19 ms·

When negotiating a price, never bid with a round number (2016)

522 points by mhb 5y ago

pflenker 5y ago
This advice is also part of the book "Never split the difference" by Christopher Voss, a highly recommended book for anyone looking to improve their negotiation skills.
- leeoniya 5y ago
  i found a lot of his advice somewhat silly. why would you come up with some to-the-$1,000 asking price in a salary negotiation rather than just asking for 30% more than you'd be okay with? i know he has another version where at some point in the negotiation (rather than the beginning), you whip out some very precise number, but that would immediately strike me as a psychological play rather than the honesty/thoughtfulness it's designed to convey. in a different situation it's certainly more effective, like when requesting a budget/expense for a specific project, since it signals you've done the math and not just throwing inflated approximations.
  - pflenker 5y ago
    I was able to successfully navigate tricky negotiation situations using his advice, but salary increases were never a part of it. I believe salary increases should reflect professional skills and not negotiation skills, and I avoid companies which reward negotiation skills with higher salary. I have always used the "imprecise offer" somewhere in the middle, and it usually worked out great.
    - Jiro 5y ago
      >I avoid companies which reward negotiation skills with higher salary. This is like saying "I avoid companies run by humans".
      - pflenker 4y ago
        I can tell you that I have worked at several companies, and am currently working on another company, where negotiation skills do not determine your salary.
  - asurty 5y ago
    I think the core ethos of the book is every negotiation is different and so each tip/technique is just that - a tip/technique you can add to your tool belt and use when the context lends itself to it. The book also mentions anchoring should usually be avoided in negotiations and instead it recommends you focus on the non monetary value points each party can exchange. There is actually a section on negotiating salary and IIRC it recommends you provide a range where the bottom of the range is where you are hoping to land. So you are correct - I would never say in a salary negotiation that I need an exact dollar amount as it might make me love petty unless I prefaced it with 'I have a family to feed and a roof to put over our heads'.
- BeetleB 5y ago
  Terrible book with some gems: https://news.ycombinator.com/item?id=21769264 https://news.ycombinator.com/item?id=21769264 https://news.ycombinator.com/item?id=19059590 https://news.ycombinator.com/item?id=19059590 https://news.ycombinator.com/item?id=25309966 https://news.ycombinator.com/item?id=25309966
  - goostavos 5y ago
    I thought the book was great! It's also the only book on negotiation that I've ever read (aside from Art of the Deal out of curiosity, which isn't actually about negotiations at all!), so take my views with a grain of salt. If you ignore the stuff your linked comments complain about, which is largely him having an obnoxious writing style and literal too-cool-for-(Harvard)-school attitude (them nerds don't know nothin'!), I found tons of the actual content immediately applicable with lots of return. The thing I absolutely loved about the book was shifting your mindset away from negotiations being these big scary stressful standoffs with winners and losers, and towards them being lighthearted, possibly even fun(!) shared problem solving sessions. That mental shift, and having a box of tools to use, makes navigating tricky situations so much easier. It also make me look forward to previously stressful situations. For instance, I recently bought a new car, which is a process I usually loathe. However, using all the tricks from the book, I was able to negotiate down a crazy amount off our car with the main approach being the "how can I do X?" from the book. There was some back and forth, some huffing and puffing about how it couldn't be done ("we're already taking a loss on this!"), but eventually, after numerous showy checks with the management, we agreed on a price. I legit had a blast the whole time cause the mental state the entire time was "can we solve this problem together?"
- kqr 5y ago
  Another thing in that book that's helped me is the suggestion to make your first bid 65 % of the maximum price you're ready to offer. Second bid 85 %, then 95 %, then your maximum offer. It's not that these numbers are magical in any way, it's just that for me it's convenient to have a rule ready so I don't have to expend mental energy on what numbers to say, and I can instead use that energy on coming up with how to present them. Knowing the steps I'll take to the final offer ahead of time also makes me slightly more comfortable entering such a low bid to start out with.
- thinkmassive 5y ago
  It reminds me of "How to Measure Anything" by Douglas Hubbard [1] I read "How to Measure Anything in Cybersecurity Risk" but the relevant concepts are from his original book: - every measurement is an approximation - you can determine a more accurate valuation (or probability) by thinking in terms of bets The book isn't primarily about negotiating, but it is about estimating based on incomplete information, which applies to all negotiations. Avoiding a round number doesn't need to be arbitrary. By calibrating your estimation process you can come up with a more precise number, which can also boost your confidence. The result is both having a more specific valuation in mind, and being more comfortable with the outcome regardless of whether the deal worked for fell apart. 1: https://www.howtomeasureanything.com/books-by-douglas-hubbard/ https://www.howtomeasureanything.com/books-by-douglas-hubbar...
dazc 5y ago
There was similar thinking in retail not so long ago when prices started to change from something like 3.99 to 3.77, for example. I don't see this so much now which suggests it didn't work out as expected?
- bombcar 5y ago
  Sam Walton hated .99 for some reason, so Walmart prices are never that.
  - HPsquared 5y ago
    ASDA (subsidiary of Wal-Mart) fuel stations in the UK always have the fuel price ending in .8 (e.g. 175.8p per litre) while pretty much EVERY other fuel station always has prices ending in .9. It gives a feeling that they're slightly cheaper than the competition, I think. Even if the more significant digit is more expensive sometimes, people don't remember that part as much because it varies from day to day.
    - twelve40 5y ago
      ...until someone else comes along and offers .7 : ) so the race to the bottom begins
      - hmate9 5y ago
        It’s not a race to the bottom because what Asda is doing is pricing it 175.8 when others price it 174.9
        Mordisquitos 5y ago
        I assumed they meant a race to the bottom in terms of decimal digits only. Another petrol station could price it at 175.7, or maybe even 176.7 if the illusion of being cheaper than ASDA still works.
      - Mordisquitos 5y ago
tromp 5y ago
I bid 701k on my house, whose asking price of 645k seemed on the low side. After winning the bid, I asked what the next-highest bid was. Turned out to be 699k. I'm so happy they took this unrounding advice in the other direction :-)
- TonyTrapp 5y ago
  This also often worked on ebay for me, e.g. if you are willing to spend 60 $currency on an auction, make your highest bid 61.52 or something like that. The extra 1.5 dollars/euros/whatever doesn't really hurt but if there's many people who'd want to win the action for a similar price as you, it can be the distinguishing factor.
  - toss1 5y ago
    Yup. Same here for eBay and industrial equipment auctions - figure out my approximate maximum, consider the nearby round number, then add something almost trivial like the "1.52" in your example. While it obviously doesn't help if the bidding runs up to another level, I've found it helps a surprising number of times. And if you actually want to win the bidding, definitely do not skimp to below or at the round figure - that marginal extra will provide way more value than the cost (i.e., not losing & spending more time & funds getting the item elsewhere). Now, I wonder how long it will take for auction systems to start suggesting this type of bid and ruining the strategy so we need to find another strategy...
