PwC’s five-step
approach to
Negotiation
(1 of 4)
PwC | PwC’s five-step approach to negotiation (1 of 4) 1
PwC’s five-step approach to
negotiation (1 of 4)
Negotiating is a fundamental business and life skill. You negotiate
everyday in your private life and at work:
• with clients to win work, to agree fees, deadlines etc.
• with colleagues for resources, support, their time and advice.
It can often cause anxiety, but the more you practise and get better at it, the
more beneficial it can be for our business and personal lives.
1 Do your research
2 Develop a strategy
3 Rehearse
4 Get it right on the day
5 Follow up
PwC | PwC’s five-step approach to negotiation (1 of 4) 2
PwC’s five-step approach to
negotiation (2 of 4)
1 Do your research
• Complete necessary research to clarify scope of negotiation to inform your
strategy e.g. perform a review of spend analysis, contract history, market
analysis.
• Gather necessary data.
1
2 Develop a strategy
• Review available data. 2A
• Use models such as SWOT and analyse any Ongoing
• potential risks to enhance your understanding. stakeholder
• Set you targets, financial and otherwise e.g. management
– Most Desirable Outcome (MDO) *
– Lowest Acceptable Offer (LAO) *
– Best Alternative to Negotiated Agreement
– (BATNA)
– Timelines Execute and manage
– Resources communications to
* Refer to page 4 for further details various client
stakeholders (from CEO
to procurement manager)
PwC | PwC’s five-step approach to negotiation (1 of 4) 3
PwC’s five-step approach to
negotiation (3 of 4)
1
3 Rehearse
• Leave a significant amount of time before the
• meeting to prepare and practise.
• Check all assumptions with colleagues before
• presenting to the client.
• Rehearse your roles as a team.
• Prepare your points of view.
• Anticipate objections.
• Prepare responses, define your desired outcome i.e. MDO, LAO, BATNA
1
4 Get it right on the day
• Preparation is key.
• Think logistics – suitability of location and room set up.
• Clarify who will manage the opening and closing comments.
PwC | PwC’s five-step approach to negotiation (1 of 4) 4
PwC’s five-step approach to
negotiation (4 of 4)
5
1 Follow up
• Expedite agreements as required.
• Follow up on risk, quality and compliance requirements, i.e. ensure any
ground won in negotiation is sustained through a robust approach to
contracting.
• Review lessons learned as a team.
Acronyms
Identify 3 targets for each negotiation variable (e.g. fee structure, cost, time
etc.) where possible:
MDO: Most Desirable Outcome – upper limit
LAO: Lowest Acceptable Offer – walk away lower limit
BATNA: Best Alternative To Negotiated Agreement - If you are forced below
your LAO then what are the alternatives?
PwC | PwC’s five-step approach to negotiation (1 of 4) 5
Key principles
to consider
when
negotiating
PwC | PwC’s five-step approach to negotiation (1 of 4) 6
Key principles to consider
when negotiating (1 of 2)
1 Think ‘Success’
Always think about what a successful negotiation looks
like…for PwC and for the other party.
2
1 Think ‘Commercials’
We are a commercial organisation and we want to negotiate for commercial
success and to be paid appropriately for our work.
3
1 Think ‘Integrity’
Integrity is key to our approach and therefore we aim for a ‘win-win’, not a
‘win-lose’ outcome. Find the collaborative route where you can both get
something
out of it.
4
1 Think ‘Flexibility’
Each engagement opportunity is different. You need to decide the
appropriateness of each negotiating step and behaviour, so be flexible in how
you deploy your approach.
PwC | PwC’s five-step approach to negotiation (1 of 4) 7
Key principles to consider
when negotiating (2 of 2)
1
5 Think ‘Relationship’
Always focus on the relationship – we want to build successful relationships
with our clients over time.
Negotiating skills are critical as we are always negotiating within a client
relationship from winning the work to negotiating deadlines and resources
during the engagement etc
1
6 Think ‘Communication’
Communicate with the client in a timely and effective manner. Keep clients up
to date with progress. This will facilitate your negotiations with them.
Be clear and specific when it comes to terms and conditions within the
negotiation so all parties are clear on what is being agreed.
Remember if you don't ask you don't get
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And finally…
During negotiations remember to…
Emphasise both the tangible and intangible value of the work we do for the
client.
Stop and check for understanding (are we comparing apples with apples?)
and then summarise,and test assumptions.
Silence is golden – Use it to let the other party step in.
When it comes to financials remember…
Negotiation is more than just price: time, quality, scope and relationships
are also ‘tradables’ and can be used in the negotiation process.
If the client wants to vary one of these ‘tradeables’, then one of the other
factors may need to move.
Have a walk-away price/line in the sand. We should not do work at any cost
– it can have a negative impact on our reputation and team. Ensure you know
the acceptable level of client profitability (CPY).
If you have to move from your desired outcome, do so slowly and
reluctantly. For example, rather than giving away 20% of the price, you might
reluctantly and emotionally give away 2%.
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