this point.
Market situation
Even more important is recognising: are you a seller in a buyer’s market or the other way around? Keep this in mind as long as you don’t misread the signs. A hard-pressed seller may have little buffer left, so he must leap out from other suppliers pricewise. On the other hand his expectations may have been lowered several times already.
Negonomics – recognise buffered pricing
At the start of negotiation first prices are usually created to include a buffer. The technique of finding out the degree of adjustment I have named Negonomics. There are clear signals once we know what to look for. In price listings the number nine is clearly popular and for good reason. It gives the seller almost what he desires and is supposed to mislead the buyer into thinking the price is lower than it really is. Certainly this applies less in commercial circumstances, right? Well, if you look at the prices that surround you this question is easily answered. Just count the percentage of 9s. If you find more than 10% you know that buffers are being added and prices raised from the original calculation to the next nine upwards. The first realisation is as simple as that.
Just look at the difference:
Calculated prices:
7,13
2,86
1,70
3,66
The same prices with slight adjustments:
7,15
2,90
1,75
3,70
The same prices with buffers:
7,95
2,95
1,99
3,99
What kind of prices do you see most? Exactly. One further point. We can give the impression that our prices are without buffers, by making them appear irregular. On a subconscious level many of us recognise prices that have been altered. In a business situation, uneven prices appear to be the result of calculation and are less likely to be challenged or compared to fabricated ones with too many nines. We will return to Negonomics later in this chapter when we discuss pricing.
FOCUS: Misguided valuations
Every value has a blended past and an unsure future. Buyers and sellers seek past performance to make up their mind regarding what is possible.
ELABORATE: One day someone had to be the first to decide a value.
Let’s look at the oldest profession on the planet, which, as we are often told is prostitution6. Imagine the girl looking at her buying costs and expenses, which added up to an exact zero. That was no help! She received the product for free, which leaves her with the all important question: “How much are clients willing to pay?”
And this manner of picking prices still works like a charm.
SOLUTION: Contrary to what may suit our purpose, there is not just one value, there are many different ones. We must find the value we like best, the valuation that supports the result we aim to reach. We have already decided that this is not accomplished by talking down what we want to buy, or overvaluing what we are selling. This is irritating, makes the other side hard of hearing, and only works counter productively.
FACT 5: Failing to acknowledge obvious strengths in the other’s position disqualifies you as a fair judge of its value
FOCUS: If your opponent disagrees with everything you say, they won’t accept your opening bid or counteroffer. If they feel you are in the wrong, any amount you come up with is also incorrect because your ‘incorrect’ assumptions are behind it.
ELABORATE: The subliminal message for them is that you, as buyer/seller, are the wrong person for them to deal with. You make them think: There must be others out there. The more convincing you are when you emphasise your strengths and their weaknesses, the less suitable as a counterpart you present yourself.
You will only succeed if they see no other option and simply have to deal with you. But keep in mind that the more pressure you apply, the more attractive their other options become in comparison. They may very well start reconsidering alternatives they had discarded earlier. And who made them do that? You did.
That is why, during negotiations, there is no such thing as a sure and set value because this is the only reason you are negotiating. Insisting your value is set yet wanting to negotiate is contradictory. Values will always depend on circumstances in which your attitude plays a big part, positive or negative.
SOLUTION: Never fear to negotiate, no matter what your counterpart tells you. The only absolute values we know are the established prices on the day. Not even one day ahead, because already you find the opinion of the experts differs. Take commodities. Will gold go up or down? What is the future price of oil?
The fact alone that we are negotiating tells us values have not been established or need revaluation. Everyone says that they offer “a fair market price” or better.
FACT 6: The market reacts to exposure, sentiment and excitement
FOCUS: Exposure, sentiment and excitement
ELABORATE: It is often said that the market decides the value of anything, which is true as far as it goes but let’s look more closely at that mysterious market… because it reacts to exposure, sentiment and excitement.
SOLUTION: The better the exposure, the more attention we get and the more attention, the higher the price. This is the sole reason companies advertise, because customers copy each other like sheep, and nothing succeeds like success but do we realise that two out of three of these decisive factors are emotional responses, and only exposure is factual?
Exposure
How visible is the item, and do people know where it can be bought?
Advertise, advertise, and advertise. Many successful companies have put every cent they have towards exposure. Put your money in the right places at the right costs, because nobody will know what you offer if you are located on page 512 on Google.
Sentiment
Without the right sentiment, we have doubts, even if there is excitement and there has been exposure. Is the sentiment right? That is in our hands. Nearly every aspect of NegoLogic relates to this issue at one level or another.
Excitement
You might very well ask; how can I spin excitement?
You can successfully trigger
