Bend their reality by using six Prospect Theory tactics.
Prospect Theory argues that people are drawn to “sure things” (called the “Certainty Effect”). And people will take greater risks to avoid loss (“Loss Aversion”) than to achieve gains. To get real leverage in a tough negotiation, you have to persuade the other side they have something concrete to lose if the deal falls through. By anchoring their emotions for a loss, the other side will jump at the chance to avoid it. Bending their reality derives from the idea that the real value of anything depends on your vantage point. Set an extreme anchor to make your real offer seem reasonable, or set a range to seem less aggressive.
Start your negotiation with an accusation audit acknowledging all of the other side’s fears.
Anchor their emotions in preparation for a loss.
- Let the other side be the first to open in monetary negotiations.
When confronted with naming your terms or price, give them a range or “ballpark” number.
For example, “Depending on all the services you expect, we’re looking at $130,000 to $170,000.” Understand that in offering them a range they will most likely come to the low end. Always “anchor” your price high (extreme).
When discussing numbers, also be aware of non-monetary terms that would be valuable.
Pivoting to non-monetary terms in a negotiation is a way to discover items of value that make the price more attractive (e.g., free advertising, additional services or support, etc.).
When talking numbers, use exact amounts or odd numbers.
Psychologically, these numbers have a more significant and concrete feel (i.e. $374,571 as opposed to $375,000).
After receiving a rejection of your first extreme anchor price, offer your counterpart a wholly unrelated surprise gift.
People feel obligated to repay debts of kindness.
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