IVEntrepreneurshipGuide
Negotiating as an Owner: Set Your Room to Move Before the Talk Begins
Most negotiations are won or lost before the conversation. If you know your numbers before the customer asks for a discount, you stay calm and give away nothing you did not intend to give.
Key takeaways
- Owners often negotiate with a double handicap: they decide alone and on the spot, and they negotiate about their own work.
- The Four-Number Card sets four things before the conversation: opening, target, floor, and your best alternative if there is no agreement.
- A meta-analysis covering more than 16,000 participants shows that an ambitious first offer improves the outcome when a deal is reached, but lowers the likelihood of reaching one.
- The most important rule in the conversation: no concession without something in return.
Why do owners often negotiate worse than they could?
The customer is happy with the proposal, only the price does not quite suit them. “If you can meet us on price, we can sign today.” You do the math in your head, do not want to put the order at risk, and say: “Five percent is possible.” Only in the evening do you realize that you just gave away a good part of your profit without getting anything for it.
Owners negotiate with two handicaps that employed buyers do not have. First, they may decide everything immediately. That sounds like strength, but it removes the simplest brake: “I need to check that internally.” Second, they negotiate about their own work. Every objection to the price feels like a verdict on their own performance.
Both can be offset, and that happens before the conversation. The central question, then: how do you negotiate as an owner so that you win the order without giving away profit? To answer it, the guide shows how to set your room to move, how to place the first offer, and how to trade concessions in the conversation instead of giving them away.
What does negotiating mean in sales?
Negotiating means that two sides with different interests look for an agreement that leaves both better off than no agreement. In sales it is rarely only about price. Scope, deadlines, payment terms, contract length, warranty, and the question of who provides what upfront are negotiable too.
This variety is your most important resource. If you only talk about price, you can only give in or stay firm. When the topic is a price increase for existing customers, the guide Raising Prices also helps. If you know several levers, you can trade: something that costs you little and is worth a lot to the customer, for something that is worth a lot to you.
The distinction from an objection matters. An objection is an open question that you clarify. A negotiation begins when the customer wants to buy and only the terms are left. How to deal with objections before that point is described in the guide Handling Objections.
If you only negotiate on price, there is only one direction: down.
The Four-Number Card: set your room to move before the conversation
The Four-Number Card is half a page that you fill in before every negotiation about a larger order. It holds four numbers and a list. If it is in front of you during the conversation, you do not have to calculate in your head or decide on gut feeling.
Opening
The price you name first. It is ambitious but justifiable. You have to be able to explain it with a straight face.
Target
The result you would be satisfied with. It lies between opening and floor.
Floor
The price below which you decline. It follows from your costs, your minimum margin, and your capacity, not from how the conversation feels.
Best alternative
What you will do if there is no agreement: another order, capacity for existing customers, quieter weeks. Negotiation theory calls this the BATNA, the best alternative to a negotiated agreement.
Trade list
Three things you can give and three you ask for in return. More on this below.
The following worked example shows the card for an order with calculated costs of 15,000 euros.
| Number | Value in the example | Rationale |
|---|---|---|
| Opening | €21,500 | List price for this scope, justified with a description of services |
| Target | €20,000 | 25 percent margin, the business's usual calculation |
| Floor | €18,500 | Minimum margin of about 19 percent; below that the order is not worth it |
| Best alternative | Capacity for two smaller orders from existing customers | No idle time if this order does not come |
Worked example
Worked example with 15,000 euros in costs. Opening and floor are 3,000 euros apart in price, but almost half of the contribution margin.
The best alternative is often forgotten, yet it determines how calm you are. If you have no other order in sight, you give in more easily. If you know what you will do without an agreement, you can calmly decline a bad offer. Abramson (2025) even recommends, for negotiations under heavy time pressure in which many proven steps have to be skipped, keeping the best alternative as a safeguard so that you do not agree to an outcome you later regret. The same paper warns against being pressured by a deadline that is not real. A customer who wants to sign “today only” rarely means it literally.
