When someone asks you “How much?”, what’s the worst thing you can do?
Answer with a price.
The traditional wisdom is “He (or she) who names a price first loses.” The academics will advise you the opposite! They say seize the initiative and set the price range with an anchor!
Which philosophy does The Black Swan Group favor? We’re with the traditionalists here.
And unlike the academics, we negotiate on our own behalf every day just like you do.
The fact is high anchors make deals go away. They kill deals you otherwise should have made.
Another fact is that until the other side has given a price, they haven’t committed yet and there is a deal they would make. Once they’re thrown a number, no matter what it is, at that point they’ve admitted there is a deal they would make. It’s an emotional threshold they’ve crossed.
Many companies or people will try to get a price out of you early when they are shopping. Most likely, if they are pushing you for a quick price up front, you are in fact the fool in the game. They only want to use your number to drive down the price with the company they are going with anyway – the favorite. So don’t do it.
If you’re the favorite, they want to get a price from you so they can then start to drive your price down with numbers from the fool. So don’t do it.
The seasoned players want to get as much information out of you as possible before they set their ranges. They figure whatever number you throw, it’s only an opening offer and they’ll move you off of it anyway. They see your number as more information, and they crave information.
Your techniques for enacting these skills will be the dual combination of calibrated questions (“What?” and “How?” questions) combined with corresponding labels that drive at the same things. The tactical empathy techniques The Black Swan Group teaches have cumulative effects. As you use them, while the label or a calibrated question may not crack open the flood-gates of information the first time you use it, be patient, pleasant, and persistent. You’ll break through. Plan to mirror whatever their answers are.
People are often surprisingly willing to discuss the ranges of prices they are thinking. “It seems like you have a range in mind?” is a great label here. “What kind of range do you have in mind?” is the companion calibrated question.
Mirror the answer.
Unless they’re entirely fishing, they’ve done their research. And in fact, should be proud of it.
Labels – Declarative (statement, downward inflecting): “Seems like you’ve put some thought into this.” “Seems like you’ve done some research.” The same label can be said with a question mark at the end (inquisitive, upward inflecting at the end) and it hits their brain in a completely different way. “Seems like you’ve put some thought into this?”
Mirror the answer.
Take some other competing industry numbers (the highest ones) and let them do the math to add it up. Example: “If you went to Harvard it would cost you $2,500, per person, per day.” Our counterpart, in that case, responded with “I’m not paying you guys $100,000 for your training.”
Our actual price was a lot less, and we had no push-back getting it. PS: We always over-deliver.
There are a few traditionalists who love to throw a high number or a low one on you first. Why? They want to see if you can take a punch in the nose. It’s a test. They’re hoping that you won’t get rattled by it. If you do get shaken, they want to take your money before somebody else does.
At the end of the day, hold your ground. Part of holding your ground is saying “no” in polite ways. Exercise tactical empathy and patience, and the clock will work for you – not against you.
And above all…over-deliver with your product or service. That way the full price they paid ends up being a bargain and the best money they ever spent. That’s the key to long-term prosperity and long-term successful relationships. You and those who do business with you thrive!