Trading—Moving in Small Steps
Episode #6 of the course Negotiation skills by Chris Croft
We saw in Lesson 5 yesterday that you should trade your way from your starting position to an agreement: Every time you move your position, you get something back in exchange, using the phrase, “If you … then I …” for each trade.
A final point about trading, and one that is both simple and brilliantly effective, is this: Move in small steps.
This is the single most common and biggest mistake that people make when they are involved in roleplay exercises in my training courses. In one exercise, the sellers start with an asking price of $4,800, and the first thing they do after being asked for the lower price is either say, “Okay, how about $4,000?” (conceding unilaterally!), or they trade and say, “If you order it in the next two weeks, I can do it for $4,000” (at least they got something back for the concession). But either way, they went from $4,800 to $4,000—they gave away nearly a quarter of the price in one big jump!
A much better suggested trade would have been to say, “If you order it in the next two weeks, I can do it for $4,650.” This is a smaller reduction and not such a round number.
The Benefits of Small Steps
Moving in small steps has three benefits:
1. First, you give away less money, obviously!
2. Second, you signal that there isn’t much more to give and they might as well get used to agreeing to a much higher price than they originally wanted.
3. Third, you get to do more trades so you get more back for the money you are conceding—in fact, you might even be gaining with each step.
It Works Both Ways
It’s exactly the same when you are buying. Suppose you said that the most you can afford for a house is $245,000. Don’t then say, “Well, maybe I could offer you $300,000—how about that?” because it’s unilateral (you’re not getting anything back for it), which makes you look weak, invites them to ask for more, it’s a round number (which looks made up)—and it’s a BIG jump. You’ve just given away $55,000!
Much better is to say, “If you could vacate the house by the end of next week, and if you leave the kitchen in, then I could pay $255,000—how about that?”
You can see that this is only giving away another 10k—and maybe the kitchen is worth that—and it sends the signal that they aren’t going to get much more out of you. If they do get more, it’s going to cost them more trades, so they might as well agree to the deal now. It’s a much more powerful signal.
You’ll Still Get a Deal
And don’t worry, you WILL still get the deal because you can do lots of trades until you get to an agreement—and you’ve already prepared a nice long list of these. Also, if things go badly and you get a bit stuck, you can always crumble up (if you’re buying) or down (if you’re selling) to their price and just agree to pay it rather than lose the deal. More about crumbling in a later lesson!
I’ll see you tomorrow for Lesson 7, which is a brilliant list of tactics both for you to use and for you to look out for in case they are used on you.
Bye for now!
CC
Recommended book
Getting More: How You Can Negotiate to Succeed in Work and Life by Stuart Diamond
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