Who names the first price, and how high?
The first offer is one of the best-researched topics in negotiation. Lipp, Smolinski, and Kesting (2023) reviewed 119 journal articles on the subject published since 1967. Among other things, they report an older meta-study in which first offer and final outcome were clearly related. This is the so-called anchoring effect: the first number in the room shapes what both sides consider reasonable afterwards.
For a long time this produced the rule that you should always go first and as high as possible. A large meta-analysis by Petrowsky, Boecker, Escher, and colleagues (2025) tested this rule. It analyzed 374 effects from 90 samples with a total of 16,334 participants and added two experiments of its own with 2,121 people. The result is more nuanced than the old rule:
- An ambitious first offer improves the outcome for the person who makes it, if a deal is reached.
- But it lowers the likelihood of reaching a deal.
- And it worsens how satisfied the other side is with the negotiation.
For a business that wants to work with its customers over the long term, the third point matters most. An order you win with an inflated anchor can cost you the follow-up orders. The role existing customers play in your growth is shown in the article Growing Existing Customers. Loschelder and Petrowsky (2027) summarize in a review what the first-offer advantage depends on: its precision, its framing, whether it is named as a range, and above all a rationale. Too assertive an offer can alienate the other negotiator and damage the relationship.
High anchor without a rationale
- “That costs 28,000 euros.”
- Round number, no derivation
- The customer feels taken advantage of
- Agreement less likely, relationship strained
Ambitious, justified anchor
- “21,500 euros for this scope, and here is how it breaks down.”
- Precise number, understandable components
- The customer negotiates about components instead of percentages
- A good result without scorched earth
Choice instead of discount: several equivalent offers
An especially practical finding comes from Leonardelli, Gu, McRuer, and colleagues (2019). In six experiments, negotiators presented not one first offer but several that were worth the same to them but put together differently. This improved both their own outcome and the joint outcome. The other side considered the agreement more sincere, and the negotiation climate became more cooperative. In sales this means: offer two or three packages, for example with a shorter delivery time, longer payment terms, or a smaller scope. Then the customer chooses instead of asking for a discount.
No concession without something in return: the trade list
The most expensive sentence in a negotiation is an unconditional concession. “All right, let's do five percent.” The customer learns that asking pays off and will ask again next time. The trade list prevents this. It contains what you can give and what you ask for in return.
| You give | What it costs you | You ask for in return |
|---|---|---|
| 3 percent discount | €600 contribution margin | Order by month-end and a 30 percent down payment |
| Shorter delivery time | Rescheduling, hardly any money | Approval of all documents within one week |
| Longer payment terms | Interest costs, small | Framework agreement for two further orders |
| Additional training | Half a day | A reference and permission for a case study |
Worked example
The formula in the conversation is always the same: “If you …, then we can …”. The condition first, then the concession. That way every accommodation stays tied to something that helps you, and the customer notices that your price is not a starting point for markdowns.
How do you behave in the conversation?
With the card in front of you, the conversation becomes easier. Three rules of conduct help as well.
- Understand first, then calculate. Ask what lies behind the wish for a better price: a fixed budget, a competing offer, a directive from management. Which lever fits depends on it.
- Pause instead of justifying. When the customer hears your price, stay silent. If you immediately explain why the price is justified, you sound as if you doubt it yourself.
- Take time to think. You may say: “I'll check that and get back to you tomorrow.” That is not weakness. It replaces the check with the boss that employed salespeople always have.
- Summarize and record. At the end, sum up every agreement in one sentence and confirm it in writing the same day.
If you notice that a customer negotiates every order on price and your business depends on them, the problem runs deeper than the conversation. The article Concentration Risk shows how to recognize and reduce dependence on individual customers. Whether a customer is worth concessions also depends on their value over the entire relationship, which the article Calculating Customer Value explains.
