He who mentions price first, loses money

Scott says…

He who mentions price first, loses money. Keep this in writing on your desk. Engrave it on your phone. Paint it on your windshield. It is a very important thing to remember.

When negotiating, both parties have an idea of the price they would like to get. Let’s say you need to buy a crib for the new baby coming along in a few months. The furniture company had put a price of $600 on a nice one that your spouse likes. In the mind of the furniture salesperson she knows she gets a $120 commission on the crib and in her thoughts she is willing to give up $50 to make $70 today. So her price is $550.

You, on the other hand, have seen similar cribs priced from $250 to $1,000. Really, you want a good crib that is comfortable and safe for your child, and you have a price of $400 in mind. So, we are looking at $550 vs $400 and a gap of $150.

When you go into the negotiation you often don’t know what the other person’s target price is. That is why the retailer sticks a list price on things. For me that is their STARTING POINT, not the price I’ll pay. If I want the crib for less than the list I need to get the furniture salesperson to come off the price first. If I say “you know, I’d buy that if it was on sale for $400” that let’s the salesperson know where I stand in the deal, possible how much I have to spend and where the negotiation is heading. “Oh, you have $400! Well, let me show you this budget model…” and the negotiation goes down hill.

But what if this particular crib was going to be on sale and the salesperson’s commission was 50% of the sale? That would mean that the salesperson could sell the crib for less than the $400 I’m willing to pay, and I’ll lose money.

Let the seller move first on the opening price. You then can see where they stand and move them down accordingly. This will help you save big bucks!

Have a question about negotiating? Send it to us at scott@rainydayfinances.com!