    - TonyTrapp 5y ago
      > Now, I wonder how long it will take for auction systems to start suggesting this type of bid and ruining the strategy so we need to find another strategy... To be honest, the immediate issue that is already there in this very moment is that more and more people no longer sell their stuff as regular auctions on ebay, but as completely overpriced fixed-priced offers. This is the main distinguishing factor for me between using ebay ten years ago and now. If everyone starts doing that, the best bidding strategies become useless.
  - 5y ago
troelsSteegin 5y ago
The idea is that the bidder's precision signals confidence, and that low confidence signals amenability to negotiation, and that negotiation leads to poorer outcomes for the bidder. The HBS paper they cite on M&A [0] is most interesting, to my view, in the sense that both players in the M&A "game" are presumably quantitative. One would think a social psychology effect would be less so in a game between quants, but their interviews suggest perceived confidence does matter. The precision signals that the bidder is confident pricing and negotiating analytically. The thing I am curious about in [0] is that they report the bid price per share, and not (unless I missed it) the asking price. I don't know how M&A "works". If you and I are both estimating the value of a good, if our estimates are close it's one thing and if they are far apart it's another. Are rounders losing because their estimates are less accurate, relative their counterparty's? [0] https://www.hbs.edu/ris/Publication%20Files/16-058_27d73983-3441-4628-906c-10ce5fb7ac47.pdf https://www.hbs.edu/ris/Publication%20Files/16-058_27d73983-...
- bombcar 5y ago
  I also suspect that sometimes the bid price is a signal to others besides the company being bought - and a number that’s easy to digest might help in media, etc.
- dmurray 5y ago
  > I don't know how M&A "works". In general it's the buyer who names a price first. Take the current Twitter acquisition, the board weren't trying to sell the company at all and Elon Musk made an unsolicited bid of $54.20/share. Other times the board may be actively looking for a buyer and have a price in mind, but it will still typically be up to the buyer to propose a deal. Not least because the number isn't the only thing being negotiated: the buyer will likely have a range of stipulations or conditions attached to the bid so every bid will look different.
- vasco 5y ago
  > One would think a social psychology effect would be less so in a game between quants One would, but the little I've seen & heard about due dilligence around M&A (and startup investments for that matter) tells me it's nothing close to "quant". People decide they want to buy something, and then try to get it for a good price, and try to have it so that due dilligence works to reduce the purchase price, while not actually finding anything to block the deal. Perhaps in public company acquisitions there's more sophistication, but I really doubt that.
qznc 5y ago
“What are your salary expectations?” “$153,845.64” Anybody ever tried that?
- tsukurimashou 5y ago
  I will
- andi999 5y ago
  add one more digit. Every ten years they need to pay another cent.
- MauranKilom 5y ago
  https://xkcd.com/2597/ https://xkcd.com/2597/
- FatalLogic 5y ago
  That extra $0.64 could lose you the job, because you'd appear to be insane and obsessed with tiny unimportant details
  - op00to 5y ago
    My old boss loved to calculate our salaries (increases always in percentages) so the actual dollar amount would contain our birthday or be $123456 or whatever.
    - pc86 5y ago
      Oh so they were actually insane, got it :)
      - op00to 5y ago
        His reasoning was 5% is just as arbitrary as 5.02% or whatever he would do. Also it really pissed off finance, which you rarely get to do with impunity. I miss him. My new boss is more concerned with my haircut and beard than anything else.
m3kw9 5y ago
Like how Elon Musk bid 54.20 for twitter?
- prasadjoglekar 5y ago
  I think that was as much a 420 reference as an un-rounded price.
  - londons_explore 5y ago
    And rounding to the nearest cool reference is just as bad as a round number according to this paper...
    - ryeights 5y ago
      I would argue it might help the buyer, if the seller believes they’re committed to the joke…
noud 5y ago
I bid 6793.75 euros for my new bathroom as my final offer a couple of years ago. You should have seen the confused face of the sales person. ...he accepted my offer. :)
- stavros 5y ago
  He was probably confused because he was hoping for 6793.76 and was on the fence.
lvl102 5y ago
I hate these hypotheticals on negotiations. They don’t work unless you come across a “rational” player and the world is full of irrational people. For example, one lowish starter bid could cut you out of the whole process. Now what? You followed a stupid MBA advice and you shot yourself in the foot. Great job!
- simmerup 5y ago
  You have to be willing to walk away to get a good deal. If you’re not willing or can’t take the risk then these strategies aren’t going to be in your interest
- 10x-dev 5y ago
  Anecdata: I bid 90% of asking price on a house a month ago. Owner got offended (as I was told by my agent) and didn't counter. He then lowered the asking price to 93% of the original. Still didn't counter even though his new asking price wasn't far from what I had offered initially. House is now pending.
  - mhb 5y ago
    I think this idea of a seller being "offended" is far more a fiction in a buyer's mind than actual reality. Think about when you are selling something. Does a too low initial offer offend you and make you unable to evaluate a more reasonable subsequent offer by that person?
- xadhominemx 5y ago
  Sounds like you could use some MBA coursework
  - lvl102 5y ago
    Sounds like you could use some game theory lessons.
- matwood 5y ago
  This strategy works because people are irrational. The round number vs. not round number are not that different, but they are perceived differently b/c we're all a bit irrational. Pricing is a tricky process of course, but you also shouldn't be over paying or under charging if selling. It's perfectly ok to get cut out of the process in those cases.
TZubiri 5y ago
This is a matter of taste I'd rather work with round numbers and settle things verbally or in paper than having to use a calculator like a nerd. https://www.forbes.com/sites/tomiogeron/2012/04/09/facebooks-buys-instagram-for-1-billion-mobile-is-the-future/ https://www.forbes.com/sites/tomiogeron/2012/04/09/facebooks...
- ipaddr 5y ago
  A nerd doesn't use a calculator they can do simple math in their head.
- Forgeties79 5y ago
  When I would do estimates for clients I’d regularly say something along the lines of “devil’s in the details but this job sounds like it’s in the $5k-$7.5K range.” Then if they still wanted to play ball, I’d send an actual quote and contract, which usually was more precise (e.g. total of $7250.00 or whatever). Now when it came to grant writing, I was definitely a little more prone to trying to make the numbers look specific out the gate. “I need $10,000” sounds like a gut number regardless of context, so in a case that really was the estimate (it happens!) I’d say “$9,850” or something. Usually a 10% misc/“the unexpected” line item took care of it though.
- ryan_j_naughton 5y ago
  > than having to use a calculator like a nerd. Why the hating on nerds?
anonu 5y ago
This reminds me of one of my favorite websites: https://tylervigen.com/spurious-correlations https://tylervigen.com/spurious-correlations
ak_111 5y ago
You tend to see this a lot in LinkedIn profiles: "Increased CTR by 142%".
bstar77 5y ago
In the early 2000's I was planning to buy a specific car. The salesman told me not to even think about for getting it under $20k. I came back the next day and told a different sales guy that I wanted the car for $16,750. He came back from the manager's room after a minute or so and said "lets do the paperwork". I always wondered what part of my tactic worked the best... I wasn't sure if it was setting the oddly specific price or my terseness or maybe both.