Worked example
When is no the better outcome?
Not every negotiation should end in agreement. If the customer's last offer is below your floor, declining is the right outcome. Many owners struggle with this because they have already counted on the order. A sober view helps: an order below the floor ties up your people in work that earns almost nothing, and it sets the price for all of this customer's follow-up orders.
Anyone making such decisions under uncertainty benefits from writing them down beforehand. The article Deciding Under Uncertainty describes the Three-Sentence Note for this. In a negotiation, the Four-Number Card takes on that role.
A friendly no leaves the door open: “At this price I cannot deliver it in the quality you expect. If something can change in the scope, I'm happy to recalculate.” This way you decline the price, not the customer. And you offer them the lever that helps you: scope.
The next step
Take the next negotiation coming up, or the last one that annoyed you.
- Create a template for the Four-Number Card: opening, target, floor, best alternative, with the trade list underneath.
- Calculate the floor for your three most common types of order from costs and minimum margin.
- Write down three things you can give, and for each one something you ask for in return.
- For your next proposal, put together two equivalent packages instead of a single price.
- Say the sentence “If you …, then we can …” out loud once before you need it in a conversation.
After three or four negotiations with the card, you will notice that less changes than you feared. Customers do not negotiate less. But you less often give away something you did not want to give.
Back to the opening question: as an owner, you negotiate better when you set the opening, target, floor, and best alternative before the conversation, place the first offer deliberately, and make no concession without something in return. Preparation offsets the two handicaps owners bring into negotiations. A no remains a possible outcome, and sometimes it is the better one.
Frequently asked questions
How do I prepare for a price negotiation?
Set four numbers before the conversation begins: opening, target, floor, and your best alternative if there is no agreement. Add a list of concessions and what you ask in return for each. That way you do not have to calculate during the conversation or decide on gut feeling.
Should I name the first price in a negotiation?
Usually yes, if you can judge the value of your work well. The first number shapes the rest of the negotiation. But a meta-analysis by Petrowsky and colleagues (2025) also shows that an overly ambitious first offer lowers the likelihood of agreement and the other side's satisfaction. So name an ambitious but justified price.
What is a BATNA?
BATNA stands for best alternative to a negotiated agreement, meaning what you will do if there is no agreement. The better your alternative, the more calmly you can negotiate. If you know no alternative, you tend to give in.
How much discount should I give?
As little as possible and never without something in return. Work out beforehand what a discount costs your contribution margin: at a 25 percent margin, a five percent discount costs a fifth of the profit. Ask for something that helps you in return, such as a down payment or a faster order.
How do I say no in a negotiation without losing the customer?
Decline the price, not the customer, and offer a different lever, such as a smaller scope. A sentence like “At this price I can't deliver the quality you expect, but with a changed scope I'm happy to recalculate” leaves the door open.
Sources
- Petrowsky, H. M.; Boecker, L.; Escher, Y. A. et al. (2025): The power and peril of first offers in negotiations: a conceptual, meta-analytic, and experimental synthesis. Organizational Behavior and Human Decision Processes, 191.
- Loschelder, D. D.; Petrowsky, H. M. (2027): The influential first offer: How to advance a negotiation classic by integrating features, mechanisms, and outcomes. Current Opinion in Psychology, 73.
- Lipp, W. E.; Smolinski, R.; Kesting, P. (2023): Toward a Process Model of First Offers and Anchoring in Negotiations. Negotiation and Conflict Management Research, 16(1), 48-79.
- Leonardelli, G. J.; Gu, J.; McRuer, G. et al. (2019): Multiple equivalent simultaneous offers (MESOs) reduce the negotiator dilemma: How a choice of first offers increases economic and relational outcomes. Organizational Behavior and Human Decision Processes, 152, 64-83.
- Abramson, H. (2025): Time-Pressured Negotiations. Harvard Negotiation Law Review, 30(2), 139-204.
