The Only Way to Haggle Successfully

In earlier posts I shared why you’re leaving money on the table by refusing to raise prices and how to raise them without incurring dissent.  In future posts I discuss how and when to raise prices to gain maximum profit while improving your brand and keeping your clients happy.

But let’s explore another way many proprietors leave money on the table: by reacting to pricing pressure by indulging haggling.  If you work in retail, you’ll find this technique directly applicable.

The tools of negotiation are information and skill.  It’s widely believed in negotiation that the first person to name a figure loses.  Why is this?  When neither party knows the other’s expectation the playing field is level.  So the first party to show their limit is at a disadvantage.  Without reciprocating, the second party can then react by moving their own figure closer or further away as they choose. They can fake their limit to exert pressure.

Because of this a seasoned negotiator always encourages her opponent to name a price.  If her opponent is also skilled, she’ll defer.  This will go back and forth until one acquiesces.  Often, this figure will be in the form of a range with fuzzy boundaries.

How This Pertains to Published Prices

If you post your prices, you’re unwittingly forewarning your customers without similarly equipping yourself.  You automatically accept a disadvantage if you negotiate because the buyer knows your limits without you knowing theirs.

This is why large retail chains don’t indulge haggling.  To keep what little profit you make, follow their lead.

What You Can Do

 

The next time a customer asks you for a discount, apply the discounted upsell that I share in an earlier post.  Offer to discount an extra item that carries a high markup.  You increase your overall profit while allowing your client to feel they won a concession.   Read more about it here.

Use this re-framing technique to add cash to – rather than remove it from – your profit.  Try it.  Leave a comment below letting me know how it worked for you!

Have you ever printed a huge run of printed material only to discover a typo after the fact?  In the next article I show a way to avoid costly printing runs.  Look for it in the next couple of weeks.  And please keep your comments coming!

Until then,
profitable business All!

P.S. Thank you for your comments, questions, and readership.  For further reading on negotiation, I recommend Getting to Yes.

2 thoughts on “The Only Way to Haggle Successfully

  1. Dan Gravell

    I have also ready "Getting to Yes", a very enlightening book and one that has encouraged me to look for different aspects which can become part of a negotiation.

    I'd say that price negotiation can sometimes depend on the industry and nature of the supply of goods. For a software company there's really a very small marginal cost of supply. So that might affect how you approach discounts, or at the extreme, free copies for promotions or reviews.

    Reply
    1. Business Doc

      Thanks for your comment, Dan. I concur: negotiation must be adapted to fit the circumstances. I appreciate your insight. Please continue to read, refer, and comment on future articles. Glad you enjoyed the post!

      Reply

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