Should you ever grab the first offer that your counterpart makes in a negotiation?
The answer is a firm “Never!” if you heed the advice given by a number of other pundits.
The wisdom informing this is that if you gladly accept an initial offer it sends the signal to your counterpart that you probably would have accepted less, if he had ground you down a little.
Instead of being grateful that he made a fast deal, he’ll always kick himself for not offering substantially less as his opening gambit.
As with so many rules of the game, this one has exceptions as I note in my negotiation seminars offered at UCLA and UC Berkeley.
(1) If you’re not dealing with a seasoned negotiator, the first offer he or she makes may be the best you’ll hear. Practiced buyers will come in low and inch their way up based on give and take. But novices will typically throw out their very best offer right away, leaving no room for haggling.
(2) Your counterpart could be telling the truth when he says, “My budget for your speech is only $10,000, plus expenses.” If you invest in trying to get him to budge from that figure, are you tacitly calling him a liar? Negotiation lore propagates the generalization that “buyers are liars,” which is obviously not applicable much of the time.
(3) If there is a downside to seeming eager to do business with someone, by accepting the first offer, there is an upside, as well. You’re saying just that; you’re glad to earn their business. Enthusiasm has been called the highest paid quality in the world, so how can it be the most costly at the same time?
(4) I can look back on some of the very best deals I ever made, and many of them came after I simply said yes.
(5) I can look back on the deals that I’ve blown, that would have made a big difference in my career had I said yes early in the negotiation, but I tried to be too clever, and I outsmarted myself.
You should know your latitudes of acceptance, rejection, and non-commitment going into a negotiation. This means you should have a strong sense of what is a great or a good deal, a minimally acceptable one, and offers you will outright reject.
If the initial bid is in the first latitude, what’s wrong with accepting? Yes, you might leave a few pennies on the table, but a speedy deal also delivers value, cutting substantially your transaction costs and the risk you might alienate your counterpart with “hardball” tactics.
Judge each circumstance carefully, and when it comes to best practices, “Never Say Never!”
Dr. Gary S. Goodman is a top speaker, sales, service, and negotiation consultant, attorney, TV and radio commentator and the best-selling author of 12 books. He conducts his “Best Practices in Negotiation” seminar at UC Berkeley and UCLA Extension, and at corporations and conventions around the world. His new audio program is Nightingale-Conant’s “Crystal Clear Communication: How to Explain Anything Clearly in Speech & Writing.” Gary’s web site is: http://www.customersatisfaction.com and he can be contacted at gary@customersatisfaction.com.
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