Negotiating Price: The Power Of Opening Extreme.
By Guy Johnson
For many of us, negotiating on price is something we do every day in our professional lives. It could be agreeing a price for your product or services with a new client, or simply haggling over what to pay with one of your many vendors.
Often this type of negotiation is done on the spot with the aim of getting a discount, or perhaps just agreeing a sale price you feel vaguely comfortable with.
The problem with this unplanned approach to negotiating price is that so often it leaves so much money on the table. The overwhelming desire to appear reasonable and to be liked can often stand in our way when we negotiate. This can materialise in asking for only slightly more that we want, or perhaps requesting a nice round number that would mean a slight discount.
As humans, we are all susceptible to something called anchor bias. Anchoring is the effect that the first number we hear has on our brains, creating a powerful magnet-like point towards which the discussion becomes drawn.
In these everyday price negotiations, with some simple planning, you can use this effect to great effect. By opening extreme – starting with an extreme, yet just about realistic opening price, you can create our own anchor point. You are then free to move from this position in the other party’s favour. The attractiveness of subsequent prices is then judged relative to that first extreme opener. Next time you are negotiating price, try opening extreme to create an anchor from which you can move and achieve a much more favourable price, that the other party will also feel satisfied with.
Guy Johnson is the Founder of negotiation consultancy BreakPoint Black