Preparation: The Foundation of Every Negotiation

The Negotiator Who Never Prepared

A freelance designer quoted $5,000 for a project. The client said, “That’s too expensive.” The designer immediately said, “How about $3,500?” She dropped 30% in one sentence—because she had no preparation, no framework, and no alternative.

By the end of this lesson, you’ll have a complete preparation system that ensures you never walk into a negotiation unprepared.

🔄 Quick Recall: In the previous lesson, we distinguished interest-based negotiation from positional bargaining. Can you explain the difference? Today we build the preparation framework that makes interest-based negotiation possible.

The Preparation Framework

Every negotiation, from buying a car to closing a million-dollar deal, benefits from this five-step preparation framework.

Step 1: Define Your Interests (Not Positions)

Your position is WHAT you want. Your interest is WHY you want it.

Position: “I want a $90,000 salary.” Interests: Financial security, recognition of my market value, fairness compared to peers, ability to afford a home.

Interests are more flexible than positions. When you know your interests, you can evaluate creative solutions that your original position might have excluded.

I'm negotiating [situation].
My position (what I want): [state it]

Help me identify my underlying interests:
- WHY do I want this?
- What need does it satisfy?
- What would achieving this enable me to do?
- List at least 5 underlying interests, ranked
  by importance.

Step 2: Research Their Interests

The most powerful preparation activity is understanding the other party. What do they need? What pressures are they under? What would make them look good to their stakeholders?

I'm negotiating with [who - their role/situation].
They'll likely take the position of [their likely demand].

Help me understand their interests:
- Why would they take that position?
- What pressures are they facing?
- What would a successful outcome look like for them?
- What constraints might they have that I don't know about?
- What's their likely BATNA?

Step 3: Calculate Your BATNA

Your Best Alternative to a Negotiated Agreement is what you’ll do if this negotiation fails completely. It’s the foundation of your negotiating power.

Strong BATNA examples:

• Salary negotiation: You have another job offer at $85,000
• Freelance pricing: You have three other projects competing for your time
• Vendor negotiation: You’ve identified two alternative suppliers

Weak BATNA examples:

• Salary negotiation: You have no other offers and need the paycheck
• Freelance pricing: This is your only lead this month
• Vendor negotiation: This is the only supplier who meets your requirements

The rule: Before negotiating, always try to improve your BATNA. A better alternative gives you genuine confidence and real leverage.

✅ Quick Check: What’s the difference between your BATNA and your reservation price? How does one determine the other?

Step 4: Set Your Range

Three numbers define your negotiation range:

Your target is what you’re genuinely shooting for. Your reservation price is the minimum you’ll accept. Your anchor is where you open the negotiation—always more ambitious than your target, supported by objective reasons.

Step 5: Identify Tradeable Variables

Most negotiations have multiple variables, not just one. In a salary negotiation, variables include base salary, bonus, equity, start date, remote work, title, vacation, professional development budget, and review timeline.

Listing all variables and ranking their importance to each party reveals trading opportunities:

My negotiation involves these variables:
[list all negotiable elements]

Rank them by importance to me (1 = most important):
[your ranking]

Now estimate how the other party would rank them:
[your guess]

Identify trades: Where I value something highly
that they value less (and vice versa). These are
the win-win opportunities.

✅ Quick Check: Why is identifying tradeable variables so important? How does it create options beyond simple compromise?

The One-Page Preparation Sheet

Before any negotiation, fill out this template:

Help me prepare a one-page negotiation preparation sheet:

NEGOTIATION: [what am I negotiating?]
OTHER PARTY: [who, their role, their constraints]

MY INTERESTS (ranked):
1. [most important]
2. [important]
3. [nice to have]

THEIR LIKELY INTERESTS (ranked):
1. [their priority]
2. [secondary]
3. [tertiary]

MY BATNA: [what I'll do if this fails]
MY RESERVATION PRICE: [my walk-away point]
MY TARGET: [realistic ideal outcome]
MY OPENING ANCHOR: [ambitious but justifiable first offer]

TRADEABLE VARIABLES:
[list all negotiable elements with importance to each side]

POTENTIAL CREATIVE OPTIONS:
[3 proposals that could satisfy both parties' interests]

THEIR LIKELY OBJECTIONS:
[top 3 objections and my responses]

The Research Checklist

Before any significant negotiation, gather this information:

• Market data: What are comparable deals, salaries, or prices?
• Their situation: What pressures, deadlines, or constraints do they face?
• Precedent: What have they agreed to in similar situations?
• Decision process: Who actually decides? What do they need to justify to their boss?
• Timing: Are there deadlines that create urgency for either side?

AI can help with all of this:

I'm negotiating [type of deal] with [who].
Research and tell me:
1. Market benchmarks for this type of deal
2. Common terms and conditions in similar agreements
3. What leverage points might exist for each side
4. Questions I should ask to uncover hidden information

Try It Yourself

Pick a real or hypothetical negotiation. Complete the entire one-page preparation sheet using AI assistance. Then review it critically:

• Is your BATNA realistic? Can you improve it before negotiating?
• Are your interests genuine needs, or are some actually positions in disguise?
• Have you identified at least 3 tradeable variables?
• Do your creative options genuinely address the other party’s interests?

Key Takeaways

• Preparation is 90% of negotiation success—never wing it
• Interests (WHY) are more important than positions (WHAT) because they reveal creative solutions
• Your BATNA determines your real power; improve it before negotiating
• Three numbers define your range: anchor, target, and reservation price
• Tradeable variables create win-win opportunities by exchanging things each party values differently
• AI can prepare a complete negotiation brief in minutes that would take hours of research manually

Up Next

In Lesson 3: Opening Positions and Anchoring, we’ll learn how the first number spoken in a negotiation shapes everything that follows—and how to use that psychology to your advantage.