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Real World Price Negotiation

context: i have a parking space with my apartment i'm not using and they no longer include spaces with apartments and instead rent them for $100 extra. my building manager just put me in touch with a guy who needed a space.

his texts are in yellow:

Hi Elliot. My name is XXXX I live in XXXXX. MANAGER told me that you have an available parking space. I'm interested in renting it out. How much do you want per month for it?

i'm in green:

hi! yeah it’s space XXX and i’m in #XXXX. MANAGER mentioned $80/month, would that work for you?

I was paying $55 for my previous space. Can we get closer to there?

ok let’s meet at 70, alright? i heard the full price is 100 now.

Can we do $65? I can send the money to you today. I can PayPal or Venmo you.

i think 70 is fair since that’s $30 off, ok? my paypal is [email protected] or there’s a link: https://www.paypal.me/ElliotTemple

Done.

great, thanks. enjoy the space.

my notes on the negotiation:

  • i was friendly and positive. i didn't communicate being an adversary. same with him.

  • i didn't let on that i know anything about negotiating and presented as potentially incompetent, which is fine. he was more direct about negotiating.

  • i knew going in that by saying 80 i might not get it and i'd be happy with 75 or 70. i intentionally used question marks b/c i didn't want to fuck things up if he didn't know he could negotiate.

  • after he said 55 i guessed we had mutual benefit from the entire range from 55 to 80 (and actually probably both higher and lower than that!)

  • he might be dishonest b/c my building manager told me he'd been paying 60 to rent a space previously (the guy he was renting a space from moved out). he mentioned that b/c he thought it was low and hadn't been updated for a long time. alternatively it could easily be the manager getting the number wrong rather than this guy lying. best not to mention it anyway.

  • i considered saying 75 instead of 70, especially in case he wanted to meet in the middle after the 70. like counter 60 and then ask to meet in middle. i decided to put some framing to discourage iterative negotiating and specifically rule out the meet in the middle reply. many ppl interpret iterative negotiating as unpleasant, cold, and mean. so i gave enough ground immediately to limit negotiation and not offend a potentially economically illiterate anti-capitalist person with penny pinching who might not actually want to negotiate beyond his initial comment.

  • i could have saved the $100 fact in case of pushback, but again chose to front load things rather than have more iteration

  • he was clever by treating his offer to pay today and with paypal as a forward progress concession or reason for saying 65. one needs an excuse to keep things friendly. the first time he had a good excuse for pushback of bringing up the previous rate, and the second time he used that.

  • when i pushed back on his 65 i was going to immediately accept 65 if he pushed back on 70 a second time. i hesitated before doing it, but decided that even if he still didn't want 70 it wouldn't ruin the deal. (and yeah realistically i could have gotten more since his alternative is to pay 100, but i didn't think it was worth trying to really minmax overall).

  • i used a non-reason reason which is a standard, good negotiating tactic but also hilarious and stupid. i had already mathematically told him i was giving him $30 off. but i just stated the discount as if it was a reason (possibly coming off dumb in the process) and it worked... also i called my offer fair which isn't an argument about what number is fair.

  • i have read about similar non-reason reasons like if you want to cut in line people will supposedly let you do it more if you say "because [anything]". although i haven't checked the study methodology, the actual reasoning and psychology makes sense to me. see e.g. http://lifehacker.com/5824481/how-to-convince-people-to-let-you-cut-in-line it's kinda funny. mine was more of a reason than that crap (can i cut in line for the xerox b/c i have to make some copies? lol)

  • i decided pushing back to keep the 70 once was worthwhile since it's a recurring payment.

  • i didn't think trying to aggressively get a higher value (only an option earlier on) was worthwhile though.

  • on TV shows like Pawn Stars or Comic Book Men where you see people negotiate, the professional (e.g. store employee) often does a pretty limited amount of iterating and will hold firm (or slip just one more time a little ways) after doing a fair, serious offer early on. people will try to give small increments and they are often willing to not reciprocate repeatedly and just hold firm. this is mildly socially hostile and difficult, but they are good at it, and it's easier b/c of their position: they are making a business decision for a store that has to make a profit, and they have expert knowledge of the actual value of the item, and they also can present their offers as being according to standard store negotiation policies that treat all customers fairly – it's hard to accuse them of trying to take advantage of you individually (and they aren't that i've ever seen).

  • presenting as someone who might dislike negotiation, be irrational about money, care about social graces, etc, made it harder for him to aggressively push me for a lower rate.

negotiation is fun and interesting!


Elliot Temple on September 6, 2017

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