What’s the right number of options to put forward in financial negotiations ^[1]?

In their April 2005 article in Negotiation ^[2] newsletter, “Putting More on the Table: How Making Multiple Offers Can Increase the Final Value of the Deal,” Northwestern professors Victoria Husted Medvec and Adam D. Galinsky write that issuing three equivalent offers simultaneously can be a good strategy ^[3] in financial negotiations.

They describe a software company that began initiating in financial negotiations by presenting three equivalent software packages to its clients at once: for example, a $1 million package with payment in 30 days, the same software for $1.5 million with payment in 120 days, or an enhanced package for $1.35 million with a 30-day payment.

Customers responded well to this strategy, and the company’s profits rose.

When you present multiple equivalent simultaneous offers, or MESOs,
you show other parties the issues you value most. In turn, their reactions to your offers tell you about their priorities. Together, you can craft an agreement that accounts for everyone’s most important interests.

What’s more, MESOs give negotiators the choice they desire without
sending them into decision paralysis.

Related Article: Negotiating Financial Strategies that Work: Adding Third Parties to Seal the Deal ^[5]