- bumby 5y ago
  I've personally had more success in salary negotiation with using oddball numbers. I think the presumption on the managers side is either 1) I have a specific offer from another potential employer or 2) I've calculated to the dollar how much I think the job switch is worth. (The latter is usually true, but with large error bounds). I wonder if the second salesman assumed you had already shopped around and found a car of similar price to your offer.
  - bstar77 5y ago
    The car was a Honda Insight... the original one from 2001, so there was nothing else like it. I think they probably felt only select customers were going to be interested in that niche car and that I had probably done my research so best to just accept and get rid of this weird inventory.
    - bumby 5y ago
      Sorry, I meant a similar car of the same make/model. I.e., another Honda Insight from another dealer. FWIW, I've always loved the Insight and wish they made more of them :-)
      - bstar77 5y ago
        Me too, getting 90mpg was no joke. I would fill up once a month with a 2 hour daily commute.
- 5y ago
amrtn 5y ago
This is one of the key ideas behind the book Never Split the Difference by Chris Voss [1]. I found the book quite enlightening if you peek through all the hostage negotiation stories. 1: https://www.goodreads.com/book/show/26156469-never-split-the-difference https://www.goodreads.com/book/show/26156469-never-split-the...
deleted 5y ago
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frereubu 5y ago
Surely this has something to do with the anchoring effect: - If you offer £210,000, it's a signal that you're looking at increments of £10,000. - If you offer £211,000 it's a signal that you're looking at increments of £1,000. - If you offer £211,000.01 then it signals that you're taking the piss. I'm sure there's something about confidence and accuracy in there too, but I would expect anchoring effects to be stronger in those contexts.
- t_mann 5y ago
  I guess a "precise" number would be more something like 210,980.55 than 211,000.01
- jjri 5y ago
  Don't forget, £210,999.99 is a bargain.
  - whitesilhouette 5y ago
    And something to do with taxation.
    - whoopdedo 5y ago
      When you show me the price in GBP I assume the tax has already been added. That's only a thing for the US.
      - thereddaikon 5y ago
        In the US, sales tax is handled on the state level not the national level. So it varies wildly.
        bialpio 5y ago
        To expand on that: it's on state, county, and city level - I believe all those jurisdictions can introduce a sales tax.
pessimizer 5y ago
The same thing is true with lists (listicles) of principles or rules that are even (or lucky) numbers. If somebody is advocating 5, 7, 10, or 20 principles for doing something, I assume at best that they added or dropped marginal ones to get the round number, and at worst that they just had a remit to do 10 rules for something and were just winging it.
- galoisscobi 5y ago
  Came across 37 signals yesterday (https://37signals.com/ https://37signals.com/) which might be a nice exception to this. I say might because they count from 0, so technically it’s 38 signals ;).
  - troupe 5y ago
    The funny thing is that the name 37 signals comes from a count of the signals from space have unexplained origins. So they picked their name long before they came up with that list that just happens to fit. (With one extra by starting at 0)
    - gowld 5y ago
      > that just happens to fit pretty sure they forced it to fit, probably by padding the list.
      - pessimizer 5y ago
        More likely by truncating the list, since they felt they had to sneak one more in at zero.
  - pessimizer 5y ago
    A nice example of this. They didn't bid a round number, so it seemed like they knew what they were talking about.
    - galoisscobi 5y ago
moomin 5y ago
I wonder if the markets realized that “54.20” was, in fact, a big round number.
vivegi 5y ago
Once upon a time the company I worked for had a client, a private company that we provided business services. Lets say we provided 5 different services for this client and had been doing so for several years and our client was quite satisfied with our services. The client was acquired by a PE firm and one of the first things that the acquiring PE firm did was to get all their vendors to bid in a realtime reverse auction. It was a standard process that the PE firm executed on all their portfolio companies post-acq. Of the 5 services that we provided to the client, there was one service that was very demanding. Suffice to say, it took us several years to get it off the ground and stabilize it. All that knowledge and experience made us a valuable extension of the client. We both had the battle scars. This service was only 10% of the total billing from this client, but very high maintenance, highly visible and operationally very challenging. When it came to the reverse auction, we dropped our price on this service marginally and held our price on all other services. A feature of the realtime reverse auction was that we would know our rank amongst competitive bidders on where our bid stood. So, it was nerve-wracking to know that we are not the L1 bid. We retained all our services at the pre-bid volume levels at the conclusion of the reverse auction and continued to grow this client account for another 5+ years. While this is a single anecdote and may not apply in all scenarios, complex bids don't always come down to price.
coward123 5y ago
I work in a field where we are negotiating over price daily. We often are using "weird" numbers because we know it will push our price just over a competitors, and because the sellers will find our number psychologically "interesting" over those competitors. We also make sure our escalation numbers are not "normal" for the same basic reasons. It has worked well for me, though I'm not sure it would make as much of a difference if my competitors were the kind of people who read articles on hbs.edu.
mindvirus 5y ago
This reminds me of a story of Mount Everest - apparently the people who did the first measurement had it come in at exactly 29,000 feet - so they said 29,002 to make it sound like they weren't making it up. Official measurement now is 29,032 feet.
- thehappypm 5y ago
  It’s getting taller too which is crazy
ryan_j_naughton 5y ago
There is a confounding variable (omitted variable bias) here that could explain the entire thing, namely, those who used precise numbers likely ACTUALLY DID use a model and/or more quantitative analysis to determine that price. Similarly, those who chose hole number prices likely did NOT use a model to determine that exact price (as the odds of a model resulting in a whole number price is extremely unlikely). Thus, you cannot disentangle the effects of the precise bidders actually being more quantitative from the perception of them being more quantitative by the seller. To properly disentangle this, you would need an experiment (or potentially quasi-experiment) where you randomize either adding some noise to the bid for some bids and rounding other bids to whole dollar amounts.
- danuker 5y ago
  Using a model is risky, because there are tons of things you have to price. Is it noisy outside? Is it warm in the winter? summer? Does sunlight pose problems (too much? not enough?) What taxes are there? Is there an HOA? Is the town growing? Is it in a walkable neighborhood? What amenities are nearby? What color is the counter? Insufficient models was the bane of Zillow, which paid for it dearly. https://www./live/2021/11/02/business/news-business-stock-market#zillow-q3-earnings-home-flipping-ibuying https://www./live/2021/11/02/business/news-business-stock-ma...
rootusrootus 5y ago
I did something similar when selling an item on craigslist. I was having trouble with lowballers and flakes, so I relisted the item but gave it a weirdly specific price. Something like $347. Maybe it was dumb luck, but I had a buyer come pick it up a few hours later and they didn't try to negotiate down the price at all. Could've just been a coincidence. But it did get their attention, for sure, because after they gave me the money, they asked why I was so specific on the price. Got an appreciative chuckle when I told them the truth.
