Negotiation strategies for business: Win better deals with confidence

Published Wednesday 5 November 2025

Table of contents

• Do your homework
• Understanding negotiation styles
• Common negotiation tactics to recognize
• Know where you can compromise
• Aim for a win-win outcome
• Have a plan B
• Negotiate with confidence and clarity
• FAQs on negotiation strategies

Key takeaways

• Prepare thoroughly by researching the other party's business, industry conditions, and decision-makers before negotiations begin, as 85% of negotiators fail to establish what the other side wants upfront.

• Recognize common negotiation tactics like anchoring (where extreme opening numbers influence all subsequent discussions) and time pressure, then counter them by researching fair market rates and taking the time you need to make decisions.

• Identify your non-negotiables versus flexible areas before entering negotiations, then make visible concessions linked to specific requests to maximize your chances of securing what matters most.

• Develop a strong BATNA (Best Alternative to a Negotiated Agreement) by listing viable alternatives and setting a clear walk-away point, which gives you confidence to negotiate firmly or exit when necessary.

Do your homework

Negotiation preparation means researching your counterpart's business, industry, and position before discussions begin, yet this is a commonly skipped step — one study found 85% of sales negotiators don't establish what the other side wants upfront. Proper homework gives you confidence and helps you identify opportunities for mutual benefit.

Key research areas include:

• Industry knowledge: Learn main terms, concepts, and current market conditions
• Company intelligence: Understand their products, services, competitors, and recent news
• Your unique value: Identify what sets you apart beyond just price
• Decision makers: Know who has authority to approve deals

Understanding negotiation styles

Every negotiation and negotiator is different. Knowing the common approaches helps you choose the best one for your situation or spot it in the other person. There are five main styles:

• Collaborating: You work together to find a creative solution that gives everyone what they want. This is great for building long-term relationships.
• Competing: You see the negotiation as a contest to be won. This can be useful when the stakes are high and the outcome is more important than the relationship.
• Avoiding: You sidestep the conflict altogether. This might be wise if the issue is small or if you need more time to prepare.
• Accommodating: You put the other party's needs first to preserve the relationship. This can be a good strategy when you're in a weak position or the outcome isn't critical to you.
• Compromising: You aim to find a middle ground where both sides give a little. It's a quick way to reach a deal, but you might miss out on a more creative, collaborative solution.

You can be more effective if you stay flexible and switch between styles depending on the deal and who you are negotiating with.

Common negotiation tactics to recognize

Some negotiations are straightforward, but sometimes you'll come across tactics designed to give the other party an advantage. Recognising them is the first step to handling them with confidence.

Anchoring is a negotiation tactic where the first number mentioned becomes the reference point for all subsequent discussions. This psychological bias can work for or against you.

How anchoring works:

• The first party names an extreme number (very high or very low)
• This "anchor" influences how both parties view subsequent offers
• Even unrealistic anchors can skew the final agreement

Defending against anchoring:

• Recognise the tactic: If their opening number seems extreme, you're likely being anchored
• Reset expectations: Say "we're quite far apart" to signal you won't be influenced
• Research fair market rates: Know realistic price ranges before negotiations begin
• Make your own anchor: Consider opening with your own well-researched figure

Another tactic is applying time pressure. If someone pressures you with a time-limited offer, stay calm. Take the time you need and only agree to a deal when you are sure.

Stay aware of these tactics so you can focus on the real issues and work towards a deal that's right for your business.

Know where you can compromise

Strategic compromise means identifying your non-negotiable requirements versus areas where you can be flexible. This approach maximises your chances of securing what matters most.

Before negotiating:

• Define your minimum: What do you absolutely need from this deal?
• Rank your priorities: List terms from most to least important
• Identify trade-offs: What can you offer in exchange for your key requirements?

During negotiations:

• Make visible concessions: Clearly state when you're being flexible
• Link concessions to requests: "I can be flexible on timeline if we can agree on price"
• Expect reciprocity: When you compromise, ask for something in return

Aim for a win-win outcome

Negotiating is about finding a profitable outcome that benefits everyone.

A win-win approach helps you build trust and encourages cooperation.

If a negotiation feels aggressive, it can damage trust and reduce the chance of future business.

Both parties can win. Being friendly and fair can help you reach better outcomes.

Have a plan B

Your BATNA (Best Alternative to a Negotiated Agreement), a concept developed by negotiation researchers Roger Fisher and William Ury, is what you'll do if this deal falls through. A strong BATNA gives you confidence to negotiate firmly or walk away when necessary.

Developing your best alternative to a negotiated agreement (BATNA):

• List alternatives: What other suppliers, clients, or opportunities exist?
• Evaluate realistic options: Which alternatives are actually viable?
• Assess your position: How much do you need this specific deal?
• Set your walk-away point: At what point is no deal better than a bad deal?

Using your best alternative to a negotiated agreement (BATNA) strategically:

• Negotiate with confidence: Knowing you have options reduces desperation
• Keep alternatives private: Don't reveal your backup plans to the other party
• Stay realistic: Weak alternatives mean you may need to be more flexible

Negotiate with confidence and clarity

Confident negotiation becomes easier with practice and preparation. These strategies help you secure better supplier terms, higher client rates, and stronger partnership agreements – all of which directly impact your bottom line.

Smart negotiation skills complement good financial management. When you secure better deals, you improve cash flow and profitability. Try Xero for free to track how your improved negotiations translate into better business performance.

FAQs on business negotiation strategies

Below are answers to common questions about business negotiation strategies.

What is a negotiation strategy?

A negotiation strategy is your plan for a negotiation. It covers what you want to achieve, your bottom line, and how you will get there. A good strategy helps you stay focused and make smart decisions.

What is the most effective negotiation style?

No single style works best for every situation. A collaborative approach often helps you build long-term business relationships and find creative solutions. The right style depends on your goals, your relationship with the other party, and the situation.

How can I get better at negotiating?

Practice is key. Start with smaller, less important negotiations to build your confidence. Always prepare by doing your research, knowing your goals, and understanding your walk-away point.

After each negotiation, review what went well and what you could do differently next time. This step is often overlooked in a formal capacity, with one study finding that only 4% of organisations have a mechanism for sharing negotiation learnings across the business.