How we change what others think, feel, believe and do
In negotiating, there are zones which need to be understood in order to reach agreement.
When I am negotiating to buy something, there is a range of prices which I will consider reasonable and which I will expect to find. If the price is lower than this, I will be pleasantly surprised and consider it to be really cheap. Together, these two zones make up the zone of acceptability. If something is priced within this range, then if I am seeking to buy it, then I will accept the price. If it is higher than this, then I will not accept the price.
The 'surprisingly cheap' zone continues to be important during negotiation, as if a buyer offers something in this range I might be suspicious that what they are selling is less than I really want, for example being of lower quality, as in the price-quality heuristic.
An important part of early preparation for a negotiation is to discover your zone of acceptability, for example by researching previous deals and looking at current market prices. You also, of course, will consider the finances available to you for this purchase. It can also be helpful to guess the other person's zone.
Typically the buyer will start bidding close to the bottom of their zone and will stop when they get to the top.
The seller also has a zone of acceptability, but this is effectively reversed, with the zone of unacceptability being below a determined price.
Typically, the seller will start by asking near the top of their range and will not sell below the bottom of the range.
Note that, although this article talks about price, the same argument applies to any desirable variable.
The buyer and seller thus both have zones of acceptability -- one low and the other high. If they are to find agreement, then these zones must overlap. This is the zone of agreement in which the final agreement on price (or what is being negotiated) may be found.
Much of the early stage of price negotiation is about discovery of the other person's zone of acceptability and working towards the zone of agreement. Thus at the start of the negotiation, both people might by outside the agreement zone.
The zone of agreement is sometimes abbreviated to the 'ZOPA' (Zone of Possible Agreement).
When the zones of acceptability do not overlap, then there is an effective agreement gap and reaching a satisfactory conclusion is unlikely.
Where this occurs, there are three possible outcomes.