Before either person opens, there's a period called the preamble. During this time, ask questions, listen, and look for weaknesses. Avoid opening because their offer might be good news for you; you may learn from it; or your opening offer might be good news for them! When selling, you may not be able to avoid opening first, but try saying some thing like, "It depends on the quality you want. Do you have a budget/quality level in mind?"
- When you first go to see someone to negotiate, there's a period called The Preamble, which is where you're kind of talking around the subject. Before either person makes an opening offer. How's business, have you had the car long? That kind of thing. There's no need to rush through this phase. In fact ideally you want to wait until they decide that The Preamble is over and make their opening offer. So, avoid making your opening offer fist and encourage them to open.
Just ask lots of questions and listen. Because this is where you'll get information on their weaknesses, maybe they'll tell you that they've looked at lots of houses and yours is the only one they like. In which case you think ah ha! But, you don't say it. And maybe they're the seller and they tell you that they're immigrating to Australia next week, ah ha! In some situations you have to open first, if you're selling something in a shop for example or putting a house on the market. But, if you possibly can avoid opening first then you should.
It's extremely beneficial to avoid opening for three reasons. Number one is that if they open first it might be good news. You never know, they might quote you a really cheap price if they're selling. And if they're buying they might say how much they're planning to spend and it might be a nice large amount. Perhaps, more than you were planning to ask for. Number two is that if you open first you might put your foot in it. If you're selling the price you quote might be stupidly low.
And if you're buying and you tell them how much you want to pay it might be higher than they were expecting. So, they'll immediately put their asking price up. There's always this risk because you just don't know their situation. They may have a completely different view of the value of what you're offering or of what they're offering than you do. So, play safe and let them open first. And the third reason is that you learn from their opening offer. Whether it's good or bad it's key information.
And you can then change your position. Particularly if say you're selling and they mention a bigger budget than expected, then up goes your price. And if you're buying and they mention a cheaper price than you expected, then down comes the amount that you might get it for. Of course, the opening offer might be bad news. But, then it's just game on as usual. And if you get great news maybe 20% of the time then getting them to open first is definitely worth doing.
But what if they ask you to open first? What do you do? The answer is to chuck it back to them at least once. I'll show you how this might go. Both for when you're buying and when you're selling. Here's a short scene of me selling a training course and trying to avoid opening first on price. - Chris do you think it would be possible for you to create a 100% brand new course specifically designed for our company? - Um, yeah, yeah I could do that. It's ah it would be tricky, but I could do it, yes.
- Great, how much do you think that would cost? - Oh well it would depend a lot on what you wanted. What level of tailoring and things. Do you have a budget in mind for that? - Not really I was just hoping we could start with you and find out exactly how much you would need. - Okay, um, yeah, it's difficult to predict. Have you done similar courses to this in the past? What did they cost? - You know the previous ones were a little bit different so I'm not exactly sure if we could compare them. - Ah okay, well just out of interest those previous ones, was there a kind of range, I mean, from the lowest to the highest cost, what did they come in at roughly? - You know Chris I'm not sure if this is exactly the way we should approach it I'd rather find out from you exactly how many hours you think you would need to design this and therefore get a cost from that.
You think you can do that for me? - Um, yep, yep, I can certainly do that. So, this would be the price. As you I didn't succeed that time. But it was worth a try because sometimes it can work really well. I had a customer once who was let down by their existing training provider in the last minute. And they're asking me for price to help them out at short notice and just before I quoted them a price increased a little bit because it was last minute and quite difficult I remembered this rule about not opening first so I asked them how much the other person had been charging.
And they told me and it was far more than I was going to ask for. So, I just said hmm, well I suppose I could do it for that. Trying not to jump up and down shouting yes. So, they were happy and so was I. So, do you tend to open first, at least sometimes? Could you try pushing it back to them? Saying I'm not sure, what do you think? Or do you have a budget in mind? Or what exactly do you mean by a good price? Make sure you remember to try it when you next negotiate.
- Why we avoid negotiating
- When you should think about negotiating
- Planning your negotiation
- Calculating your opening offer
- Leveraging different negotiation tactics
- How to trade
- Determining if you should walk away