Price Negotiating Tactics
IN CHAPTER THREE, we talked about two types of negotiation: the short-term, onetime negotiation and the long-term business negotiation. In the short-term negotiation, your job is to get the very best price and terms at this moment, without concern for whether you will ever see or work with this person again. There are a series of price negotiating tactics that you can use to get a better price or deal in a one-off purchase or sale. Fortunately, these tactics also work in negotiating a long-term business arrangement where you will be negotiating with the same party again, year after year.
Tactic 1: The Flinch
No matter what price the other person offers, flinch as if you just heard something disappointing. Put a sad or pained look on your face. Roll your eyes upward and back as though you were experiencing great pain. Say something like, “Gee! That’s an awful lot of money!”
Surprisingly, sometimes just flinching will cause the other person to alter the price immediately. And if the first flinch gets you a lower price when you are buying, or a higher offer if you are selling, be prepared to use the flinch again and again throughout the negotiation.
Tactic 2: Question
Ask, “Is that the best you can do? Can’t you do any better than that?”
When you ask the price and the person responds with the price, pause, look surprised or even shocked, and say, “Is that the best you can do?” And then remain perfectly silent. If there is any flexibility, often the other person will drop the price or otherwise raise the offer immediately.
If the person lowers the price in response to your questioning whether it’s “the best you can do,” you then say, “Is that the very best you can do?” Keep pressing for the lowest possible price and best terms. Follow up by again asking, “Couldn’t you do any better than that?” Remember, the people you are negotiating with don’t know if you’ve spoken to anyone else who’s gotten a better deal from them. You can also ask, “What is the best you can do if I make a decision today?” This adds an element of urgency and triggers in the mind of the vendor the fear of losing the sale.
Sometimes you can ask the question, “Are you telling me that you’ve never sold this item for less than that amount to anybody else? Nobody has ever bought it for less than that price?” Whenever you ask this kind of direct question, people will feel almost obligated to tell you truthfully whether they have ever sold it at a lower price.
GET IT ON SALE
In purchasing something at retail, such as furniture, appliances, or lawn equipment, you can ask, “Do you ever have this item on sale?”
Most retail organizations have special sales on certain items every year. When they tell you that this item usually goes on sale in the spring, you can then reply, “Well, I missed the sale the last time, but I would like to get it at that price today.” Sometimes, just giving sellers a good reason to give you a better price will sway them and influence them to lower the price for you.
Tactic 3: Assertion
Whatever price they give you for a particular item, you immediately reply, “I can get it cheaper somewhere else.”
Whenever you tell salespeople that you can get that item cheaper from one of their competitors, they immediately soften and begin to backpedal on the price. The assertion that “I can get it cheaper elsewhere” often demolishes price resistance because the seller now thinks that you will go somewhere else.
Remember, always be friendly and genial, even in this type of negotiation. When you ask in a pleasant way, it’s much easier for the person to concede to you than if you are serious or aggressive.
Tactic 4: Lowball
When someone asks you for $100, you lowball your answer and say, “I’ll give you $50 cash right now.”
Whenever you offer cash immediately, the price resistance of the other party diminishes dramatically. There are reasons why offering an all-cash deal causes people to be more open to doing business with you. The three most obvious ones are 1) reduced inventory costs, 2) no credit card merchant fees, and 3) the feeling of “instant gratification.” As another example, let’s say you offer $50 for a $100 item and the seller comes back with an offer of $60. Very often you will find that even if you lowball at a price that seems ridiculous, sellers will still be willing to sell to you for much less than you ever thought you would have to pay.
Tactic 5: The Nibble
A nibble is an add-on. You say something like, “Okay, I’ll agree to this price if you will throw in free delivery.”
If the other party hesitates about adding something else into the deal, you can say in a pleasant way, “If you won’t include free delivery, then I don’t want the deal at all.”
Here is the key to using the nibble. Agree on the purchase of the main item. Agree on the price and terms. Make it appear as if it is a done deal. The seller thinks he has sold the item at a price that he is happy to receive. Then you add on additional requests. It’s a tactic that works even if the “item” you are buying is a house, a car, or a boat.
LESSONS FROM BUYING A HOUSE
You have just agreed to purchase a house for a certain price. Once you have agreed to the purchase price and occupancy date, but before you sign anything, you request that the sellers include the furniture, drapes, and lawn equipment in the offering price. It is quite amazing how many people will sell an entire home, as is, for the same price that they were asking for the house itself.
In the wake of the dramatic decline of the real estate market, a friend of mine purchased a house that had been offered for sale at $2.4 million. After six months of negotiation, the older couple finally agreed to a price of $1 million, just to be free of the house and the costs of maintenance. Then my friend, who is an excellent negotiator, said, “Of course, this price includes all the furniture, including the artwork, doesn’t it?”
As it happened, the home was extremely well furnished and there was more than $100,000 worth of artwork inside. But because they were eager to sell the house, and also realized they had no place to put the furniture, they said, “What the heck,” and gave him everything he asked for, even though they ended up selling at a dramatically lower price than they had hoped to get.