- jalgos_eminator 5y ago
  That's funny because when buying things from Craigslist I try to round the price to an even number since the transaction will always be cash and few people have enough small bills to make change. For instance if the asking is $125, I'll offer $120 since I don't want to find a $5 bill or make the person find change for the extra $20 bill I'd have to use. I've even rounded up a few times to make it easy, though some people have been so insistent that they even resorted to giving me quarters.
  - rootusrootus 5y ago
    Yeah, that makes sense. If they'd have offered me a round number anywhere near my asking price I'd have just said yes, for much the same convenience reason you cited. But in this particular instance they had Venmo so just paid me the exact amount.
d--b 5y ago
Mmh it really depends on the situation. The apartment I paid was listed at 985k€. High confidence? Maybe… I made an offer at 800k€. The broker literally insulted me. We settled at 825k.
acchow 5y ago
The study looks into 'investors who offer “precise” bids for company shares' But then the article opens with 'anyone negotiating to buy a car, a house, or even a company' Seriously?
justinlloyd 5y ago
Every time I negotiate a job offer I use something like "two hundred and sixty two thousand and seven hundred dollars as my final figure" or "You'd need to increase that compensation by at least nineteen thousand four hundred dollars." The precise number indicates confidence in my research and it gets past the other person's resistance point. They focus on the weird number rather the actual round amount. "And four hundred dollars? laughs I'm sure we can do that." This is also a stronger negotiation tactic than asking for the whole amount. They offer 180k but you really want 210k? "To make me feel comfortable I'd need to see that number adjusted by thirty four thousand and six hundred dollars." I am on the fence about numbers that are alliterative. They sound good, but they let people latch on to the sound which you don't want. You want them focused on the smaller number and get them to say "yes" to that, because then their brain won't let them say "no" after they've thought about it. In their mind, they are committed to that course of action then. Also works for buying anything that you have to haggle over, like antiques, like the glass fronted antique cabinets we want. Four of them. $11,200 in total according to the ticket price. "Would you be willing to throw in all four for $8,760?" Slaps hand on desk as I say the final number. Sold! Lowest they could go was $10,500 just moments before. Works every time, ninety percent of the time.
- sicromoft 5y ago
  > Works every time, ninety percent of the time. ITYM 91.4% of the time
  - justinlloyd 5y ago
    A recent study shows that made up statistics are more believable if you use a very precise number. And emphasize the word "point." Another study I read some years ago that I can probably never find again, but I am sure you are already aware of because you seem interested in this sort of thing, showed that by quoting the p value as less than 0.1% added unsubstantiated authority to the numbers. Anecdotally though I prefer putting the statement about the p value before the statistical number. Some guys out of Harvard, for their final year thesis that got some massive government grant demonstrated that bequeathing knowledge on the other person in the form of positive attributes, such as already having read a study, increased the chance that your statements would be believed. Especially if you use mirroring and nod as you are saying it so that they nod, and thereby agree, along with you. Also, throwing in the fact that you personally disagree with the study you read, or point out that you think the methodology employed had some flaws, or that the results were not as conclusive as the authors claim, adds even more authority to your citing of the study.
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monktastic1 5y ago
Tangential, but it bothers me that the technical definition of "precision" is often at odds with its common usage. Someone who is very precise in their measurements and measures Mount Everest to be 29,000 ft has a figure that is less "precise" than that of someone who is sloppy and arrives at 29,001 ft (though both are, of course, less precise than the person who comes up with 29,000.482712...). https://simple.wikipedia.org/wiki/Precision_(numbers) https://simple.wikipedia.org/wiki/Precision_(numbers)
r3trohack3r 5y ago
Another extremely successful tactic I stumbled upon by accident: electing a 3rd party decision maker that the other negotiator can't communicate with. Without the communication channel, the other negotiator is forced to "sweeten the deal" instead of using conversational skills. I received a job offer while my wife was traveling. The number was right for me and the job/company was right. But I told the hiring manager that I needed to talk it through with my wife first and that I'd need a few days (no context about why I needed the time or which direction I expected it to go). She got home 3 days later. We sat down, talked it through for 10 minutes, and we were ready to accept. In the time between the initial offer and accepting the offer, I received 3 updated offers with increasing compensation. The final offer I accepted was $75k higher than the initial offer. After experiencing that, I've noticed companies use this tactic frequently. When you call into a help center, often times the phone operator "will need to talk to their manager" who is authorized to make the actual decision. You aren't allowed to talk to the manager - all communication goes through the intermediary. I suspect they are aware that this is an effective negotiating tactic.
- nickff 5y ago
  I agree with you about the benefits of disallowing your counter-party from communicating directly with the final decision maker (for the purposes of a negotiation), but I don't think that's what call centers are doing. Front-line agents screen a lot of calls by people who have easy-to-resolve issues, or are just angry..
- jandrese 5y ago
  > electing a 3rd party decision maker that the other negotiator can't communicate with This is why every dealership salesman "has to go talk it over with his manager" at some point in the negotiation.
- jacquesm 5y ago
  The manager might not even exist.
- TameAntelope 5y ago
  Hm, that probably won't work against a competent negotiator, but it makes sense! They invent some nightmare scenario where they lose you, and they end up bidding against their nightmare, rather than you.
syngrog66 5y ago
related phenom: whenever I see something that is retail priced at $X.99 I can assume that price was not driven entirely by organic/natural/production/COB input factors, but rather a psychological one. and thus they are either overcharging or undercharging.
ineedasername 5y ago
It seems like this is at least slightly backwards in reasoning. I think it has less to do with something sounding more precise than it does with the fact that, in the real world, actual costs are only rarely a round number. As such, if there's a psychological association of non-round numbers sounding more precise, it's because non-round numbers are actually much more common. This means if you provide a round number bid, you are in reality more likely to have given a value that is incorrect.
988747 5y ago
I cannot find the reference right now, but I read somewhere that when people are on vacation they prefer round prices so they don't have to count change. So, if you are running a gift shop in some popular tourist destination pricing something $5 is better than pricing it $4.95. Edit: apparently it is not just tourists: https://www.strategy-business.com/blog/The-Psychology-of-Pricing-Customers-Prefer-Round-Numbers https://www.strategy-business.com/blog/The-Psychology-of-Pri...
flemhans 5y ago
When confronted with a precise bid, I always think they are making that up to seem more confident :')

