January 5, 2024

Splitting The Difference

This month I received an email from a client who frequently hosts KARRASS In-House negotiation seminars for their employees. They asked me to elaborate on what happens when, in the negotiation process, you agree to "split the difference" to finalize an agreement.

This is an interesting negotiating topic. My research shows that "splitting the difference" can provide a simple, quick way to reach agreement. Many people use this approach all the time. After all, people are used to giving and getting equal shares at home, at restaurants, and at birthday parties. Splitting in the middle is simple. Not splitting in the middle is full of problems. It brings up a tough question: "If not in the middle, where else?"

Think about it. When someone offers to split the difference, haven't they just offered you half the difference as a concession? Rather than saying "OK," your next thought should be: "How much of the remaining difference do I need?"

In professional negotiating "splitting the difference" can be a mistake. This is true if you are negotiating prices, hours a job will take, development costs, determining which department does what, scope-of-work issues, skill too much. If a buyer suggests a spilt, sellers should respond, "I can't afford to." Then provide more levels of people required to work on a project, ownership of intellectual property or software code, and a multitude of other negotiating situations.

Things that are equal may not necessarily be equitable. Splitting the difference is certainly equal, but it may not be equitable or fair. And, it may end up leaving both parties to the negotiation unsatisfied.

I know buyers who use the spilt approach. They make a low starting offer, raise it only slightly, and then say, "Okay, let's split the difference." These buyers know it's hard for a salesperson to say no to such a reasonable request. The salesperson gets sucked into the split and then discovers they give away information to justify why a simple split is not equitable and use this as an opportunity to explore other options.

What about the buyer? What happens in the buyer's mind when a salesperson quickly says, "OK you've got a deal," to a request to split the difference? The buyer suddenly realizes they could have done better. It was too simple. They should have asked for more.

My research proves that the best agreements come when both parties are satisfied. In this example, chances are both parties have lingering doubts about the agreement. Both think they could have done better. Neither is fully satisfied.

You have a better opportunity to reach a mutually satisfying agreement if you resist the urge to "spit the difference." The first person to suggest a split immediately establishes a benchmark which the other person, even if they think the split is reasonable, should resist accepting. Take more time – remember the value of time and effort we discuss in the KARRASS negotiating seminars. Take the time to explore other options, other ways to look at the split, re-define what will be split up and what cannot be split up, see if there is a way to "expand the pie" before you start dividing up who gets what. Your time and effort in this discussion may reveal options neither party had thought of before, and open a route to a truly "both-win" agreement. Even if you end up agreeing to the originally suggested split, this extra time and effort will help raise the satisfaction level of both parties. "We got the best agreement that was available."