Bracketing

Bracketing is a strategic negotiation technique where you make an initial offer significantly more favorable to yourself than your target outcome. If selling, you start higher; if buying, you start lower. When a house seller wants $300,000 but brackets by asking $350,000, they create room to "concede" while still achieving their goal. This approach accounts for the natural tendency of negotiations to settle between opening positions, allowing you to reach your actual target while the other party feels they've won concessions.

Core Concept and Principles

At its essence, bracketing is based on the understanding that most negotiations involve a series of concessions from both parties before reaching an agreement. By strategically setting your initial position further from the midpoint than your actual target, you create space to make concessions while still achieving your desired outcome.

The technique gets its name from the concept of "bracketing" your target between your opening offer and the expected counteroffer from the other party. Your target outcome sits within this bracket, ideally closer to your side of the range.

Three key principles underpin effective bracketing:

1. Ambitious but credible starting positions - Your initial offer should be aggressive enough to create negotiating room but not so extreme that it damages your credibility or causes the other party to walk away.
2. Calculated concession strategy - Successful bracketing requires planning not just your opening position but also how you'll make concessions to move toward your actual target.
3. Psychological reciprocity - The technique leverages the social norm of reciprocity, where your concessions create pressure for the other party to make concessions in return.

The Mathematics of Bracketing

While negotiation is as much art as science, bracketing does involve some basic mathematical principles:

The Basic Formula

A common approach to bracketing uses this formula:

Opening Offer = Target + (Target - Their Expected Opening)

For example, if you're selling a product:

• Your target price: $10,000
• You expect the buyer to open at: $7,000
• Your bracketed opening offer would be: $10,000 + ($10,000 - $7,000) = $13,000

This creates a bracket where your target ($10,000) is positioned between your opening ($13,000) and their expected opening ($7,000).

The Midpoint Principle

Another way to understand bracketing is through the midpoint principle. If negotiations often settle near the midpoint between opening offers, then:

Your Opening = (2 × Your Target) - Their Expected Opening

Using the same example:

• Your target price: $10,000
• You expect the buyer to open at: $7,000
• Your bracketed opening offer would be: (2 × $10,000) - $7,000 = $13,000

This positions the midpoint between your opening and their expected opening at your target price.

Types of Bracketing

Standard Bracketing

The basic approach described above, where you set your opening position to create room for concessions while still achieving your target.

Extreme Bracketing

A more aggressive approach where you set an opening position significantly further from the midpoint, creating even more room for concessions. This approach carries higher risk of damaging credibility but can be effective in certain contexts where extreme anchors are expected.

Multiple-Issue Bracketing

In complex negotiations with multiple issues, bracketing can be applied selectively across different items. You might bracket aggressively on issues of lower importance to you, creating room to hold firm on your high-priority items.

Reverse Bracketing

In some situations, particularly when you have significant leverage or when the other party expects aggressive bracketing, starting closer to your actual target can be disarming and build trust. This approach sacrifices some potential gain but may lead to smoother negotiations and stronger relationships.

Applications in Sales

Bracketing is widely used in sales contexts, where it helps sales professionals achieve target prices while still giving customers the satisfaction of "winning" concessions:

For Sales Professionals:

• Price negotiations - Starting with a higher price than your target allows room to offer discounts while still meeting margin requirements.
  Example: A software company with a target annual subscription price of $50,000 might start at $65,000, allowing them to "concede" to $50,000 after negotiation.
• Contract terms - Bracketing can apply to non-price elements like contract length, service levels, or implementation timelines.
  Example: Proposing a 3-year contract when you'd be satisfied with 2 years, or offering premium support when standard support is your actual target.
• Proposal structure - Creating tiered proposals with premium, standard, and basic options is a form of bracketing that guides customers toward your preferred option (typically the middle tier).
• Upselling strategy - Starting discussions with higher-tier products creates room to "step down" to your actual target product while making the customer feel they've negotiated effectively.

For Buyers:

• Initial offers - Starting with a lower offer than your maximum creates room to increase your bid while staying within budget.
• RFP specifications - Including more demanding requirements than you actually need gives you flexibility to compromise during vendor selection.
• Timeline negotiations - Requesting more aggressive delivery schedules than necessary creates room to "concede" to your actual timeline requirements.

Real-World Examples

Example 1: Real Estate Negotiation

A home seller knows from market research that comparable properties are selling for around $400,000, which is their target price. They list the property at $450,000, anticipating that buyers will offer below asking price. When a buyer offers $370,000, the seller counters at $425,000. After several rounds of negotiation, they settle at $395,000 - close to the seller's target. The bracketing approach gave the seller room to make concessions while still achieving near their target price.

Example 2: Enterprise Software Sale

A software vendor has a target price of $200,000 for their enterprise solution. Knowing that procurement teams typically expect 15-20% discounts, they present an initial price of $250,000. During negotiations, they offer a series of concessions: first removing some premium features (worth $20,000), then offering a "volume discount" of $15,000, and finally a "decision-maker discount" of $15,000 for signing by quarter-end. The final price of $200,000 meets their target while giving procurement the expected discount to report to leadership.

Example 3: Salary Negotiation

A job candidate researches that the market rate for her position is $90,000-$110,000. Her target is $100,000, but she brackets by asking for $115,000. When the employer counters with $95,000, she has room to negotiate additional benefits (like extra vacation days or flexible work arrangements) while still landing at her target salary.