522 points by mhb 5y ago

This advice is also part of the book "Never split the difference" by Christopher Voss, a highly recommended book for anyone looking to improve their negotiation skills.

leeoniya 5y ago
i found a lot of his advice somewhat silly. why would you come up with some to-the-$1,000 asking price in a salary negotiation rather than just asking for 30% more than you'd be okay with? i know he has another version where at some point in the negotiation (rather than the beginning), you whip out some very precise number, but that would immediately strike me as a psychological play rather than the honesty/thoughtfulness it's designed to convey. in a different situation it's certainly more effective, like when requesting a budget/expense for a specific project, since it signals you've done the math and not just throwing inflated approximations.
- pflenker 5y ago
  I was able to successfully navigate tricky negotiation situations using his advice, but salary increases were never a part of it. I believe salary increases should reflect professional skills and not negotiation skills, and I avoid companies which reward negotiation skills with higher salary. I have always used the "imprecise offer" somewhere in the middle, and it usually worked out great.
  - Jiro 5y ago
    >I avoid companies which reward negotiation skills with higher salary. This is like saying "I avoid companies run by humans".
    - pflenker 4y ago
      I can tell you that I have worked at several companies, and am currently working on another company, where negotiation skills do not determine your salary.
- asurty 5y ago
  I think the core ethos of the book is every negotiation is different and so each tip/technique is just that - a tip/technique you can add to your tool belt and use when the context lends itself to it. The book also mentions anchoring should usually be avoided in negotiations and instead it recommends you focus on the non monetary value points each party can exchange. There is actually a section on negotiating salary and IIRC it recommends you provide a range where the bottom of the range is where you are hoping to land. So you are correct - I would never say in a salary negotiation that I need an exact dollar amount as it might make me love petty unless I prefaced it with 'I have a family to feed and a roof to put over our heads'.
BeetleB 5y ago
Terrible book with some gems: https://news.ycombinator.com/item?id=21769264 https://news.ycombinator.com/item?id=21769264 https://news.ycombinator.com/item?id=19059590 https://news.ycombinator.com/item?id=19059590 https://news.ycombinator.com/item?id=25309966 https://news.ycombinator.com/item?id=25309966
- goostavos 5y ago
  I thought the book was great! It's also the only book on negotiation that I've ever read (aside from Art of the Deal out of curiosity, which isn't actually about negotiations at all!), so take my views with a grain of salt. If you ignore the stuff your linked comments complain about, which is largely him having an obnoxious writing style and literal too-cool-for-(Harvard)-school attitude (them nerds don't know nothin'!), I found tons of the actual content immediately applicable with lots of return. The thing I absolutely loved about the book was shifting your mindset away from negotiations being these big scary stressful standoffs with winners and losers, and towards them being lighthearted, possibly even fun(!) shared problem solving sessions. That mental shift, and having a box of tools to use, makes navigating tricky situations so much easier. It also make me look forward to previously stressful situations. For instance, I recently bought a new car, which is a process I usually loathe. However, using all the tricks from the book, I was able to negotiate down a crazy amount off our car with the main approach being the "how can I do X?" from the book. There was some back and forth, some huffing and puffing about how it couldn't be done ("we're already taking a loss on this!"), but eventually, after numerous showy checks with the management, we agreed on a price. I legit had a blast the whole time cause the mental state the entire time was "can we solve this problem together?"
kqr 5y ago
Another thing in that book that's helped me is the suggestion to make your first bid 65 % of the maximum price you're ready to offer. Second bid 85 %, then 95 %, then your maximum offer. It's not that these numbers are magical in any way, it's just that for me it's convenient to have a rule ready so I don't have to expend mental energy on what numbers to say, and I can instead use that energy on coming up with how to present them. Knowing the steps I'll take to the final offer ahead of time also makes me slightly more comfortable entering such a low bid to start out with.
thinkmassive 5y ago
It reminds me of "How to Measure Anything" by Douglas Hubbard [1] I read "How to Measure Anything in Cybersecurity Risk" but the relevant concepts are from his original book: - every measurement is an approximation - you can determine a more accurate valuation (or probability) by thinking in terms of bets The book isn't primarily about negotiating, but it is about estimating based on incomplete information, which applies to all negotiations. Avoiding a round number doesn't need to be arbitrary. By calibrating your estimation process you can come up with a more precise number, which can also boost your confidence. The result is both having a more specific valuation in mind, and being more comfortable with the outcome regardless of whether the deal worked for fell apart. 1: https://www.howtomeasureanything.com/books-by-douglas-hubbard/ https://www.howtomeasureanything.com/books-by-douglas-hubbar...

dazc 5y ago

There was similar thinking in retail not so long ago when prices started to change from something like 3.99 to 3.77, for example. I don't see this so much now which suggests it didn't work out as expected?

bombcar 5y ago
Sam Walton hated .99 for some reason, so Walmart prices are never that.
- HPsquared 5y ago
  ASDA (subsidiary of Wal-Mart) fuel stations in the UK always have the fuel price ending in .8 (e.g. 175.8p per litre) while pretty much EVERY other fuel station always has prices ending in .9. It gives a feeling that they're slightly cheaper than the competition, I think. Even if the more significant digit is more expensive sometimes, people don't remember that part as much because it varies from day to day.
  - twelve40 5y ago
    ...until someone else comes along and offers .7 : ) so the race to the bottom begins
    - hmate9 5y ago
      It’s not a race to the bottom because what Asda is doing is pricing it 175.8 when others price it 174.9
      - Mordisquitos 5y ago
        I assumed they meant a race to the bottom in terms of decimal digits only. Another petrol station could price it at 175.7, or maybe even 176.7 if the illusion of being cheaper than ASDA still works.
    - Mordisquitos 5y ago

tromp 5y ago

I bid 701k on my house, whose asking price of 645k seemed on the low side. After winning the bid, I asked what the next-highest bid was. Turned out to be 699k. I'm so happy they took this unrounding advice in the other direction :-)

