How to Plan Negotiations for the New Year – A Systematic Approach

Most businesses plan budgets for the new year. Few plan their NEGOTIATIONS. Yet negotiations determine how that budget is spent – whether procurement costs are 3% lower, whether sales prices are 5% higher, whether contract terms are more favorable.

Planning negotiations is planning profits. And like all planning, it requires a system.

The 4-Step Negotiation Planning System

Step 1: Contract Inventory

List ALL contracts, agreements, and commercial relationships. For each, record:

• Partner (supplier/client/subcontractor)
• Annual value.
• Expiration date / renegotiation window.
• Current terms (price, delivery, quality)
• Alternatives available (BATNA)?
• Renegotiation priority (A/B/C)

Priority A: highest-value contracts or most unfavorable terms. B: medium value, room for improvement. C: working well, monitor only.

Step 2: Build BATNA for Each Priority Contract

For every Priority A contract, gather at least 2 alternative quotes. In December. Before you start negotiating in January.

Why December? Because in January everyone negotiates. In December you have time for calm research, contacting potential suppliers, comparing offers. BATNA built under time pressure is weaker than BATNA built strategically.

"If I had eight hours to chop down a tree, I'd spend six sharpening the axe."

Step 3: Set Measurable Targets

For each priority contract, define a specific goal:

• Materials supplier: 5% reduction from current price (or block the increase)
• Key client: 3% price increase with cost justification.
• Subcontractor: shorten delivery from 14 to 10 days.
• Office lease: maintain rent without increase for 2 more years.

Step 4: Renegotiation Calendar

Don't negotiate everything in January. Spread across the year:

• January: Priority A contracts expiring in Q1.
• February–March: Priority B. Service providers, logistics.
• April–June: Mid-year review. Renegotiate unsatisfactory terms.
• July–September: Prepare for Q4. Research new suppliers.
• October–December: Plan for next year. Close annual targets.

The Preparation Framework

The Bible of Negotiation (Chapter 3) provides a complete preparation framework. Adapted for business:

1. Goal: What do I want? (specific amount or condition)
2. BATNA: What if we don't reach agreement? (alternative supplier)
3. WATNA: Worst scenario without agreement? (supply disruption, switching costs)
4. ZOPA: Zone of possible agreement? (my min/max vs their min/max)
5. Anchor: My first offer? (ambitious but justified)
6. Concessions: What can I give in return? (volume, timeline, multi-year contract)
7. Walk-away point: When do I leave? (absolute minimum)
8. Arguments: 3-5 building blocks (market data, competing quotes, cost analysis)

15 minutes to complete. Thousands in savings.

Technique #21 – Expanding the Pie in Annual Planning

When planning renegotiations, think beyond price. Technique #21 (Expanding the Pie) means finding ways to create value for both sides:

• "I'll accept a 3% increase IF you extend the contract to 2 years" (you get price stability, they get certainty)
• "I'll increase my order volume IF you improve delivery times" (they get bigger revenue, you get better service)
• "I'll pay faster IF you give me a 2% discount for early payment" (they get cash flow, you get savings)

Each of these is a win-win. Neither side loses. Both gain. That's expanding the pie.

"In life and business, we don't get what we deserve – we get what we negotiate."

Common Planning Mistakes

• No planning at all. "When the renegotiation comes, we'll prepare." By then it's too late for BATNA.
• Reactive instead of proactive. Supplier raises prices – only then you seek alternatives. Too late.
• Focusing on price only. Price is 1 of 8 contract elements. Negotiate the package.
• No tracking. You don't know how much you saved. Can't improve what you don't measure.

The ROI of Negotiation Planning

A typical mid-size company with $500,000 in annual procurement:

• 3% better terms through planned negotiation: $15,000/year savings
• Cost of planning: 20 hours of preparation time
• ROI: $750/hour of preparation

There is no business activity with higher ROI per hour than negotiation preparation.

FAQ – Frequently Asked Questions

How to plan negotiations for the new year?

Contract inventory, BATNA per contract, measurable targets, calendar with dates.

When to start planning?

2-3 months before expiration. December = preparation, January = action.

What is a preparation framework?

Goal, BATNA, WATNA, ZOPA, Anchor, Concession plan, Walk-away. Bible of Negotiation Ch. 3.

How to build BATNA?

2+ alternative quotes per key partner. Gather proactively, not reactively.

Should you renegotiate working contracts?

Yes. Markets change. A 2-year-old contract may not reflect current realities.