My neighbor had a plumbing problem last week that partially flooded his house. When the carpet installer quoted a price of $5k to replace the carpet, Rocky simply asked him, “can you do it cheaper?” The installer knocked off $1k without even blinking.
One question, one grand.
On the face of it, this story seems like a victory for the buyer. Simply by asking, he saved himself a ton of money. But, what if the “fair” value of the carpet replacement was $3k? In that case you could say that the carpet installer was the winner, because by asking for $5k, he was able to earn an extra grand, with the small possibility of actually doubling that.
For the record, I have no idea what the fair value was, but that’s not the point. The point is that the ask has a tremendous influence on the final number agreed on. Research shows that “final agreements in any negotiation are more strongly influenced by initial offers than by the subsequent concessionary behavior of an opponent.”
To put the point as plainly as I can, those who ask for more, get more.
While most of this article is written from the point of view of the buyer, the exact idea works for even better for the seller, because they usually make the opening offer. Make it a good one. In my previous article, I wrote about salespeople who fly into the sales battle flying a white flag, prepared to retreat off the asking price at the slightest sign of the buyer’s resistance. In fact, many of them probably preemptively lower their asking price to make their offer more attractive. That’s a big mistake, because smart buyers will always ask for more. Why not? It doesn’t hurt, and it can pay off big.
Of course, bargaining is usually expected to a certain extent in B2B sales, but it’s far less common in retail. We look at a price tag and either pay it or not, or we wait for a sale. We don’t bargain in a retail store, because it’s just not done that way. But why is the list price so sacrosanct? Someone—a real flesh and blood person sitting in an office somewhere at corporate—decided that was the opening offer, and had an official price tag printed up to make it the “list” price. That doesn’t make the price any more fair than if you were negotiating with someone at a craft fair on a Saturday morning, or a souvenir seller in your cruise ship port. It doesn’t hurt to ask, “is that the best you can do?”
There are limits, of course, generally for questions of good taste and common sense. I went to dinner once with a colleague in Canada who tried to bargain with the waiter in a restaurant, “If we all order the prime rib, will you take 20% off the price?” I wanted to crawl under the table out of embarrassment, but to Don, that was just part of the fun he found in life. The waiter got permission to accept the offer, but to this day I still wonder what “extra ingredients” might have been added to our meal.
That’s why one of my personal caveats about negotiating is that I don’t like to ask for price reductions from people performing a service, because I think it will affect their motivation to do quality work, even if only subconsciously.
A big part of life for all of us is buying and selling. One of the easiest and quickest ways to get more out of life is simply to ask for more. Just ask.
 Negotiating Rationally, Max H. Bazerman and Margaret A. Neale, p. 28.