TonyTrapp 5y ago
This also often worked on ebay for me, e.g. if you are willing to spend 60 $currency on an auction, make your highest bid 61.52 or something like that. The extra 1.5 dollars/euros/whatever doesn't really hurt but if there's many people who'd want to win the action for a similar price as you, it can be the distinguishing factor.
- toss1 5y ago
  Yup. Same here for eBay and industrial equipment auctions - figure out my approximate maximum, consider the nearby round number, then add something almost trivial like the "1.52" in your example. While it obviously doesn't help if the bidding runs up to another level, I've found it helps a surprising number of times. And if you actually want to win the bidding, definitely do not skimp to below or at the round figure - that marginal extra will provide way more value than the cost (i.e., not losing & spending more time & funds getting the item elsewhere). Now, I wonder how long it will take for auction systems to start suggesting this type of bid and ruining the strategy so we need to find another strategy...
  - TonyTrapp 5y ago
    > Now, I wonder how long it will take for auction systems to start suggesting this type of bid and ruining the strategy so we need to find another strategy... To be honest, the immediate issue that is already there in this very moment is that more and more people no longer sell their stuff as regular auctions on ebay, but as completely overpriced fixed-priced offers. This is the main distinguishing factor for me between using ebay ten years ago and now. If everyone starts doing that, the best bidding strategies become useless.
- 5y ago

troelsSteegin 5y ago

The idea is that the bidder's precision signals confidence, and that low confidence signals amenability to negotiation, and that negotiation leads to poorer outcomes for the bidder. The HBS paper they cite on M&A [0] is most interesting, to my view, in the sense that both players in the M&A "game" are presumably quantitative. One would think a social psychology effect would be less so in a game between quants, but their interviews suggest perceived confidence does matter. The precision signals that the bidder is confident pricing and negotiating analytically. The thing I am curious about in [0] is that they report the bid price per share, and not (unless I missed it) the asking price. I don't know how M&A "works". If you and I are both estimating the value of a good, if our estimates are close it's one thing and if they are far apart it's another. Are rounders losing because their estimates are less accurate, relative their counterparty's? [0] https://www.hbs.edu/ris/Publication%20Files/16-058_27d73983-3441-4628-906c-10ce5fb7ac47.pdf https://www.hbs.edu/ris/Publication%20Files/16-058_27d73983-...

bombcar 5y ago
I also suspect that sometimes the bid price is a signal to others besides the company being bought - and a number that’s easy to digest might help in media, etc.
dmurray 5y ago
> I don't know how M&A "works". In general it's the buyer who names a price first. Take the current Twitter acquisition, the board weren't trying to sell the company at all and Elon Musk made an unsolicited bid of $54.20/share. Other times the board may be actively looking for a buyer and have a price in mind, but it will still typically be up to the buyer to propose a deal. Not least because the number isn't the only thing being negotiated: the buyer will likely have a range of stipulations or conditions attached to the bid so every bid will look different.
vasco 5y ago
> One would think a social psychology effect would be less so in a game between quants One would, but the little I've seen & heard about due dilligence around M&A (and startup investments for that matter) tells me it's nothing close to "quant". People decide they want to buy something, and then try to get it for a good price, and try to have it so that due dilligence works to reduce the purchase price, while not actually finding anything to block the deal. Perhaps in public company acquisitions there's more sophistication, but I really doubt that.

qznc 5y ago

“What are your salary expectations?” “$153,845.64” Anybody ever tried that?

tsukurimashou 5y ago
I will
andi999 5y ago
add one more digit. Every ten years they need to pay another cent.
MauranKilom 5y ago
https://xkcd.com/2597/ https://xkcd.com/2597/
FatalLogic 5y ago
That extra $0.64 could lose you the job, because you'd appear to be insane and obsessed with tiny unimportant details
- op00to 5y ago
  My old boss loved to calculate our salaries (increases always in percentages) so the actual dollar amount would contain our birthday or be $123456 or whatever.
  - pc86 5y ago
    Oh so they were actually insane, got it :)
    - op00to 5y ago
      His reasoning was 5% is just as arbitrary as 5.02% or whatever he would do. Also it really pissed off finance, which you rarely get to do with impunity. I miss him. My new boss is more concerned with my haircut and beard than anything else.

m3kw9 5y ago

Like how Elon Musk bid 54.20 for twitter?

prasadjoglekar 5y ago
I think that was as much a 420 reference as an un-rounded price.
- londons_explore 5y ago
  And rounding to the nearest cool reference is just as bad as a round number according to this paper...
  - ryeights 5y ago
    I would argue it might help the buyer, if the seller believes they’re committed to the joke…

noud 5y ago

I bid 6793.75 euros for my new bathroom as my final offer a couple of years ago. You should have seen the confused face of the sales person. ...he accepted my offer. :)

stavros 5y ago
He was probably confused because he was hoping for 6793.76 and was on the fence.

lvl102 5y ago

I hate these hypotheticals on negotiations. They don’t work unless you come across a “rational” player and the world is full of irrational people. For example, one lowish starter bid could cut you out of the whole process. Now what? You followed a stupid MBA advice and you shot yourself in the foot. Great job!

simmerup 5y ago
You have to be willing to walk away to get a good deal. If you’re not willing or can’t take the risk then these strategies aren’t going to be in your interest
10x-dev 5y ago
Anecdata: I bid 90% of asking price on a house a month ago. Owner got offended (as I was told by my agent) and didn't counter. He then lowered the asking price to 93% of the original. Still didn't counter even though his new asking price wasn't far from what I had offered initially. House is now pending.
- mhb 5y ago
  I think this idea of a seller being "offended" is far more a fiction in a buyer's mind than actual reality. Think about when you are selling something. Does a too low initial offer offend you and make you unable to evaluate a more reasonable subsequent offer by that person?
xadhominemx 5y ago
Sounds like you could use some MBA coursework
- lvl102 5y ago
  Sounds like you could use some game theory lessons.
matwood 5y ago
This strategy works because people are irrational. The round number vs. not round number are not that different, but they are perceived differently b/c we're all a bit irrational. Pricing is a tricky process of course, but you also shouldn't be over paying or under charging if selling. It's perfectly ok to get cut out of the process in those cases.

TZubiri 5y ago

This is a matter of taste I'd rather work with round numbers and settle things verbally or in paper than having to use a calculator like a nerd. https://www.forbes.com/sites/tomiogeron/2012/04/09/facebooks-buys-instagram-for-1-billion-mobile-is-the-future/ https://www.forbes.com/sites/tomiogeron/2012/04/09/facebooks...

ipaddr 5y ago
A nerd doesn't use a calculator they can do simple math in their head.
Forgeties79 5y ago
When I would do estimates for clients I’d regularly say something along the lines of “devil’s in the details but this job sounds like it’s in the $5k-$7.5K range.” Then if they still wanted to play ball, I’d send an actual quote and contract, which usually was more precise (e.g. total of $7250.00 or whatever). Now when it came to grant writing, I was definitely a little more prone to trying to make the numbers look specific out the gate. “I need $10,000” sounds like a gut number regardless of context, so in a case that really was the estimate (it happens!) I’d say “$9,850” or something. Usually a 10% misc/“the unexpected” line item took care of it though.
ryan_j_naughton 5y ago
> than having to use a calculator like a nerd. Why the hating on nerds?

anonu 5y ago

This reminds me of one of my favorite websites: https://tylervigen.com/spurious-correlations https://tylervigen.com/spurious-correlations

ak_111 5y ago

You tend to see this a lot in LinkedIn profiles: "Increased CTR by 142%".

