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Highball

 

Disciplines > Negotiation > Negotiation tactics > Highball

Description | Example | Discussion | See also

 

Description

This is a tactic for sellers, where you make your first offer as high possible without completely putting off the customer.

This can be helped by determining what constitutes a reasonable range of prices, so do your research beforehand to find the buyer's zone of acceptability, then start at, or even above, the top of their range.

Be careful about asking the other person what they will offer, as their first bid anchors the discussion, quite possibly on the low side (although if they seem particularly keen to settle, asking them might give you a pleasant surprise).

Example

A child who wants a parent to fund a night out starts by asking for about three times as much as they really want.

When selling goods, a market trader starts with a high price. He then reduces the price without being bargained with, using excuses about being kind, needing to sell everything today and so on.

An estate agent takes buyers to houses that they cannot afford. This, however, raises their desires and the house they eventually buy is more expensive than they had anticipated.

Discussion

Where you start sets expectations for the other person. When you start high, you can always go down. When you start low, you can never go up.

Starting high creates an anchor for the other person, whereby they may well assume that this is in a reasonable range. If their counter-bid is also high, then you will end up with a high price. Even if they are above what you expected, do not settle immediately -- at best split the difference and you may be able to nudge them even higher.

A high start may well take longer to reach resolution, giving you more opportunity to find out more about the other person and to build effective tension.

If the other person starts low, then it may be socially difficult for you to counter with a high bid, although this can actually be a good move. Responding to a low bid with a high bid indicates that you know they are low and may be seeking

If the other person counters with a low bid (or starts to walk away), this may be a signal that they know what you are doing. Hold your nerve! If you collapse your position, they may well take advantage and seek to pull you even further down.

Be careful about starting too high, as this may cause a betrayal response whereby they leave without further ado, ignoring anything you may say. Extreme positions outside of a range that may be considered fair can also be damaging to relationships (which may be important).

The difference between your start position and your end position is a signal to the other person about how much you have conceded to them. A significant difference will make them believe they have got a bargain (a view you can encourage with sighs and supporting words).

See also

Anchoring and Adjustment Heuristic

 

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