If you’ve ever used Craigslist, you know that costly transactions with complete strangers are now totally normal. From cars, to boats, to diamonds, even luxury items are now transacted online. Yet, ubiquity does not imply simplicity, as intransigent online parties often make unreasonable demands, then fail to find common ground.
Online deals are difficult, but negotiable!
To make them negotiable, however, is to make concessions. Distasteful as Donald Trump may find them, concessions are the best negotiators’ best friend. And online, in the absence of any other basis for trust, they are nothing short of essential. So the key to (online) negotiations is not to resist concessions; it’s to make them strategically.
To illustrate, let’s imagine that you’re selling your beloved Bonneville on Craigslist. (Yes, I had one in high school and am still blogging about it in 2015). And let’s imagine that you’ve done everything I’ve advised so far—defined your alternatives, used them to determine your bottom line, set a target, made a first offer, and made it aggressively (say $15,000, i.e., 1000 times the car’s MPG). Shortly after posting this figure on Craigslist, some presumptuous “bigbuyer216” had the nerve to email you an offer of $5,000! Maybe you don’t even want to deal with such a jerk. But what if the days roll by without any other offers, and what if you really need the cash? Looks like you’ll have to deal with bigbuyer216, and looks like both of you will have to make concessions. So, without further ado, here are five ways to make them wisely:
- Make your first concession your biggest concession: Supposing your bottom line is $10,000 (the horror!), start with a big concession like $2,500, bringing the price down to $12,500. Then progressively reduce the size of your concessions. Perhaps the second is more like $1,000. Even the dense bigdealer216 will interpret your shrinking concessions as a sign that you’re nearing your bottom line, meaning he’d better get serious if he wants your beautiful Bonneville.
- But don’t make a huge first concession: What happens if you go from $15,000 all the way down to $10,000? First, any credibility surrounding your initial offer will disappear. Second, bigdealer216, seeing himself $5,000 better off at the drop of a hat, will greedily want more. But since you’ve already reached your bottom line, you can’t offer anything more. Frustrated at your seeming intransigence, bigdealer216 will probably try to satisfy his Bonneville fix elsewhere.
- And don’t make unilateral concessions. If you’re willing to offer $12,500, don’t say “$12,500,” as there’s nothing stopping bigdealer216 from replying “No thanks, $5,000.” Then you might be tempted to say “$11,000,” at which point bigdealer216 will just repeat himself, at which point you might be tempted to offer your bottom line of $10,000. You’ve just negotiated against yourself. Instead, tie each of your concessions to their concessions. For example, you might say: “I’m willing to offer you $12,500 if you pay cash.” By making all concessions reciprocal concessions, you avoid the risk of being the only enlightened person at the table.
- Offer a reason for your concessions. People like to feel that they and the people around them are acting for good reasons—even when they aren’t. So your concession will seem more convincing if you not only offer $12,500 and ask them for cash, but also explain that you are making the concession because you are sincerely motivated to reach a deal with the admirable bigdealer216.
- Don’t say “final offer.” Few phrases are more tempting or less helpful in a negotiation. We usually say “final offer” not because it is, but because we can’t think of anything better to say. The main effect of saying so, however, is to box yourself into a corner. There’s nothing stopping bigdealer216 from continuing to negotiate or explore creative options, but you’ve just eliminated any hope of doing so yourself. So if you’re tempted to say “final offer,” just repeat your last offer instead.
These five rules are helpful for making concessions in any negotiation. But they are essential for online negotiations, in which both parties are tempted to make outrageous offers, then hide behind their computers.
Have you had any success making concessions online?