bstar77 5y ago

In the early 2000's I was planning to buy a specific car. The salesman told me not to even think about for getting it under $20k. I came back the next day and told a different sales guy that I wanted the car for $16,750. He came back from the manager's room after a minute or so and said "lets do the paperwork". I always wondered what part of my tactic worked the best... I wasn't sure if it was setting the oddly specific price or my terseness or maybe both.

bumby 5y ago
I've personally had more success in salary negotiation with using oddball numbers. I think the presumption on the managers side is either 1) I have a specific offer from another potential employer or 2) I've calculated to the dollar how much I think the job switch is worth. (The latter is usually true, but with large error bounds). I wonder if the second salesman assumed you had already shopped around and found a car of similar price to your offer.
- bstar77 5y ago
  The car was a Honda Insight... the original one from 2001, so there was nothing else like it. I think they probably felt only select customers were going to be interested in that niche car and that I had probably done my research so best to just accept and get rid of this weird inventory.
  - bumby 5y ago
    Sorry, I meant a similar car of the same make/model. I.e., another Honda Insight from another dealer. FWIW, I've always loved the Insight and wish they made more of them :-)
    - bstar77 5y ago
      Me too, getting 90mpg was no joke. I would fill up once a month with a 2 hour daily commute.
5y ago

amrtn 5y ago

This is one of the key ideas behind the book Never Split the Difference by Chris Voss [1]. I found the book quite enlightening if you peek through all the hostage negotiation stories. 1: https://www.goodreads.com/book/show/26156469-never-split-the-difference https://www.goodreads.com/book/show/26156469-never-split-the...

deleted 5y ago

[deleted]

frereubu 5y ago

Surely this has something to do with the anchoring effect: - If you offer £210,000, it's a signal that you're looking at increments of £10,000. - If you offer £211,000 it's a signal that you're looking at increments of £1,000. - If you offer £211,000.01 then it signals that you're taking the piss. I'm sure there's something about confidence and accuracy in there too, but I would expect anchoring effects to be stronger in those contexts.

t_mann 5y ago
I guess a "precise" number would be more something like 210,980.55 than 211,000.01
jjri 5y ago
Don't forget, £210,999.99 is a bargain.
- whitesilhouette 5y ago
  And something to do with taxation.
  - whoopdedo 5y ago
    When you show me the price in GBP I assume the tax has already been added. That's only a thing for the US.
    - thereddaikon 5y ago
      In the US, sales tax is handled on the state level not the national level. So it varies wildly.
      - bialpio 5y ago
        To expand on that: it's on state, county, and city level - I believe all those jurisdictions can introduce a sales tax.

pessimizer 5y ago

The same thing is true with lists (listicles) of principles or rules that are even (or lucky) numbers. If somebody is advocating 5, 7, 10, or 20 principles for doing something, I assume at best that they added or dropped marginal ones to get the round number, and at worst that they just had a remit to do 10 rules for something and were just winging it.

galoisscobi 5y ago
Came across 37 signals yesterday (https://37signals.com/ https://37signals.com/) which might be a nice exception to this. I say might because they count from 0, so technically it’s 38 signals ;).
- troupe 5y ago
  The funny thing is that the name 37 signals comes from a count of the signals from space have unexplained origins. So they picked their name long before they came up with that list that just happens to fit. (With one extra by starting at 0)
  - gowld 5y ago
    > that just happens to fit pretty sure they forced it to fit, probably by padding the list.
    - pessimizer 5y ago
      More likely by truncating the list, since they felt they had to sneak one more in at zero.
- pessimizer 5y ago
  A nice example of this. They didn't bid a round number, so it seemed like they knew what they were talking about.
  - galoisscobi 5y ago

moomin 5y ago

I wonder if the markets realized that “54.20” was, in fact, a big round number.

vivegi 5y ago

Once upon a time the company I worked for had a client, a private company that we provided business services. Lets say we provided 5 different services for this client and had been doing so for several years and our client was quite satisfied with our services. The client was acquired by a PE firm and one of the first things that the acquiring PE firm did was to get all their vendors to bid in a realtime reverse auction. It was a standard process that the PE firm executed on all their portfolio companies post-acq. Of the 5 services that we provided to the client, there was one service that was very demanding. Suffice to say, it took us several years to get it off the ground and stabilize it. All that knowledge and experience made us a valuable extension of the client. We both had the battle scars. This service was only 10% of the total billing from this client, but very high maintenance, highly visible and operationally very challenging. When it came to the reverse auction, we dropped our price on this service marginally and held our price on all other services. A feature of the realtime reverse auction was that we would know our rank amongst competitive bidders on where our bid stood. So, it was nerve-wracking to know that we are not the L1 bid. We retained all our services at the pre-bid volume levels at the conclusion of the reverse auction and continued to grow this client account for another 5+ years. While this is a single anecdote and may not apply in all scenarios, complex bids don't always come down to price.

coward123 5y ago

I work in a field where we are negotiating over price daily. We often are using "weird" numbers because we know it will push our price just over a competitors, and because the sellers will find our number psychologically "interesting" over those competitors. We also make sure our escalation numbers are not "normal" for the same basic reasons. It has worked well for me, though I'm not sure it would make as much of a difference if my competitors were the kind of people who read articles on hbs.edu.

mindvirus 5y ago

This reminds me of a story of Mount Everest - apparently the people who did the first measurement had it come in at exactly 29,000 feet - so they said 29,002 to make it sound like they weren't making it up. Official measurement now is 29,032 feet.

thehappypm 5y ago
It’s getting taller too which is crazy

ryan_j_naughton 5y ago

There is a confounding variable (omitted variable bias) here that could explain the entire thing, namely, those who used precise numbers likely ACTUALLY DID use a model and/or more quantitative analysis to determine that price. Similarly, those who chose hole number prices likely did NOT use a model to determine that exact price (as the odds of a model resulting in a whole number price is extremely unlikely). Thus, you cannot disentangle the effects of the precise bidders actually being more quantitative from the perception of them being more quantitative by the seller. To properly disentangle this, you would need an experiment (or potentially quasi-experiment) where you randomize either adding some noise to the bid for some bids and rounding other bids to whole dollar amounts.

danuker 5y ago
Using a model is risky, because there are tons of things you have to price. Is it noisy outside? Is it warm in the winter? summer? Does sunlight pose problems (too much? not enough?) What taxes are there? Is there an HOA? Is the town growing? Is it in a walkable neighborhood? What amenities are nearby? What color is the counter? Insufficient models was the bane of Zillow, which paid for it dearly. https://www./live/2021/11/02/business/news-business-stock-market#zillow-q3-earnings-home-flipping-ibuying https://www./live/2021/11/02/business/news-business-stock-ma...

