How would you answer this question that a buyer might pose: “Why not just eliminate all the negotiation nonsense and just get right down to the best deal?”

Well, you can, but only about as often as you get married. Skipping negotiation means trashing the communication and investigation process by which buyer and seller build a relationship. Without a time tested courtship history, we almost guarantee a poor outcome. Trust, like credit, must be earned. Only a fool would extend credit to a stranger. Trust is merely a form of credit.
Part of courtship is self-protection until trust is established. We protect ourselves from predation by always asking for more than we want. We propose High Initial Demands (HID). HID is the device that preserves the relationship until trust makes it unnecessary. Here are some of the FAQ on HID.

Q) Isn’t asking for more than I want with HID being dishonest?
A) No, on the contrary, it is cautious. Asking for more than we want, whether price, delivery time, quality level, etc, allows us to build in concessions. HID trains the other side in how to treat us, as well as sets expectation. HID is mandatory in negotiations.
Q) Since the buyer or seller already knows this, are we just wasting time and effort?
A) This fault of logic is what lawyers call “assuming facts not in evidence”. Therefore, all assumptions must be proven before accepted. Who says the buyer knows about HID? Who says he is not using his own form of HID? If the buyer does indeed know, then he or she deserves our respect and admiration as a cautious business professional.
Q) What is meant by setting expectations?
A) In the canned vegetable aisle of the grocery store, find 15oz cans of peas. The national name brand prices out at 89¢ and the store brand at 69¢. Does this mean the price difference is quality? Horse feathers! While some incremental marketing and advertising costs raise the price by a few pennies, HID probably accounts for the balance of the price premium.
Buyers make the subconscious assumption that the store has its own brand of low cost peas. Isn’t it much more likely that this private brand merchandise is the very same product with a different label?
Q) How does HID relate to our final offer?
A) They are opposite ends of the concession scale. Visualize your settlement range as a line with upper and lower limits. The HID is the highest we could get, and the final offer is the lowest we will accept. Between these extremes is a settlement range.
Q) How does HID train the buyer to treat us?
A) HID influences concession behavior and gives us negotiating room. The higher price sets an expectation of higher quality, better service, or some other benefit worth the price differential. The buyer assumes that concessions will be difficult to extract without affecting the overall picture.
A business adage says, “You get what you pay for”. We train the buyer in the truth of that conventional wisdom by consistent use of HID in negotiation. This raises the buyer’s settlement bar as it moves line with expectations.
Q) Is there any impact on the personal side of buyer/seller relations?
A) Yes, we can satisfy the buyer’s need to win without damaging the trust relationship. This is especially true of dominant personality types. The emotional imperative works like this. You build in a price concession of 15% before meeting a new buyer. He demands a 10% price reduction, thus revealing his HID first. He might well settle for a 5% cut, or 1/3 of your ultimate position. Nevertheless, he has ‘won’ the battle, you made a profitable sale, and he has now been conditioned for the next encounter.
Q) Will setting the HID too high infuriate my customer?
A) As a buyer, I sometimes act shocked as a negotiation tactic. I ask the seller to justify its position. If the seller is flustered, tentative or brazen, I know in a jiffy that she is not interested in trust. On the other hand, if I detect a willingness to explore mutual benefit, I gain a new perspective that holds promise.
Q) What is a non-price example of how HID is used?
A) In preparing for a negotiation, use visual aides to help you see what you mean. Here, we examine delivery as a negotiable item. The chart below compares delivery lead-time from the buyer and seller viewpoints.
-----------Buyer Seller
HID -----------2 weeks 5 weeks
Nice to have ---3 weeks 4 weeks
Final offer (NO)---4 weeks 3 weeks

The Buyer’s HID is 2 week delivery, which no one on the planet can do. Our HID is 5 weeks, or two more than our final offer position of 3 weeks. Conceding one week on the Seller’s HID, to 4 weeks, brings us into the Buyer’s settlement range. If the buyer insists on 3 weeks, our NO position, we can agree then. Alternatively, we have the option of conceding earlier delivery on the condition that we get a price relief in return.
When buyers ask for the “best deal up front”, they betray their misunderstanding of the negotiation process in general. The HID factors inherent to the bargaining process protect both buyer and seller. The relationship must first take root in trust. After trust has been long established, then the time is right to discuss getting down to the best deal right off the bat.

Author's Bio: 

Robert Menard, Certified Purchasing Professional and Certified Professional Purchasing Consultant, is a purchasing & sales negotiation expert and author of "You're the Buyer - You Negotiate It!" He serves clients worldwide through professional purchasing, consulting, and negotiation roles.

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