Rules of negotiation
- Always quote the lower number first. If dust settles down a bit on any higher number, its never going to come down soon. (Anchoring effect).
- Show least interest in the end product and start with listing the shortcomings.
- 35% is usual margin in nay retail product. You know where lies the real price (If they are quoting the retail price).
- Create sense of urgency. Once the other party has invested in your discussion substantially (like 10 minutes of effort in talking) start to run. Say you are getting late. Loss aversion principle comes into foray here. We avoid losses 2X than waiting for gains.
- Show them the money. Show them real money, like cash and increase your chances by firing primitive brain response of mind loving ‘immediate gains’.
- Practice two minutes of silence (essentially 10 seconds) rule. After there last offer, repeat their price like 200 INR and remain silent for some time (depending on their body language), signaling them that you are thinking about the offer. In most cases they come up with the best they can offer you at that very time. I have got few things at cost to cost by these methods. I signal the seller that these items are out dated and might not sell now and hence it is easier to clear the inventory at cost.
PS : Last method might not work for very popular items.
Edit : The similar advice in a bit different words
Negotiations are all about entering into someone’s psyche and changing the way they perceive value of anything.
- Start with the midpoint of both of you. Suppose they are at 1000, start with 500 (thinking to get something as free is the lowest starting point.
- Go on discussing with an disguised intent of ‘non-interest’.
- Just before final negotiations be ready to walk away.
- Let them invest a lot of energy and emotions into the discussion.
- Then if you walk away (pretend to walk away) they will usually accept you deal (If it is not too ridiculous).
Important point is to let them invest emotional energy and not logical bullet points. Emotions are illogical you know.