Learn how research challenges accepted beliefs about bargaining tactics
For decades, negotiation experts advised that making a range offer, such as asking for a 15% to 20% discount, rather than proposing a single number, is not a good move. But research from Columbia Business School suggests those experts have gotten it at least partly wrong.
A series of studies shows that using certain range offers can have meaningful benefits.
"For years, we taught students to avoid making range offers in negotiations, assuming that counterparts receiving those offers would have selective attention, hearing only the end of the range that was attractive to them," says Daniel Ames, co-author of the research and professor of business at Columbia Business School.
"Our results surprised us, upending how we teach the topic. We can't say that range offers work 100% of the time, but they definitely deserve a place in the negotiator's toolkit."
Ames and co-author Malia Mason, associate professor of business at Columbia Business School, conducted a series of studies gauging how people reacted to negotiators making a variety of different offers. They compared single-number point offers, such as asking for a 15% discount, with three different kinds of range offers:
- Bolstering range offers start with the point and stretch in an even more ambitious direction, like asking for a 15% to 20% discount instead of just 15%. Historically, most negotiation experts would have said this strategy was doomed to flop because the bargaining counterpart would hear only the 15% end of the range. In contrast, Ames and Mason's research found that bolstering range offers frequently led to better settlements for the offer-makers without harming their relationship with the other party.
- Bracketing range offers span the point, such as asking for 13% to 17% instead of 15%. In the past, experts would likely have said this strategy was also sure to lose value. However, Ames and Mason's research found that negotiators using bracketing range offers didn't reach worse deals than those using point offers, but they frequently experienced relationship benefits, such as being seen as more flexible.
- Backdown range offers start with the point and then offer a more accommodating value, like asking for 12% to 15% instead of 15%. In this case, Ames and Mason's research converged with the prior conventional wisdom: Those using backdown range offers ended up with less value than those using point offers but didn't see more relational benefits than those using bracketing range offers.
"While negotiation experts have been advising against range offers for a long time, many people use them," noted Mason. "A good share of the time, people use backdown range offers, and our work suggests that's unwise. But many people use bracketing or bolstering range offers, and our research shows that they're onto something. Those range offers can draw out more accommodating responses from a counterpart."
Negotiating Using Range Offers
Ames and Mason conducted five studies to explore the effects of different kinds of opening offers in negotiations. They studied contexts ranging from bargaining with an event caterer to negotiating a salary or the price of a used car.
The studies addressed when and why range offers sometimes bring benefits (part of the answer concerns politeness) and which kind of range offers sacrifice value. The research also showed that range offers can sometimes outperform more assertive point offers.
In one study, the researchers gave people different guidance heading into a mock negotiation over a used car. Some sellers were advised to make a single-price starting offer. Others were told to start with an initial offer: and then ask for more: a higher single price. A third group was guided to start with an initial price and then offer a bolstering range that featured their initial price and stretched up in a more ambitious direction.
The results? Those offering the bolstering range got better deals than the single-price negotiators and were not seen any more negatively. Those encouraged to just "ask for more" with a single higher price point didn't fare any better when they got a deal: but were twice as likely to end up without a deal, provoking their counterparts to abandon the negotiation.
"Range offers can sometimes be an effective way of asking for more," says Ames, "without driving your counterpart away."