Successfully Negotiating Prices

How many times have we wanted to buy something but the price of the item was more than we could or was willing to pay? How many times have we just walked away in this situation without even attempting to negotiate the price?

To often we won’t make the effort to negotiate a lower price. If we will at least try to negotiate, we’ll often find that the seller is willing to sell the item or service at a lower price. It helps us, though, if we utilize some “rules of negotiating” that have worked for successful negotiators.

We need to do our due diligence homework

To start with, we need to know a few things about the product or service before we attempt our negotiations:

  • What is the price the competitors are charging for this product or service? If you can document that a competitor is selling this item for $xxx, the seller may be willing to meet or beat it. This puts pressure on a the seller to accept a lower price because he knows that you want or need the product or service and that you have done some research about the product.
  • What is the cost of the item to the seller? This is especially important when purchasing a big ticket item like a car. When you know the difference between what the seller paid for an item and what his asking price is, you have a powerful negotiating tool in your possession. Your intent is not to deprive the seller of a reasonable profit but rather not willingly pay a price that results in excessive profit to the seller.
  • Does the seller (or salesperson) have a quota to meet? Many businesses and salespeople have a monthly sales quota. If you are near the end of the month and the business or salesperson hasn’t met their monthly quota yet, your chances of successfully negotiating a reduced price is very good.
  • Why is the seller selling? There are times when we buy something from an individual rather than a business. If the seller needs to sell the item quickly, offering to pay cash immediately for a lower price may be all the negotiating required.

Make the seller name the price first

Having the seller state the price first gives you the opportunity to make a counteroffer for a lower price.

This puts us, the buyer, in control of the negotiations because we are determining what it will take for the seller to make the sale.

If we, the buyer, first tell the seller what we are willing to pay for the item or service, the seller will often times tell us that she cannot sell the item for what we are willing to pay.

This puts the seller in control of the negotiations which is the opposite of where we want to be in the negotiating process.

Don’t be afraid to offer a much lower price

If we are going to make a counteroffer or be the first person to name a price, our offer needs to be much lower than what we are actually willing to pay. This puts the seller in the position where his attention will be focused in getting our offer higher … not on getting the price he actually wants.

Keep quite

Once we have made an offer, we need to keep our mouths shut. Silence is a powerful tool. Remember, the seller is just as uncomfortable as we are when there is silence. In fact, the seller is mentally working on what he must do to prevent losing the sale.

The first person to break the silence loses their negotiating position. The seller knows this and will attempt to outlast us. We must not let this happen.

Ask for something extra

In today’s economy, few sellers can afford to let interested customers get away without making a sale. This puts us, the buyers, in control.

If the seller isn’t able or willing to sell the item or service at the price we want, ask the seller if she will add something extra to in exchange of for us paying her final offering price. Example: Ask if she will throw in a microwave oven with your purchase of the washer and dryer.

Know the seller’s limit

When it becomes clear that the seller will not go below her last offer, don’t be afraid to politely walk away from the deal. Walk away on good terms. The seller may very well be more willing to reduce her price in a few days when the item is still unsold. Money in the bank pays the bills … inventory on the showroom floor does not. In fact, the seller may be having to pay interest on a loan to carry the inventory.

Let’s keep in mind that our goal is not to keep the seller from making a reasonable profit. Our goal is to not allow the seller to make excessive profit at our expense.

Again, we must be willing to walk away if the seller is unwilling to negotiate or meet our counteroffer. Rarely will a particular seller be the only seller with the product or service we need or want. We are not under any obligation to buy from a particular seller. Our money, and how we spend it, is the only real voice we get in the marketplace.

Final thought

We need to realize that the seller’s objective and reason to be in business is to sell products and/or services. The seller knows all to well that no money is made unless a sale is made.

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Published by W. M. Brown

I am a retired U.S. expat living in Ecuador. I was a business owner for 32 years before retiring in 2012.

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