will not disclose the price, which is less than what I hope to receive from Kyle.

  7. How can I improve my best alternative? (By improving your alternative, you increase your power.)
  8. I could try to find other buyers by placing more ads and by detailing the car.

  9. What is the other side’s goal in this negotiation? Why does the other side want to achieve this goal?
  10. Kyle obviously wants to buy a car, but at this point I don’t know the reason for this goal.

  11. What is the other side’s best alternative for achieving its goal if this negotiation is not successful?
  12. I assume that Kyle will buy a car from someone else.

  13. How can I weaken the other side’s best alternative? (By weakening the other side’s best alternative, you increase your power.)
  14. I will attempt to show that Kyle won’t get a better deal than what I am offering.

    (For a detailed analysis of Questions 2-7, see Developing Your Negotiating Power)

    Issues That Are Likely to Arise (apart from price)

  15. What issues are likely to arise during the negotiation? List them and after each issue note:
    1. whether the issue is “tradable” (because it is of relatively low importance to you) or “not tradable” (because the issue is important to you),
    2. why the issue is important to me,
    3. facts I can use to support my position on each issue,
    4. whether the other side considers the issue to be “tradable” or “not tradable,” and
    5. why the issue is important to the other side.

    (In complex negotiations, you should consider using a spreadsheet to organize these issues.)

    In addition to price, analyzed at Questions 11-16, the main issue is the transfer date. (a) This is not tradable. (b) The transfer date is important to me because I need the car for transportation until my truck arrives. (c) I will explain how I use the car. (d) Uncertain at this time. (e) Uncertain at this time.
  16. Do I have a personal or long-term relationship with the other side? If so, how might this relationship affect the analysis in #8? If not, do I want to build a relationship with the other side?
  17. There is no relationship with Kyle. Because this is a one-time transaction, there is no need to build a relationship apart from spending some time at the beginning of the negotiation getting to know Kyle.

    There is a relationship with Terry, who is a friend. This is why I am willing to sell the car to Terry for a lower price.

  18. Using the analysis at #8, what are the possible ways to create value for both sides—for example, by trading issues or by building on interests? What questions do I want to ask the other side when exploring these possibilities?
  19. If the transfer date issue is tradable by Kyle, I might be able to keep the car by lowering my price—but not below my reservation price. If the transfer date is not tradable by either of us, I should ask Kyle about why that date is important. If Kyle needs the car for a specific reason over the next three weeks when I also need the car, we might be able to work out an arrangement where one person gets the car but provides transportation to the other.

    Questions Relating to Price

  20. What is my reservation price? Why is this price important to me? (The reservation price is the lowest price you are willing to accept if you are the seller or the highest price you are willing to pay if you are the buyer.)
  21. My reservation price in the negotiation with Kyle is $4,500. I need at least $4,000 (which I can obtain from Terry) to purchase the truck.

  22. What is the most likely price? (This is a reasonable target price.)
  23. The most likely price is $5,000.

  24. What is my stretch goal? (Use this stretch early in negotiations. This is the highest price or the lowest price—depending on whether you are seller or buyer—that you can reasonably justify.)
  25. My stretch goal is $6,000.

  26. What is the other side’s reservation price?
  27. Uncertain at this time.

  28. What is the zone of potential agreement? (This is the zone in which a deal can take place. This zone lies between the two reservation prices.)
  29. Uncertain at this time.

  30. Should I be the first to state a price? (If you are fairly confident about the value, consider anchoring the other side to your offer by stating the price first. If you are not confident about the value, asking the other side to state the price first is one way to determine value. But avoid becoming anchored to the other side’s number.)
  31. In this case, I am fairly confident about value, so I will open with my stretch goal of $6,000.

    Authority When Agents Are Involved

  32. Am I negotiating as an agent? If so, what are the limits of my authority?
  33. No.

  34. If the other side is acting as an agent, what are the limits of the other side’s authority? (This information should come from the principal, not the agent.)
  35. As far as I know, Kyle is not acting as an agent. But I should confirm this with Kyle. If Kyle is an agent, I will ask the principal whether Kyle is authorized to complete this transaction.

*Thank you to the International Association for Contract and Commercial Management (IACCM) for encouraging the development of this planner. IACCM, in partnership with Huthwaite International, produced a benchmark study entitled “Improving Corporate Negotiation Performance.” The study noted the importance of planning to negotiation success, but concluded that most companies use no formal planning tools. After reviewing a planning template included in the study, I prepared a list of items that should be in a planner and presented them to contract professionals at conferences in the United States and Europe and to an international audience during a webinar. This planning checklist incorporates feedback from these veteran negotiators.