You’re arguing over fairness, but what’s the pie?

Negotiators waste hours debating what’s “fair.” Let's first get clear on the real pie, and split it with precision.

Author

Scott Harrison
August 19, 2025

You’re negotiating costs. But do you know what the negotiation is really about?

Let me show you in real life.

Last year, I was delivering negotiation training for an MNC client.

1. First stop: San Francisco.
2. Next: Houston.
3. Final: New York.

Here’s where it gets interesting.

Instead of flying two separate round trips (SF ↔ Houston and SF ↔ New York)

I arranged the trip as a triangle route:

  • SF → Houston ($666)

  • Houston → New York ($909)

  • New York → SF ($1243)

Total: $2,818

That routing saved time, hassle, and money.

But it also created a negotiation problem:

How should Houston and New York split the cost of the flights?

Both were cost centres, both responsible for hosting me, and both wanted to pay less.

Seems like a simple question.
But what followed was a masterclass in misunderstanding the real negotiation.

Round one: “Just split it evenly?”

New York says:

“Let’s go 50/50. $1,409 each. Fair?”

Houston replies:

“Wait. A round trip from SF to Houston is only $1,332. Why would I pay more just because of the triangle?”

Round two: “You pay your leg. We pay ours.”

New York counters:

“OK, you pay SF → Houston ($666), we pay NY → SF ($1243), and we split the middle leg.”

That means:

  • Houston pays $666 + $454.50 = $1,120.50

  • NY pays $1243 + $454.50 = $1,697.50

Sounds better.

Still wrong!

Round three: “Split the middle leg by ratio.”

Now they try to split the $909 (Houston → NY) in proportion to what each would’ve paid on their own:

  • Houston round trip: $1,332

  • NY round trip: $2,486

So the $909 gets split:

  • 35% to Houston = $317

  • 65% to NY = $592

Now:

  • Houston pays $666 + $317 = $983

  • NY pays $1243 + $592 = $1,835

Closer. Still missing the point!

So what is the point?

They’re trying to be fair.
But they never asked the most important question:

What’s the pie?

They were arguing about splitting costs
But they weren’t even clear on what they created by working together

The real pie isn’t the cost. It’s the saving.

If each city flew me in and out separately:

  • Houston RT: $1,332

  • NY RT: $2,486
    = $3,818 total

But the triangle route?
= $2,818 total

They saved $1,000

That $1,000 is the negotiation pie.

It’s not the costs.

It’s the surplus created by coordination.

So how do you split the pie?

Houston could argue:

“NY, you were ready to pay $2,486, just pay it.”

NY could argue:

“Houston, you budgeted $1,332, stick to it.”

Both want all the surplus.

But the fact is:
Neither side could create that saving alone.

  • If Houston changed the meeting date → triangle falls apart

  • If NY couldn’t host in sync → triangle falls apart

  • No coordination = no saving = no pie

They’re interdependent.

So the most reasonable split on this occasion?

Each gets half of the savings.

That’s $500 saved each.

So:

  • Houston pays $1,332 – $500 = $832

  • NY pays $2,486 – $500 = $1,986

That’s how you divide a pie, once you’ve defined it


However, remember that there’s no rule that says it must be a 50/50 split.
It just so happens that it’s the best decision in this situation.

I hope today you’ll takeaway

Negotiators waste hours debating “fairness” without ever defining the pie.

If you don’t define the pie, you’ll argue about surface logic, and miss the strategic value.

In this case, the pie was the $1,000 saved by coordination.

Once you see that, all the noise fades.

Start with:

What can we create together that we can’t create alone?

Then:

Split that.

That’s principled negotiation.

Next week we’ll tackle a case where the pie isn’t as obvious.

See you then

Scott