Negotiation strategies that make money

When a buyer and a seller negotiate over a deal it is in the interest of each party to get the best deal possible. Here are the four most common tactics buyers use in a negotiation in order to get to the best deal possible. The Russian Front This is a tactic whereby the buyer presents the seller with only two options.   One is so terrible; it feels like being sent to the Russian Front which makes you agree to the other options. Compared to the first option the second option does not look that bad now. Don’t make the other party put you under pressure, don’t accept either option. Ask for an alternative or come up with a counter proposal. Good guy bad guy In this tactic you have one person making very high demands. This person is also often cold an unapproachable. The aim is to intimidate the selling party. The good guy on the other hand has a more reasonable approach and shows a willingness to concede and come to a deal. The purpose of this tactic is to set the ...

Funny Money is ‘Money whose value has been artificially increased, or money that is not worth as much as it appears to be:   The banks have used funny money generated by creative accountancy to deal with vast amounts of public debt’ (Cambridge Dictionary) In negotiation people use ‘funny money’ as a strategy to make money look insignificant. The aim is to put the other party under pressure and make them agree to a deal that is unfavourable to them. This tactic is used especially when dealing with big numbers. Let’s say two parties are negotiating over a $12.25 million contract. The buying party is asking for a 2.25% discount. They make it look like it is only a small ask, so not much to the overall price. What they don’t mention is the dollar amount for good reason. When the situation is already tense and the selling party is already under pressure to get the deal the selling party might agree to the deal without even having checked the actual number because it did no...

I recently had to get an arborist to do some tree pruning at our house. An arborist is not someone that I would call on very often hence I wondered how do I know that I got the best offer? Yes, you can get a comparison quote, which I did get, but then again was this the best offer I could get? Here are 5 steps that assist in determining if you got the best offer: 1)      Build rapport and sympathy People like to deal with people they like, so why burn your bridges and play hard ball.   People like to be of help so assume good intentions build rapport and trust. 2)      Reject the offer politely Tell the other party that their price is too high. While you would like to consider them for the job you would like them to review their offer. 3)      Think about their motivations Put yourself in their shoes. What motivates them to get this work? Is it money, is it the prospect of more work or are d...

The menu of a restaurant is not just a list of food and drinks, it serves as a clever marketing tool that guides its guests into ordering what the restaurant wants to sell and subsequently makes more money. The expensive entrée on the top of the list A high-priced entrée on the top of the list serves as an anchor point. The Restaurant does not intend to sell this entrée as it merely serves to create the impression that the subsequent entrees are not as expensive. This strategy tempts customers to order the second most expensive dish that could also be more profitable to the restaurant. A descriptive menu increases sales Research by Wansinkj et al (2001) found that the more vividly the dishes and drinks are described the more sales increase, up to 27%. Attributes like textures, flavours, the origin or quality all contribute to an increase in sales. Offering meals in two sizes Sometimes meals are offered in two sizes however the customer has no idea what the differ...

When talking numbers in a negotiation it is a good strategy to use odd numbers for many reasons. Firstly, an odd number signals the other party that you have thought long about your proposal and made many precise calculations. Secondly because it looks like that it took some effort to come up with this odd but precise number people tend to believe more this number is true. A round number on the other hand gives the impression that you are just giving a ballpark figure and that there might be still a lot of room to move. Thirdly, an odd number is less likely to be negotiated down due to it being perceived as being a true value with hardly any bargaining range. Two marketing professors from the University of Florida, Chris Janiszewski and Dan Uy looked at five years of data of real estate sales in Alacha County, Florida. They compared the list prices and the actual sales prices of the properties sold during that time.  They found that those who listed their hom...

It is 24 days till Christmas and if you are like me, then you probably haven’t started your Christmas shopping yet. 24 days is plenty of time, I hope! However, before you hit the shops, I want to give you some practical advice on how to negotiate when doing your Christmas shopping so your money will go further this year! While most people pay what the price tag says, savings can be made if you just ask. The reality is that most stores are willing and open to negotiate. As Herb Cohen, the author of ‘You can negotiate everything’, said ‘Our culture has programmed us to believe that the sticker price is what we are supposed to pay, but the reality is that almost no price is etched in stone’. 1)    Do your research Once you know the product that you want to buy, be it a camera, a phone, a fridge; be prepared. Research what the market price is and what the competitors are selling the same product for; then make your offer. 2)    Have a maximum acceptance poin...

All last week was hyped up by ‘Black Friday’ Sales. But what is it and why do we have it in Australia and is it worth it? Black Friday originates from the US and is the Friday after Thanksgiving which is the fourth Friday in November. Thanksgiving is a public holiday in the US. In the 1950s people used the Friday as a sick day and went shopping to get a head start in their Christmas shopping. Eventually in the 1960s this day turned into another paid leave day or shall we say into a paid ‘shopping day’. It has become a made-up event to drive consumerism. Many believe the term ‘Black Friday’ is used for profit making; black numbers in the ledger books; but that is not entirely correct. While this is the meaning today it meant something totally different in the 50s and 60s.  According to Bonnie Taylor Blake, a researcher at the University of North California, the term originated in Philadelphia by the Philadelphia police as they saw the day as a terrible day. The city was...