Everyone wishes they had better negotiation skills. Sort of. We want to be amazing negotiators, but we don’t want to be sleazy A-holes, and it’s hard to be the former without (intentionally or unintentionally) becoming the latter. Regardless, it’s fun to watch people with questionable morals use their Jedi mind tricks to con people out of money (and maybe we can learn something along the way).
Consider the following sleazy A-holes¹.
Some guy’s dad really wanted a reel-to-reel tape player². The dad finds one online and goes to check it out. It’s exactly what he wants, but the seller’s asking price is $1000. The dad offers all he can, which is $600. The seller tells the dad to go to hell. On his way to hell, the dad gives the seller his phone number in the remote chance that the seller eventually wants to lower his price.
The next day, the son, knowing what happened to his father the day before, goes to look at the reel-to-reel. He doesn’t say anything to the seller about his dad. As far as the seller knows, he’s an unrelated, independent party.
The son doesn’t know anything about reel-to-reel tape players; regardless, he pulls out a screw driver, takes off the back panel, inspects it with a flashlight, and pulls out some bullcrap line about the components being worn and needing to be replaced. He offers $300 for the reel-to-reel and says that anyone willing to pay a penny more than $300 is a giant dumbass³.
The seller is furious. He tells the son to take his $300 and go to hell because some other guy offered him $600 just the day before. At this point the son leaves, and the seller immediately calls the dad and happily sells the tape player for $600.
So what happened here? The son was able to adjust the sellers anchor price. Powerful strategy, but very difficult to pull off, especially if you’re not a douchebag with lots of extra time. To learn more about adjusting anchor prices, check out Chapter Two of Dan Ariely’s book Predictably Irrational.
A man, let’s call him Nibbles, was waiting to board an airplane. Since the airline had seriously overbooked the flight, they began offering travel vouchers to anyone who would voluntarily get bumped. They started the vouchers at $300, but before long they were up to $1000. This was enough for Nibbles to cash in. But when he went to counter to claim his prize, he wasn’t quite done.
He said, “Thanks for the $1000 travel voucher. Would it be possible to get upgraded to first class tomorrow, too?” The airline representative agreed.
Then he said, “Since I can’t leave until tomorrow, can the airline put me up for the night at a hotel?” Again the airline representative agreed.
He continued, “I’ll need to eat. Can you hook me up with dinner tonight as well?” The airline representative agreed to this, too.
“One last thing,” he said, “I have no way to get home from the airport tomorrow. Can you provide a car and driver to take me home?” And once more the airline representative agreed.
This guy bought his original ticket for less than $200, and he got a $1000 voucher for getting bumped, but the additional nibbles he took after he accepted the official offer may easily have been worth over $1200. This is not only an illustration of the negotiation technique called the nibble, it’s also an illustration of a more foundational principle of negotiation: don’t ask, don’t get.
The nibble can be a very powerful technique in negotiations. Here’s a few thoughts to help you use the nibble without losing your soul:
• When the nibbles are inconsequential to the other party, the nibble is not evil.
• If you’re getting the other party out of a pinch, the nibble is pretty benign.
• Scope documents, when properly executed, remove any chance of nibbles from either party.
To learn more about the nibble, read this article by power negotiating expert and crypt keeper stunt double, Roger Dawson.
A former FBI hostage negotiator went to a car dealership to purchase a new car. He fell in love with an SUV and began negotiating the price.
The FBI agent started with an offer that was so low it was probably offensive. The salesman dutifully presented it to his manager and soon came back with a counter offer. The FBI agent looked at the offer and said something like, “This SUV is amazing, and it’s clearly worth every penny of the price that you’re asking–probably even more. That said, I’m a little embarrassed, but I really can’t afford to go any higher than my original offer.” The salesman went back to “see what he could do.” He came back with a handwritten note saying, “You win,” and “Congratulations!” with hearts and smiley faces on it. The note also had a new counter offer that was still considerably higher than the FBI agent’s original offer. Each round of the negotiations, FBI agent continued to explain apologetically that he couldn’t afford any more, and the salesman continued coming back with lower and lower offers until he finally came back with the FBI agent’s original offer.
Now let’s try to imagine the disarming empathy technique in the context of a CPA firm. You deliver your pricing proposal to your client. They are unwilling to pay that much. Using disarming empathy you would say something like, “Your QuickBooks file is amazing, and clearly my services aren’t worth a penny more than what you want to pay–maybe they’re worth even less–but I’m embarrassed to say it, I can’t really go any lower than my original fixed price offer.” Nailed it.
Negotiation techniques are very interesting to study, but much harder to practice, mostly because I don’t get too turned on by manipulation or by pissing people off. We can’t escape negotiations, so it’s important to understand these techniques and use them when they don’t compromise the purity of your being. And always keep in mind, the most important leverage you can get in negotiations comes from, as Steve Martin put it, being so good they can’t ignore you.
¹All of the sleazy A-hole stories in this post come from Episode 425 of the Planet Money podcast and its comments.
²I know. I get it. “Wow. This guy’s an early adopter. Probably wants a Blackberry, too.” You’re hysterical.
³Love ya, dad.
Greg was born in Akron, Ohio, in the shadow of the Firestone tire factory. He began to swim competitively when he was eight, swimming for the Mountlake Terrace Lemmings. He graduated in 1995 from the University of Washington with a math degree. He chose math for the ladies. After serving ten-years as an 8th grade math teacher, he decided it was time for a career change, mainly because he “couldn’t stand those little bastards.” He began his accounting career with a local CPA firm in Orem, Utah, where he consistently failed the QuickBooks ProAdvisor advanced certification exam. Greg currently works as the Controller for the Utah Valley Physicians Plaza. He lives in Provo, Utah, with his wife and two kids. He enjoys eating maple bars, drinking Diet Pepsi, and swearing.