How to Use Bracketing Effectively

Preparation

1. Research thoroughly - Effective bracketing requires understanding market rates, industry norms, and the other party's likely expectations and constraints.
2. Define your target clearly - Know exactly what outcome you're aiming for before calculating your bracket.
3. Anticipate their opening - Try to predict where the other party will start, as this affects your bracketing calculation.
4. Prepare justifications - Develop logical rationales for your opening position to maintain credibility.
5. Plan your concession strategy - Decide in advance how you'll make concessions to move from your opening position toward your target.

Execution

1. Present your opening confidently - Deliver your bracketed position with conviction, supported by your prepared rationale.
2. Make measured concessions - Move gradually toward your target, with each concession smaller than the last.
3. Require reciprocity - Ask for something in return with each concession you make.
4. Track the midpoint - Monitor how the midpoint between current positions relates to your target as negotiations progress.
5. Know when to stop - Recognize when you've reached your target or an acceptable outcome and avoid over-negotiating.

Common Mistakes to Avoid

• Bracketing too aggressively - Setting an opening position that's too extreme can damage credibility and may cause the other party to walk away.
• Conceding too quickly - Rapid concessions can signal weakness and undermine your bracketing strategy.
• Focusing only on price - Effective bracketing should consider all negotiable elements, not just price.
• Neglecting justification - Failing to provide rationale for your position can make bracketing seem arbitrary or manipulative.
• Revealing your target - Disclosing your actual target eliminates the effectiveness of your bracketing strategy.

Ethical Considerations

While bracketing is a standard negotiation technique, it raises ethical questions that professionals should consider:

• Honesty vs. strategy - There's a fine line between strategic positioning and misrepresentation. Your bracketed position should be one you can justify with legitimate arguments.
• Relationship impact - Aggressive bracketing may secure short-term gains but damage long-term relationships if the other party feels manipulated.
• Power imbalances - Using sophisticated bracketing techniques against inexperienced negotiators raises fairness concerns.
• Industry norms - In some contexts (like car sales), extreme bracketing is expected; in others (like professional services), it may violate norms and damage trust.

The most ethical approach is to use bracketing in a way that allows both parties to reach a mutually beneficial agreement, rather than as a tool to extract maximum value at the other's expense.

Bracketing in Different Cultural Contexts

Bracketing practices vary significantly across cultures, and international negotiators should be aware of these differences:

• High-context cultures (e.g., many Asian countries) - May use more extreme bracketing but expect the process to unfold gradually through relationship building.
• Low-context cultures (e.g., Northern Europe) - May prefer more moderate bracketing with rational justifications for positions.
• Bargaining cultures (e.g., Middle East, parts of Southern Europe) - Often expect significant bracketing and view the negotiation process itself as valuable.
• Non-bargaining cultures (e.g., Japan, Scandinavia) - May view extreme bracketing as disrespectful or unprofessional.

Adapting your bracketing approach to cultural context is essential for international negotiations.

Advanced Bracketing Strategies

Multi-variable Bracketing

In complex negotiations, bracketing can be applied across multiple variables simultaneously. For example, in a job negotiation, you might bracket on salary, bonus structure, vacation time, and remote work flexibility. This creates multiple dimensions for potential trade-offs and increases the likelihood of reaching your targets on high-priority items.

Bracketing with Escalation Clauses

This approach involves building conditional elements into your agreement that can help you reach your target over time, even if the initial agreement falls short.
Example: A vendor who targets a 10% price increase might accept 7% now with an escalation clause guaranteeing additional increases based on inflation or other metrics.

Bracketing with Options

Rather than bracketing on a single variable, you can present multiple package options that bracket your target outcome from different angles.
Example: A consultant might offer three service packages: a premium option above their target, a standard option at their target, and a basic option below their target. This approach increases the likelihood that the client will choose the middle option.

Bracketing vs. Other Negotiation Techniques

Bracketing and Anchoring

While related, bracketing and anchoring serve different purposes:

• Anchoring focuses on establishing a reference point that influences the other party's perception of value.
• Bracketing focuses on creating a strategic starting position that allows for concessions while still achieving your target.

Effective negotiators often combine these techniques, using an anchor to shape perceptions and bracketing to plan their concession strategy.

Bracketing and BATNA

Your Best Alternative To a Negotiated Agreement (BATNA) should inform your bracketing strategy:

• A strong BATNA allows for more aggressive bracketing since you can afford to walk away.
• A weak BATNA suggests more conservative bracketing to reduce the risk of failed negotiations.

Conclusion

Bracketing stands as one of the most practical and widely applicable negotiation techniques. By strategically positioning your opening offer to create room for concessions while still achieving your target outcome, bracketing helps you navigate the give-and-take of negotiations more effectively.

For sales professionals, mastering bracketing can significantly improve deal outcomes while still giving customers the satisfaction of "winning" concessions. The technique acknowledges the reality that most negotiations involve compromise, and plans for this reality from the outset.

The most successful practitioners of bracketing approach it not as a rigid formula but as a flexible framework that can be adapted to different situations, relationships, and cultural contexts. They combine it with other negotiation techniques like anchoring, labeling, and strategic use of their BATNA to create comprehensive negotiation strategies.

As you incorporate bracketing into your negotiation toolkit, remember that the ultimate goal is not to "win" at the other party's expense, but to reach agreements that create value for both sides while protecting your interests. When used ethically and skillfully, bracketing helps achieve this balance by creating the space for productive negotiation while ensuring you reach outcomes aligned with your true objectives.