30. Why you should never make the first offer?
An experienced buyer will very seldom, if ever, accept your first price. An experienced seller knows this and always presents a price higher than they expect to get.
A buyer will feel like they are not doing their job if they don't get a sales person to move down a little on price. As a seller, if you don't give them a price reduction they will feel like you out-smarted them.
When someone asks you for a price on a single item that you know is price sensitive, try and get them to give you the price they are looking for.
For example: As you start looking up the price or waiting for your computer to boot up, you might respond with: “I’ll be happy to give you a price on that, by the way, what price are you looking for?”
If you do get the buyer to tell you how much he or she is willing to pay, act slightly shocked as if their opening price is low!
When you are selling, always start at your highest price whenever possible. No matter what the customer may say (such as "This is a one-time only offer; take it or leave it!"), don't take it! If they really want to make the purchase, they'll move from that price.
Don't be shy when you state your original price - put on a show of confidence. Amateurs almost always hesitate when giving their first price and professionals very seldom do.
The more you ask for in the beginning, the better. You're not being greedy - you're being smart. Eventually you will meet an acceptable compromise, but usually not in the beginning.
When you ask for a higher price, you can always come down. If you begin by asking for a higher price and you know you will settle for the lower price, everyone comes out a winner. If you start low you may end up having to go ever lower.
Here’s an example: I was in Ft Myers Florida taking a tour of Thomas Edison’s winter home and workshop. The tour guide told a story I will never forget.
Thomas Edison had invented the “Ticker Tape” machine and was in the buyer's office in New York to sell it for use in the New York Stock Exchange. The buyer asked Edison how much he wanted for it. Edison said, “How much will you give me?” The buyer said "$25,000". Edison said, “I’ll take it!”
Later they were having dinner and the buyer said to Edison, “you were mighty quick to jump on that $25,000, I would have paid all the way up to $50,000.” Edison said, “I would have taken $5,000.”
That was a great story – but I couldn’t help but wonder. Edison must have been doing cartwheels in his mind thinking that he was getting FIVE TIMES MORE THAN WHAT HE WAS GOING TO ASK! However, what if Edison would have said, “$25,000 – is that the best you can do?” The buyer might have gone up to $40,000.
Now Edison would really have a hard time concealing his excitement! Once again, what if Edison would have said “are you sure that is the best you can do – this is the only one like it in the world – it will do this and this and this?” The buyer might have gone up to $50,000.”
Here is another real live example. I was at a convention sitting next to me was a gentlemen who had recently sold his company. He told me how he started in his garage and built the business in to huge success. When he went to negotiate the sale the buyers offered him thirty million dollars - he immediately took it. One year later they sold the company for SIXTY MILLION DOLLARS.
He said if he had only hesitated and not accepted their first offer he might have added TEN MORE MILLION to the selling price!
Of course, there may be times when you know what the competition has priced a certain item and to get the business you might go in with a lower price right up front. Other times you may be dealing with a regular customer and they might consider it a pain in the neck to have to negotiate a price week after week.
Remember the bottom line of your first offer is to view it as another tool in your strategy inventory. There are times when it would be unwise to give your lowest price first with nowhere to go - and there are other times when it would be unwise to give your highest price first as you might scare off a potential new customer.
However, if they make the first offer, you usually know which way to go on your counter offer.