Negotiation Strategy

[Star]

As a seller which places you in a better position to maxise your price? Is it better to

i) name your price first,

or

ii) let the buyer name his?

What are the pro's and con's of each?

Same question but this time as a buyer.

 

[Joffrey]

Name price first. Know the true value (or the minimum you are willing to sell it for) and price above that.

 

[Thomas]

Name your price first. Generally, the opening positions predict the outcome.

 

[JoeWoah]

Americans don't negotiate like those from other cultures do. People here tend to feel embarrassed by it and they don't want others to think they're cheap.

 

[RedLantern]

It seems like people are sometimes offended when they get lowball offers as well.

 

[Thomas]

Originally Posted by RedLantern

It seems like people are sometimes offended when they get lowball offers as well.

Yes, partly because it implies a lack of value (or esteem), and also partly because it's an effective anchoring technique if you tread the line between low and offensively low. But they work, where the buyer has leverage - such as in today's housing market in general.

 

[Milhouse]

It is far to variable to give hard and fast rules. If you are resistant to anchoring techniques and understand all the hardball tactics, then it doesn't matter to you if they name first. You can even let them name first so they feel like they got a concession.

Second, how many other variables can you negotiate on? In many sales, timeline is incredibly important to the seller at the very least (e.g. wants to book the sale on this month/quarter/etc to get a certain bonus level, or needs to close the sale because they are moving to xyz city soon). If the price isn't where you need it to be, tweak them on the date to make them nervous.

Personally, I take no offense at lowballs, but I do immediately cease negotiations. If anyone tries to play hardball right off the bat, I assume they are too stupid to engage in negotiations with skill, and thus it isn't worth the time to hassle with them since they are probably flaky. "thank you for your offer, I'll take it under consideration"

 

[Thomas]

^^ these are good points, and many times buyer and seller have different priorities. For instance, extended warranty/service levels may be fairly valueless to a seller but have great importance to a buyer - but the seller wants to get payment now, where the buyer is indifferent to payment terms.

In that case, the seller offers the extended warranty in exchange for accelerated payment terms, both get something they want and give up something they're indifferent to.

If you have a bunch of negotiable factors, you can bundle or present trade-offs to the other party to see where they see value and where they don't - and then compare them to your value areas to maximize value for both parties. It's a tricky art sometimes, and not all deals are meant to be made, but preparation beforehand can make a huge difference.

 

[Milhouse]

Originally Posted by Thomas

preparation beforehand can make a huge difference.

Tons of wisdom in that statement.

 

[Piobaire]

He who gives their number first, looses. I've been party to a million (well close to a million, lol) negotiations. But here's the story of why I know this is true.

When I was about 15, I had a certain "golden age" comic book I wanted to sell to the local comic book dealer. Now, I knew the book was worth about $75 mint, $60 in NM. I wanted $50, as I knew the guy had to turn around and resell it. So we went around the bush for five minutes, trying to get each other to name a price. I kept saying, "You're the expert" and "I'll know you'll be fair." So finally he says, "The best I can do is $350."

This story is 100% true, and every time I have broken down and given my number first, I've left money on the table. Remember, if you're selling, you can only go down from your initial figure, and if you're buying, you can only go up from your initial figure. Why put yourself in that position?

Now, there are a host of other tactics, all good and some mentioned above, like getting into non-monetary selling points, but for the cash? He who gives their number first?

Looses.

 

[Milhouse]

You are assuming cash is the most important factor. It may or may not be. I've been in negotiations where time was more important due to the long term costs associated with delays outweighing just about any initial outlay of cash (relevant to the situation).

 

[Piobaire]

Originally Posted by Milhouse

You are assuming cash is the most important factor. It may or may not be. I've been in negotiations where time was more important due to the long term costs associated with delays outweighing just about any initial outlay of cash (relevant to the situation).

And how does one usually compensate when time is the most important factor? With money. You would pay more money to get the time variable where you want it to be if you were the buyer, right? Cash premium up front for time constraint in process. If you were the seller, you would require more cash to give ground on the time variable.

However, the OP asked this:

Originally Posted by Star

As a seller which places you in a better position to maxise your price? Is it better to

i) name your price first,

or

ii) let the buyer name his?

What are the pro's and con's of each?

Same question but this time as a buyer.

It seems price is the priority in his question.

 

[Pennglock]

Originally Posted by Piobaire

He who gives their number first, looses.

I tend to agree with this. By naming your number first you may or may not be able to exert some upward influence on your allowable range, but you completely negate the possibility that the buyer will make an outsided bit, which in my experience seems to happen far more often than you'd expect.

9 times out of 10, let the other party name the first number. There is very little to lose, and sometimes the world to gain.

 

[antirabbit]

I never price off of retail, but mark up from what I paid or price off of what has sold recently on the board.
I really hate the marked down from retail, lets be honest most of us find these at discounters at very good prices, we are not retailers.

On thrifted items, I just shoot for a price that will help me aquire something else I desire. With that said, I only thrift items I want to wear, not to resell.

 

[Thomas]

Originally Posted by Piobaire

He who gives their number first, looses. I've been party to a million (well close to a million, lol) negotiations. But here's the story of why I know this is true.

When I was about 15, I had a certain "golden age" comic book I wanted to sell to the local comic book dealer. Now, I knew the book was worth about $75 mint, $60 in NM. I wanted $50, as I knew the guy had to turn around and resell it. So we went around the bush for five minutes, trying to get each other to name a price. I kept saying, "You're the expert" and "I'll know you'll be fair." So finally he says, "The best I can do is $350."

This story is 100% true, and every time I have broken down and given my number first, I've left money on the table. Remember, if you're selling, you can only go down from your initial figure, and if you're buying, you can only go up from your initial figure. Why put yourself in that position?

Now, there are a host of other tactics, all good and some mentioned above, like getting into non-monetary selling points, but for the cash? He who gives their number first?

Looses.

Pio - re: the comic book story - how does such a huge disparity in values occur? If you've already done your research and set your values, how does it come to pass that someone who does this for a living and is reputedly knowledgeable would be so far away from your estimates? Either you worked with two grossly different sets of value bases (rendering one invalid) or one of you didn't do quite enough homework.

Either way, there was an information disparity between you and the dealer (which, truth be told is the case in every negotiation), and that leads me to wonder what he would really have been willing to pay, and why. After it was said and done, did you find out why he was willing to pay so much?