This is one of the most important things you need to do. You need to set your limits before you enter into a negotiation. Set your limits early to save time and consternation later in the negotiation. Having set your goals as you came into the negotiation, setting your limits clarifies your bargaining parameters. If you have set your goals and have set your limits you can navigate a complicated and contentious negotiation.
A limit defines what you are willing to concede. It sets your reservation point. While the market always defines values, what is fair, and what is common practice, theft is that it needs to be better defined by comparing it with your limits.
There are consequences if you do not set your limits. Usually your limits are rarely tested. But it is critically important that each party is aware that there are limits which define the negotiation’s boundaries.
Know your BATNA. Know that you have other choices. Know what those choices are and rank them. Knowing your strongest BATNA, then focus on it. Know your resistance point, your “bottom line” and do not change it unless you have a very, very good reason to so do. The easiest person to fool is yourself. You need mohave a rational and clear plan in place before you have the first exchange with the other side.