Negotiation Tips: Don’t Be First to Name a Price

£ How tio generate incomeThe Price Golden Rule

Never be the first person to name a figure

In negotiations once everything else is settled someone names a price.  Then the other side names a price and we gradually meet in the somewhere in the middle.

When this happens the first one to name a price always gets the worse deal.

There is a better tactic if you want the best price you can get.

Ensure the best price you can get by ensuring the first figure mentioned is as high as possible.  If you can get the other side to mention this figure you have a figure anchored in their minds with which everything else is measured.  Anchoring is an important negotiation technique.

So if someone wants, say, training for process operatives, I start by talking to them about their current situation.  I ask how much more productive do they think they could be if the staff were better trained.  Then I ask what this equated to in financial terms.  They might say £100,000 a year.  So that is my anchor.

I then say well you’ll be pleased to know the training is a lot less than that.  “I can provide training at,(say), £5k, which will give you a bottom line benefit of £95k.  Does £95k on the bottom line sound good?”

Now even if the training is only normally £1k I have them thinking about £95k on the bottom line.  Often I’ve seen the other side agree to the £5k at that stage .. they are so fixated on the bottom line figure.

More often they will say but x does it for £1500 (they still haven’t really understood we would have charged £1k) and we negotiate between the £5k and £1500.   Even if I settle for £1500 I’ve still done extremely well and they feel they’ve got a bargain when measured against £95k+ on the bottom line.

Another tact is to ask what there budget is for the training.  Often they will give me an answer that is above my expectation and we negotiate based on their opening figure.

Whichever tactic I use I try never to be the person who names the cost figure first.