rootusrootus 5y ago

I did something similar when selling an item on craigslist. I was having trouble with lowballers and flakes, so I relisted the item but gave it a weirdly specific price. Something like $347. Maybe it was dumb luck, but I had a buyer come pick it up a few hours later and they didn't try to negotiate down the price at all. Could've just been a coincidence. But it did get their attention, for sure, because after they gave me the money, they asked why I was so specific on the price. Got an appreciative chuckle when I told them the truth.

jalgos_eminator 5y ago
That's funny because when buying things from Craigslist I try to round the price to an even number since the transaction will always be cash and few people have enough small bills to make change. For instance if the asking is $125, I'll offer $120 since I don't want to find a $5 bill or make the person find change for the extra $20 bill I'd have to use. I've even rounded up a few times to make it easy, though some people have been so insistent that they even resorted to giving me quarters.
- rootusrootus 5y ago
  Yeah, that makes sense. If they'd have offered me a round number anywhere near my asking price I'd have just said yes, for much the same convenience reason you cited. But in this particular instance they had Venmo so just paid me the exact amount.

d--b 5y ago

Mmh it really depends on the situation. The apartment I paid was listed at 985k€. High confidence? Maybe… I made an offer at 800k€. The broker literally insulted me. We settled at 825k.

acchow 5y ago

The study looks into 'investors who offer “precise” bids for company shares' But then the article opens with 'anyone negotiating to buy a car, a house, or even a company' Seriously?

justinlloyd 5y ago

Every time I negotiate a job offer I use something like "two hundred and sixty two thousand and seven hundred dollars as my final figure" or "You'd need to increase that compensation by at least nineteen thousand four hundred dollars." The precise number indicates confidence in my research and it gets past the other person's resistance point. They focus on the weird number rather the actual round amount. "And four hundred dollars? laughs I'm sure we can do that." This is also a stronger negotiation tactic than asking for the whole amount. They offer 180k but you really want 210k? "To make me feel comfortable I'd need to see that number adjusted by thirty four thousand and six hundred dollars." I am on the fence about numbers that are alliterative. They sound good, but they let people latch on to the sound which you don't want. You want them focused on the smaller number and get them to say "yes" to that, because then their brain won't let them say "no" after they've thought about it. In their mind, they are committed to that course of action then. Also works for buying anything that you have to haggle over, like antiques, like the glass fronted antique cabinets we want. Four of them. $11,200 in total according to the ticket price. "Would you be willing to throw in all four for $8,760?" Slaps hand on desk as I say the final number. Sold! Lowest they could go was $10,500 just moments before. Works every time, ninety percent of the time.

sicromoft 5y ago
> Works every time, ninety percent of the time. ITYM 91.4% of the time
- justinlloyd 5y ago
  A recent study shows that made up statistics are more believable if you use a very precise number. And emphasize the word "point." Another study I read some years ago that I can probably never find again, but I am sure you are already aware of because you seem interested in this sort of thing, showed that by quoting the p value as less than 0.1% added unsubstantiated authority to the numbers. Anecdotally though I prefer putting the statement about the p value before the statistical number. Some guys out of Harvard, for their final year thesis that got some massive government grant demonstrated that bequeathing knowledge on the other person in the form of positive attributes, such as already having read a study, increased the chance that your statements would be believed. Especially if you use mirroring and nod as you are saying it so that they nod, and thereby agree, along with you. Also, throwing in the fact that you personally disagree with the study you read, or point out that you think the methodology employed had some flaws, or that the results were not as conclusive as the authors claim, adds even more authority to your citing of the study.

deleted 5y ago

[deleted]

monktastic1 5y ago

Tangential, but it bothers me that the technical definition of "precision" is often at odds with its common usage. Someone who is very precise in their measurements and measures Mount Everest to be 29,000 ft has a figure that is less "precise" than that of someone who is sloppy and arrives at 29,001 ft (though both are, of course, less precise than the person who comes up with 29,000.482712...). https://simple.wikipedia.org/wiki/Precision_(numbers) https://simple.wikipedia.org/wiki/Precision_(numbers)

r3trohack3r 5y ago

Another extremely successful tactic I stumbled upon by accident: electing a 3rd party decision maker that the other negotiator can't communicate with. Without the communication channel, the other negotiator is forced to "sweeten the deal" instead of using conversational skills. I received a job offer while my wife was traveling. The number was right for me and the job/company was right. But I told the hiring manager that I needed to talk it through with my wife first and that I'd need a few days (no context about why I needed the time or which direction I expected it to go). She got home 3 days later. We sat down, talked it through for 10 minutes, and we were ready to accept. In the time between the initial offer and accepting the offer, I received 3 updated offers with increasing compensation. The final offer I accepted was $75k higher than the initial offer. After experiencing that, I've noticed companies use this tactic frequently. When you call into a help center, often times the phone operator "will need to talk to their manager" who is authorized to make the actual decision. You aren't allowed to talk to the manager - all communication goes through the intermediary. I suspect they are aware that this is an effective negotiating tactic.

nickff 5y ago
I agree with you about the benefits of disallowing your counter-party from communicating directly with the final decision maker (for the purposes of a negotiation), but I don't think that's what call centers are doing. Front-line agents screen a lot of calls by people who have easy-to-resolve issues, or are just angry..
jandrese 5y ago
> electing a 3rd party decision maker that the other negotiator can't communicate with This is why every dealership salesman "has to go talk it over with his manager" at some point in the negotiation.
jacquesm 5y ago
The manager might not even exist.
TameAntelope 5y ago
Hm, that probably won't work against a competent negotiator, but it makes sense! They invent some nightmare scenario where they lose you, and they end up bidding against their nightmare, rather than you.

syngrog66 5y ago

related phenom: whenever I see something that is retail priced at $X.99 I can assume that price was not driven entirely by organic/natural/production/COB input factors, but rather a psychological one. and thus they are either overcharging or undercharging.

ineedasername 5y ago

It seems like this is at least slightly backwards in reasoning. I think it has less to do with something sounding more precise than it does with the fact that, in the real world, actual costs are only rarely a round number. As such, if there's a psychological association of non-round numbers sounding more precise, it's because non-round numbers are actually much more common. This means if you provide a round number bid, you are in reality more likely to have given a value that is incorrect.

988747 5y ago

I cannot find the reference right now, but I read somewhere that when people are on vacation they prefer round prices so they don't have to count change. So, if you are running a gift shop in some popular tourist destination pricing something $5 is better than pricing it $4.95. Edit: apparently it is not just tourists: https://www.strategy-business.com/blog/The-Psychology-of-Pricing-Customers-Prefer-Round-Numbers https://www.strategy-business.com/blog/The-Psychology-of-Pri...

flemhans 5y ago

When confronted with a precise bid, I always think they are making that up to seem more confident :')